Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (May 2010)
27 slides from Capital Power's roadshow presentation, May 2010
Slide 1: Investor Meetings May, 2010
Investor Meetings May, 2010 Brian Vaasjo, President & CEO CONFIDENTIAL
Slide 2: Forward-looking statement
Forward-looking statement Certain information in this presentation is forward-looking and related to anticipated financial performance, events and strategies. When used in this context, words such as “will”, “anticipate”, “believe”, “plan”, “intend”, “target” and “expect” or similar words suggest
Slide 3: Overview of Capital Power
Overview of Capital Power New company formed in July/09 from EPCOR Utilities Inc.’s spin-off of its power generation business Canadian-based independent power producer (IPP) operating in North America and trading on the Toronto Stock Exchange (TSX: CPX) Business model: stable and growing cash
Slide 4: Corporate strengths
Corporate strengths One of Canada’s largest IPPs with interests in 31 Large, high quality facilities totaling ~3,500 MW of owned and/or operated generation portfolio generation capacity; geographic, fuel source and counterparty diversification Modern fleet with Average plant availability of 94%(1);
Slide 5: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 31 facilities (~3,500 MW) Directly Owned 30.3% LP Interest(3) Alberta Contracted Capital Power Income L.P. ON/BC Contracted Alberta 20 Facilities Two Facilities Three Facilities Commercial 1,668 MW(1) 820 MW 80 MW (467 MW)(2) Six Facilities Sunda
Slide 6: Strategic North American platform
Strategic North American platform Calstock Area where contracted assets could potentially be added Area where merchant Capital Power facilities or contracted assets could potentially be Capital Power Income L.P. facilities added CONFIDENTIAL 6
Slide 7: Modern fleet
Modern fleet Modern fleet with average facility age of 12.5 years(1); two units commissioned in late 2009 with 495 MW of additional capacity in 2011-12 Facility age (as of March 31, 2010) Genesee 2 Genesee 1 Capital Power Income L.P. Brown Lake Taylor Coulee Chute Joffre Weather Dancer Average facil
Slide 8: Strong operating history, fleet availability
Strong operating history, fleet availability Very good operating performance history with high plant availability (1) 12,000 95% 95% 91% 94% 94% 100% 10,000 75% 8,000 Total 6,000 50% Plant Generation Availability (GWh) 4,000 25% (%) 2,000 - 0% 2006 2007 2008 2009 2010 Target Capital Power Generation
Slide 9: Financial strength and access to capital
Financial strength and access to capital(1) Strong balance sheet with BBB investment grade credit rating (S&P/DBRS) • $1.2B in credit facilities, of which $1.1B available • Net debt / total capitalization of ~32% (non-consolidated basis) • Consolidated assets of ~$5.0B with only ~$1.6B in long-ter
Slide 10: Strong cash flow generation
Strong cash flow generation $M (on a de-consolidated basis) $275(1) FFO excluding non-controlling interests in CPILP ~($100) Dividends ~($30 - $40) Average maintenance capex (excluding CPILP) ~($10) Other capex ~$125 - $135 Free cash flow Generating significant discretionary cash flow net of dividen
Slide 11: Financial ratio targets
Financial ratio targets Dividend • Consistent with peers in the 60-70% payout ratio over the long term Debt-to-total capitalization ratio (non-consolidated basis excluding CPILP) • 40-50% Funds from operations to total debt ratio • Minimum 20% Contracted versus merchant operating margin cont
Slide 12: Financial performance
Financial performance ($M, except earnings per share) Q1/10 Q4/09 Q3/09 Revenues $499 $497 $511 Gross margin(1,2) $210 $182 $189 Operating margin(1,2) $161 $120 $140 Net income $13 $7 $14 Earnings per share $0.60 $0.33 $0.64 Earnings per share (normalized)(2) $0.55 $0.18 $0.42 Funds from operations(
Slide 13: Alberta (AB) power market
Alberta (AB) power market Alberta 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 in real-
Slide 14: Hedging Alberta spot power price exposure
Hedging Alberta spot power price exposure Actively manage our position throughout various time periods Plant capacity (MW) 2009 2010 2011 AB Commercial – Base load Hedging positions taken primarily Genesee 3 248 248 248 on base load length from coal Sundance PPA 371 371 371 facilities and PPAs B
Slide 15: Hedging Alberta spot power price exposure
Hedging Alberta spot power price exposure Alberta commercial portfolio Hedging positions based primarily on generation from Genesee 3 base load coal plant and output from the Sundance PPA Risk management targets 70%+ hedged position entering into a prompt year % Contracted Contract price 2010 Su
Slide 16: Alberta power prices
Alberta power prices Alberta spot power prices of $41/MWh in Q1/10 declined 36% from Q1/09 and 12% from Q4/09 $80 $66 $67 $70 $63 $58 $57 $60 $54 $49 $46 ($/MWh) $50 $41 $40 $32 $30 $20 $10 $0 Q1/09 Q2/09 Q3/09 Q4/09 Q1/10 Capital Power's captured price Alberta power average spot price (1) Capture
Slide 17: Growth via acquisitions
Growth via acquisitions Market M&A market continues to be active for acquisition opportunities in Canada and the U.S. Gap between buyers and sellers closing CPX taking a very disciplined and patient approach Acquisition criteria Maintain goal of having a minimum of 50% operating margin contr
Slide 18: Growth via development opportunities
Growth via development opportunities Over 700 MW of new capacity added or under development since IPO launch 4,500 Confirmed capacity growth 4,000 New generation has 3,500 an expected capital cost of $2 billion 3,000 2,500 2,000 1,500 Quality Wind 1,000 Port Dover Wind Keephills 500 CBEC 2 & 3 0 Bas
Slide 19: Wind power project contract wins
Wind power project contract wins Quality Wind Port Dover & Nanticoke Location Tumbler Ridge, BC Norfolk and