Capital Power Corporation · TSX:CPX
Capital Power — Investor Day (December 2017)
92 slides from Capital Power's investor day presentation, Dec 7, 2017
Slide 1: Capital Power Investor Day
Capital Power Investor Day Driving to a Sustainable Future December 7, 2017 capitalpower.com
Slide 2: Forward-looking information
Forward-looking information Cautionary statement Certain information in today’s presentations 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
Slide 3: Executive leadership team
Executive leadership team Brian Vaasjo Jacquie Pylypiuk President & Chief VP Human Resources Executive Officer Kate Chisholm Darcy Trufyn SVP Legal & External SVP Operations, Relations Engineering & Construction Bryan DeNeve Mark Zimmerman SVP Finance & SVP Corporate Chief Financial Development & Of
Slide 4: Agenda
Agenda Time Topic Presenter 9:00 am Introduction Randy Mah Executing on Strategy Brian Vaasjo Delivering Growth in Cash Flows Mark Zimmerman Excellence in Operations and Darcy Trufyn Development Break Optimizing Financial Strategy Tony Scozzafava 2018 Corporate Priorities Brian Vaasjo Q&A session 11
Slide 5: Executing on strategy
Executing on strategy Brian Vaasjo capitalpower.com
Slide 6: Capital Power is well-positioned
Capital Power is well-positioned Capital Power’s footprint Company – growth-oriented diversified North American power generator Assets – young and modern fleet of assets Competencies – proven operating, development, construction, and risk management expertise Financial Strength – strong cont
Slide 7: Strategy
Strategy Provide investors with a strong total return Fixed income investors with the stability of maintaining credit ratings over the investment term Shareholders with a robust Total Shareholder Return • Minimum average annual AFFO per share growth of 7% Continue to maintain substantial upsid
Slide 8: Strategy
Strategy Execute on strategies that continue outstanding operations while reducing our GHG costs and risk (existing assets) Successful completion of 5-year program of increasing availability while reducing costs and risk Management of risks and opportunities relating to carbon costs • GPS projec
Slide 9: Execution in 2017
Execution in 2017 Excellent existing operations Expect to achieve operating performance targets on our plants Operating cost in-line with target Bettered sustaining capex target Continued efforts on reducing carbon footprint Excellent realized Alberta power price Substantial contracted gro
Slide 10: Executing on contracted growth
Executing on contracted growth Added nearly 1,300 MW Acquired 3 contracted natural gas and 2 waste heat facilities • All are meeting the or beating the acquisition business case Completed the construction of Bloom Wind early and under budget Announced and commenced construction for New Frontier
Slide 11: Geographic profile
Geographic profile Recent acquisitions and completion of Bloom Wind has increased geographic diversification Breakdown based on Adjusted EBITDA: U.S. ON 5% U.S. 13% 20% BC 9% AB ON AB 73% 16% 56% BC 8% 2016(1) 2018 Estimate(1) 1) Percentage breakdown based on Adjusted EBITDA prior to Corporate and u
Slide 12: Managing through market & regulatory uncertainty
Managing through market & regulatory uncertainty Carbon price Alberta carbon price of $30/tonne in place January 1, 2018 Government model shifts the profile of existing carbon credit value realization but maintains overall value to Capital Power Federal Government’s indication of $50/tonne car
Slide 13: Outlook
Outlook 2017 operating and financial results forecast to meet or exceed targets 2018 • ~5% growth in AFFO; annualized growth partially offset by carbon tax • Clarity on Alberta capacity market • Expect to secure 350MW to 600MW of contracted renewable developments Longer-term • Clarity on Genes
Slide 14: Delivering Growth in Cash Flows
Delivering Growth in Cash Flows Mark Zimmerman capitalpower.com
Slide 15: Pulling all levers
Pulling all levers Growing cash flow Optimize existing assets Capitalize on capacity market Maximize commodity portfolio value Execute on development opportunities Acquire high quality assets capitalpower.com 15
Slide 16: Where we have come from
Where we have come from Alberta context: risk declining 2015 2016 2017 Uncertainty Event Uncertainty Event Uncertainty Event Capacity Market Transition Shepard COD Oil price bottoms out Stakeholder Kick-off CPC Terminates Role as SD C Oil price crashing First REP competition Announced buyer Sundance
Slide 17: Evolving fundamentals
Evolving fundamentals Ontario context: improving outlook for supply Most relevant Short Term (0-2 years) Medium Term (2-5 years) Long Term (5+ years) 2+ GW of nuclear Napanee Generating Station 3 GW of nuclear retired refurbishment starting 4,600+ MW of intermittent Prospect of expanded HQ 2+ GW of
Slide 18: US forecast generation by fuel source
US forecast generation by fuel source 10,000 9,000 Gas 8,000 7,000 Wind 6,000 5,000 4,000 3,000 Wind 2,000 1,000 0 2020 2030 2040 2050 Other Geothermal Biomass Solar Wind Hydro Nuclear Natural Gas w/ CCS Natural Gas Coal Wind generation expected to increase from 20% in 2020 to 47% of total 1) Source
Slide 19: Maximizing the commodity portfolio
Maximizing the commodity portfolio Creating incremental value through market expertise Average realized power prices(1) have exceeded spot power prices ($/MWh) by 23% since the Company’s inception 8 years ago $125 $100 $75 $50 $45/MWh over last 2 years $25 $0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 20: Alberta power market design change
Alberta power market design change Transition to a capacity market from energy-only market by 2021 Alberta Government Objectives System Reliability Investor Confidence Investment Signals System stability as renewables Opportunity for new and To strike a balance between are brought on under the exist
Slide 21: Increasing market visibility
Increasing market visibility Improving Alberta outlook Nov-16 Avg. 2018 Price CPC Coal Phase-out Agreement Reached $45/MWh CPC PPA Dispute Resolved Capacity Market Transition Stakeholder Kick-off First REP competition Announced Sundance A retirement/mothball announcement Capacity Market Transition -
Slide 22: Alberta load growth
Alberta load growth(1) Fundamentals improving Fort McMurray Wildfires capitalpower.com 22
Slide 23: Spark spread forwards are trending higher
Spark spread forwards are trending higher Improving outlook for gas generation $/MWh Bullish comments from SD A retirement/mothball power market participants announcement 35 30 25 20 15 10 5 0 -5 -10 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 CAL 2018 Spark Spread C
Slide 24: Position in Alberta
Position in Alberta Competitive position in merit curve Coal-fired generation occupies the bottom of the curve Variable Cost ($/MW) Peaking Combined Cycle Clover Bar Coal Shepard Genesee 3 2017 Merit Curve Capacity (MW) capitalpower.com 24
Slide 25: Position in Alberta
Position in Alberta Competitive position in merit curve Increasing carbon prices shift some coal and combined cycle units in the curve Variable Cost ($/MW) Peaking Coal Combined Cycle Clover Bar Shepard Genesee 3 2017 Merit Curve 2018 Merit Curve Capacity (MW) capitalpower.com 25
Slide 26: Position in Alberta
Position in Alberta Competitive position in merit curve With $50 carbon prices, gas occupies the bottom of the curve Variable Cost ($/MW) Peaking Coal Combined Cycle Clover Bar Genesee 3 Shepard 2018 Merit Curve 2022 w/ $50 CO2 Capacity (MW) capitalpower.com 26
Slide 27: Optimizing existing assets
Optimizing existing assets Unlocking potential incremental value Alberta Assets Ontario Assets • Gas co-firing • Cost of fuel • Biomass • Transportation • Full conversion • Wind dispatch Island/Decatur US Wind • Re-contracting efforts have • Dispatch optimization commenced • Maintaining PTC capitalp
Slide 28: Canadian opportunity set
Canadian opportunity set Saskatchewan Significant investment required by 2030 Targeting 50% renewable generation capacity by 2030 Alberta • 1,600 MW of new wind Coal phase-out Junior developer consolidation Ontario • >2,500 MW of capacity Nuclear Retirements Renewable Energy Program Market Renewal •
Slide 29: Alberta strategic position
Alberta strategic position Wind development Halkirk 2 • 148 MW • Next to existing facility • 37%+ capacity factor • Available transmission Junior Portfolios • Locational advantage • > 2,500 MW of capacity with wind diversity - high • > 20 opportunities capture factor • Aggregation potential Whitla 1
Slide 30: Alberta strategic position
Alberta strategic position Thermal development Genesee Clover Bar Shepard • Mitigate GHG volumes • Transmission • Equal rights to further • Life extension through infrastructure development with CCS, conversion, • Water infrastructure partner repowering • Peaking opportunities • Peaking opportunitie
Slide 31: Alberta strategic position
Alberta strategic position Siksika Nation Siksika Nation • Exclusive agreement to jointly develop new generation • 172,000 acres of land • Solar, wind, and gas project potential • Attractive location • Existing transmission and distribution infrastructure • Ample water • Potential for renewable attr
Slide 32: US wind development opportunity
US wind development opportunity Significant opportunity in the near term $100 billion Opportunity • 52 GW1 incremental capacity additions through 2022 C B Policy Drivers • Renewable Portfolio Standards • Renewable Tax Credits A • Tax Reform D High Potential Economic Drivers Less Potential • Low gas
Slide 33: US wind position
US wind position New Frontier Tisch Mills Our approach • 99 MW • • 100 MW >7 m/s wind speed • >8 m/s wind speed • MISO Nolin Hills • MISO • WI RPS • Executed GIA • Advanced DPP • 350 MW • Contracted • >6 m/s wind speed Black Fork • 100-180 MW • >6 m/s wind speed Garrison Butte • PJM • Executed GIA •
Slide 34: Tactical transactions
Tactical transactions Focus on high quality assets Bloom Wind New Frontier Ontario Thermal(1) Decatur $271 million USD Long-term contract $515 million $448 million USD 178 MW 99 MW 294 MW 795 MW • COD June 2017 on • 12-year fixed price • Highly operable units • Contracted through 2022 schedule and o
Slide 35: Precedent wind transactions
Precedent wind transactions Key Attributes • Mid-life contracts North American M&A Opportunity • Pipeline of development projects • Optimization opportunities • Repowering opportunities Transaction Totals (Jan 2012 – Nov 2017)1 1. Source: S&P Global Market Intelligence; SNL Energy Data and various I
Slide 36: Precedent gas-fired transactions
Key Attributes Precedent gas-fired transactions • Mid-life contracts North American M&A opportunity • Optimization opportunities • Strong regional fundamentals • High re-contracting probability Transaction Totals (Jan 2012 – Nov 2017)1 (2) 1. Source: S&P Global Market Intelligence; SNL Energy Data a
Slide 37: Fuel diversification
Fuel diversification Strategically evolving profile Generation type based on Adjusted EBITDA: 2015 2017 2020(1) 1) Includes projected growth. capitalpower.com 37
Slide 38: Greater visibility
Greater visibility Strategically evolving profile Merchant-contracted mix based on Adjusted EBITDA: 2015 2017 2020(1) 1) Includes projected growth. capitalpower.com 38
Slide 39: More geographic diversity
More geographic diversity Strategically evolving profile Geographic breakdown based on Adjusted EBITDA: 2015 2017 2020(1) 1) Includes projected growth. capitalpower.com 39
Slide 40: Strategically evolving profile
Strategically evolving profile Decreasing risk and growing cash flows Generation Contracted North American technology capacity footprint 42% gas and 66% Contracted 74% Alberta 2015 renewables 56% gas and 81% Contracted 62% Alberta 2017 renewables 68% gas and 82% Contracted 52% Alberta 2020(1) renewa
Slide 41: Delivering cash flow growth
Delivering cash flow growth Key takeaways Improving outlook for Alberta Significant North American opportunity Pulling all levers Maximize commodity portfolio value Capitalize on capacity market Optimize existing assets Execute development opportunities Acquire high quality assets capitalpower.com 4
Slide 42: Excellence in Operations & Development
Excellence in Operations & Development Darcy Trufyn capitalpower.com 42
Slide 43: Maximizing asset value in 2017
Maximizing asset value in 2017 Sustained excellence in operations On-going focus on efficiency and reliability to improve performance and availability. End of very successful 5-year program • Move to opportunistic approach • Optimization driven by facility specific asset management plans. Contin
Slide 44: Maximizing fleet performance
Maximizing fleet performance CP Operated Availability 97.00 96.50 96.00 95.50 % 95.00 94.50 94.00 93.50 93.00 2012 2013 2014 2015 2016 2017F 1) Excludes 2017 acquired assets. Industry-leading performance capitalpower.com 44
Slide 45: Cost – bending the curve
Cost – bending the curve capitalpower.com 45
Slide 46: Completion of Bloom Wind project
Completion of Bloom Wind project Continued excellence in new project development 178 MW project in Kansas Began commercial operations on June 1/17 Completed one month ahead of schedule with construction costs below budget 54 Vestas V117 3.3 MW turbines Location with exceptional wind regime
Slide 47: New Frontier Wind project
New Frontier Wind project Development of company’s next U.S. wind farm underway Location: McHenry County, North Dakota 99 MW capacity using 29 V126-3.45 MW Vestas Turbines 45% wind capacity factor expected North Dakota Project commenced August 2017 COD: December 2018 Budget: US$145M(1) N
Slide 48: Wind farm optimization
Wind farm optimization Development Technology improvements Lower OEM costs Standardization Plant arrangements Scope certainty/lessons learned Market share Focused approach to lowest $/MWh capitalpower.com 48
Slide 49: Wind farm optimization
Wind farm optimization Operation and maintenance Turbine improvements Maintenance enhancements Commercial Spares Critical mass Numerous initiatives underway to enhance wind assets capitalpower.com 49
Slide 50: 2017 asset additions
2017 asset additions Growing our natural gas and renewables generation Plant MCR COD Location Ownership Technology East Windsor 84 MW 2009 East Windsor, ON 100% Gas-fired Cogeneration cogeneration York Energy 400 MW 2012 Newmarket, ON 50% Simple Cycle Center Gas 150 Mile House 5 MW 2008 150 Mile Hou
Slide 51: 2017 asset acquisitions
2017 asset acquisitions Growing our natural gas and renewable generation Decatur (795 MW) All acquired assets successfully integrated into the company Planned outages performed on all acquired assets in 2017 Savona (5 MW) Integration highlighted the thermal plants (East Windsor, York Energy an
Slide 52: Genesee Generation Station
Genesee Generation Station Industry leader through the carbon transition Advantages Highest availability for Alberta coal plants (96.3% over last 3 years) Lowest fuel cost from mine mouth operation Youngest units (21 years average) in Alberta Excellent maintenance history and focused reliabi
Slide 53: Genesee Performance Strategy savings
Genesee Performance Strategy savings Program reduces fuel & carbon compliance costs(1) GPS Program - carbon & fuel costs annual savings Program targets an 11% $40,000 reduction in GHG $35,000 emissions Avoided Costs ($000) $30,000 $50M forecasted capital $25,000 investment accelerated $20,000 re
Slide 54: Genesee Performance Standard (GPS)
Genesee Performance Standard (GPS) Carbon footprint reduction roadmap Combustion Improvements Airflow and Intelligent Improvements Boiler and real-time Optimization monitoring Fuel Quality LP Turbine Enhancements Optimization of Balance of Plant Performance capitalpower.com 54
Slide 55: Turbine enhancement – low pressure rotor
Turbine enhancement – low pressure rotor Increasing plant efficiency with state-of-the-art LP rotors Replacing existing LP rotors on Genesee units 1&2 with high efficiency rotors (L-0 40 inch blades) Implementation schedule • Unit 1: 2019 planned outage • Unit 2: 2020 planned outage Costs • Un
Slide 56: Coal-to-Gas conversion
Coal-to-Gas conversion Optimal operational flexibility Co-firing provides greatest fuel flexibility through to 2030 Timing of conversion flexible Targeting execution period of 9 months or less Capital cost per unit of $25M to $50M Outage of 2 months per unit Reviewing strategies for tran
Slide 57: Transition CTG approach
Transition CTG approach Genesee currently can co-fire up to 250MW of natural gas Low natural gas prices have us co- firing opportunistically Reviewing our ability to enhance natural gas utilization during planned outages starting with Genesee 2 this spring On track to bring significant natur
Slide 58: Leadership in solid fuel innovation
Leadership in solid fuel innovation Refining a potential bioenergy option Experimental co-firing of sawdust, bark and processed biowaste was successfully performed in 2016-17 Biomass co-firing could reduce carbon footprint from Genesee and also address growing bio-waste challenges in Alberta C
Slide 59: Key takeaways
Key takeaways Sustained excellence in operations New assets meet or exceeds expectations Continued success on new developments World leading carbon reduction program (GPS) Flexibility in transition from coal to natural gas capitalpower.com 59
Slide 60: Optimizing Financial Strategy
Optimizing Financial Strategy Tony Scozzafava capitalpower.com
Slide 61: Overview of financial strategy
Overview of financial strategy Annual 7% dividend growth within AFFO payout ratio of 45 to 55% Provide stability through contracted cash flow profile Maintain and improve competitive cost of capital Ensure strong access to capital markets Provides stability to the dividend Properly ladde
Slide 62: Common share dividend guidance
Common share dividend guidance Targeting 7% annual increase Annualized dividend per share(1,2) $2.05 $1.92 $1.79 $1.67 $1.56 $1.46 $1.36 $1.26 2013 Y/E 2014 Y/E 2015 Y/E 2016 Y/E 2017 Y/E 2018T 2019T 2020T Targeting annual 7% dividend growth to the end of 2020 Target annual AFFO payout ratio of 45-5
Slide 63: 2017 AFFO guidance
2017 AFFO guidance 2017 results remain on track AFFO ($M) AFFO expected near the mid- $340 to $385 point of a $340M to $385M $305 to $345 target range Original Target Revised Target with Acquisitions 1) Adjusted funds from operations (AFFO) is a non-GAAP financial measure. See pages 89-90. capit
Slide 64: AFFO guidance for 2018
AFFO guidance for 2018 Full year of AFFO from acquisitions offsets GHG compliance headwinds $ (M) 1) 2017 AFFO restated using Adjusted AFFO (2018 method). See Non-GAAP measures on pages 89-90. capitalpower.com 64
Slide 65: AFFO continues to support dividend growth
AFFO(1,2) continues to support dividend growth Cash available for common share dividends and growth $400 $380 $365 CAGR of ~10% since 2014 $350 $324 $300 $292 44% 46% $256 $250 41% ($M) 49% $200 51% $150 Gross common dividends(3) Discretionary cash flow $100 $50 $- 2014 2015 2016 2017E 2018T Avera
Slide 66: Discretionary cash flow supports dividend growth target
Discretionary cash flow supports dividend growth target(1) $400M $40M $29M(2) 7.7% 7% Capital EBITDA AFFO AFFO Dividend Growth/Share Growth AFFO growth from discretionary cash flow covers 7% annual dividend growth without dilution to existing shareholders 1) Assumes a 10x EBITDA multiple and a capit
Slide 67: Growing AFFO/share
Growing AFFO(1)/share Acquisitions and addition of Bloom in 2017 strengthen AFFO per share in 2017/2018 4.00 3.50 3.00 2.50 $ 2.00 1.50 1.00 4 year CAGR of ~10% since 2014 0.50 0.00 2014 2015 2016 2017E 2018T (2,3) AFFO/share 1) Represents Adjusted FFO (2018 method), less the portion allocated to
Slide 68: Contracted EBITDA growth exceeds AFFO growth
Contracted EBITDA growth exceeds AFFO growth(1-5) $700 $600 Savona and 150 Mile House Decatur East Windsor $500 York Energy Off-coal compensation $400 Bloom ($M) Macho Springs and Beaufort K2 Wind $300 Shepard PD&N $200 Halkirk Quality Wind Island Generation $100 North Carolina Kingsbridge 1 $0 Gene
Slide 69: Merchant-contracted mix
Merchant-contracted mix(1,2,3) 81% 82% 58% 66% 67% 2014 2015 2016 2017E 2018T Contracted % Adjusted EBITDA increasingly derived from contracted assets 1) Adjusted EBITDA includes off-coal compensation and excludes corporate costs. 2) Only includes contracted portions of Halkirk and Shepard plants. 3
Slide 70: Financial obligations covered by contracted cash flow
Financial obligations covered by contracted cash flow Operating margin(1,6) to financial obligations(2) and dividends(3) 140% 130% Contracted(5) + merchant ($60/MWh) 120% Contracted(5) + merchant (forwards(4)) 110% Contracted(5) + merchant ($40/MWh) Contracted(5) margin 100% Minimum Alberta power pr
Slide 71: New CCI Regulation replaces SGER in 2018
New CCI Regulation replaces SGER in 2018 Electricity sector output based allocation set at 0.37MT CO2e / MWh Credit usage limitation impact on Compliance Cost1 • Increases compliance target from 20% to ~60% for coal fired units $30 $26 • Reduces compliance for gas fired units $20 • Net impact: 2018
Slide 72: Cash flow and financing outlook
Cash flow and financing outlook Sufficient funding for current growth projects 2018T Sources of cash flow ($M) Funds from operations(3) + coal compensation $505 Estimated proceeds from tax-equity debt (New Frontier Wind) $125 $630 Uses of cash flow Dividends (common & preferred shares) ($215) New Fr
Slide 73: AB commercial portfolio positions
AB commercial portfolio positions Current Position 2018 2019 2020 % baseload generation sold 81% 42% 25% forward(1) Contracted prices(2) ($/MWh) High-$40 Low-$50 Low-$50 Avg. forward prices ($/MWh) $49 $50 $49 EBITDA sensitivity to a $5/MWh $10M $23M $27M change in spot prices(3) ($M) Despite high %
Slide 74: Financial strength
Financial strength Strong balance sheet and investment grade credit rating Investment grade credit ratings Agency Ratings Outlook by S&P and DBRS S&P BBB- / P-3 Stable Continued to be well capitalized DBRS BBB(low) / Pfd-3 (low) Stable with capacity for leverage Corporate Liquidity(1) Debt to to
Slide 75: Credit metrics
Credit metrics Within DBRS financial criteria for current rating Cash flow/Debt(1) EBITDA/Interest 30% 6.0 25% 5.0 20% 4.0 15% 3.0 10% 2.0 5% 1.0 0% 0.0 2017E 2018T 2017E 2018T Within S&P financial criteria for investment grade rating Adj. FFO/Adj. Debt(1,2) Adj. Debt/Adj. EBITDA(1,2) 20% 5.0 15% 4.
Slide 76: Financing growth in 2017
Financing growth in 2017 ~$1 billion raised in capital Raised ~$1.0B in gross proceeds from recent financings in 2017 to fund growth $244M from tax-equity investor for Bloom Common Tax-equity Shares Wind (Jun) $244M $183M $183M common share issuance used to partially finance the Decatur Energy
Slide 77: Debt maturity schedule
Debt maturity schedule(1) ~$1B in committed credit facilities renewed with 5-year tenor maturing 2022, of which virtually all is available(1) $400 $450 $350 $300 $300 ($M) $250 $250 US $230 US $65 $200 $174 $150 $160 $100 $50 $0 2018 2019 2020 2021 2022 2023 2024 2025 2026 EPCOR Capital Markets CAD
Slide 78: US tax reform
US tax reform General expectation is that PTC’s would not directly be changed looking at the Senate bill at this time Senate bill contains Base Erosion and Anti-Abuse (BEAT) provision and retains Alternative Minimum Tax (AMT) at 20% rate which could erode tax equity market • Expect the BEAT prov
Slide 79: Tax guidance
Tax guidance(1) US(2) Net Operating Losses (NOLs) currently being used to shelter federal taxes State taxes of ~$1M per year Do not expect to be cash taxable until the latter part of the next decade Canada Canadian corporate tax rate is currently 27% Cash taxes less than $1M per year (excl
Slide 80: US Wind projects
US Wind projects Combined US Wind projects(1,2) cash flow Starting in 2027 as PTC’s start to 60 expire and tax equity investments convert to non-controlling interests 50 (NCI) Material increase in cash flows $ million (CAD) 40 starting in 2027 as lower contracted 30 cash flows are replaced by hi
Slide 81: Attractive yields relative to peers
Attractive yields relative to peers Capital Power’s AFFO payout ratio is conservative 2018E Dividend & AFFO Yield1,2 2018E AFFO Payout Ratio1,2 6.0% 6.1% BEP.UT-CA 98% 4.5% 7.7% ENF-CA 78% Dividend Yield 4.8% 8.3% AFFO Yield RNW-CA 72% 4.0% 8.4% ENB-CA 61% 5.5% 9.0% AQN-CA 59% 7.6% 9.7% EMA-CA 58% 7
Slide 82: Trading at a discount to peers on EV/EBITDA
Trading at a discount to peers on EV/EBITDA Utilities Pipelines Canadian IPPs Average = 11.7x Average = 13.1x 13.2x 13.1x 11.8x 11.6x 18.0x 2018 EV / EBITDA1 14.1x 13.0x 12.5x Average2 = 12.2x 10.6x 9.5x 8.5x 7.8x EMA-CA CU-CA ENF-CA ENB-CA INE-CA BEP.UT-CA AQN-CA BLX-CA NPI-CA RNW-CA CPX-CA TA-CA A
Slide 83: Key takeaways
Key takeaways Growing dividend supported by AFFO growth Financial obligations and dividends covered by contracted cash flow Financial capacity to fund growth Access to capital remains strong In addition to hedges on 700 MW of baseload generation, have ability to capture upside from higher
Slide 84: 2018 Corporate Priorities
2018 Corporate Priorities Brian Vaasjo capitalpower.com
Slide 85: 2018 Operational targets
2018 Operational targets Deliver strong operational performance from a young, well-maintained generation fleet 95% Capacity-weighted plant availability $85M Maintenance capital (plant maintenance capital, and sustaining capital expenditures) $230M to $250M Plant operating and maintenance expenses ca
Slide 86: 2018 Development & construction targets
2018 Development & construction targets Enhance value for shareholders by delivering accretive growth Complete New Frontier Wind on time and on budget Committed capital of $500 million for contracted growth Expect 2-4 wind farms in progress capitalpower.com 86
Slide 87: 2018 Financial target
2018 Financial target Financial target 2018 key assumptions Adjusted funds from operations(1) Commodity price assumptions ($M) $360 to $400 • $49/MWh average AB power price $400 $365 • ~$2/GJ AECO natural gas $300 81% of AB Commercial portfolio sold $200 forward at high-$40/MWh $100 Excludes a
Slide 88: Attractive investment opportunity: Driving to a sustainable future
Attractive investment opportunity: Driving to a sustainable future 2017: Met or exceeded targets with tremendous growth 2018: Operationally strong, well positioned for Alberta upside, significant growth Great assets • Capacity market favorable to coal and natural gas conversion • Maximizing option
Slide 89: Non-GAAP financial measures
Non-GAAP financial measures The Company uses (i) earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense from its joint venture interests, and gains or losses on disposals (adjusted EBITDA), (ii) adjusted
Slide 90: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) • Historically, the impacts of tax equity financing structures on adjusted funds from operations have been insignificant. With the commencement of commercial operations of Bloom Wind in 2017, management has revisited the flow of these operations through the adjus
Slide 91: Forward-looking information
Forward-looking information Forward-looking information or statements included in this presentation and in responses to questions 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 m
Slide 92: Investor Relations Contact
Investor Relations Contact Randy Mah 10423 101 Street NW Senior Manager 10th Floor (780) 392-5305 Edmonton, Alberta rmah@capitalpower.com Canada, T5H 0E9 www.capitalpower.com capitalpower.com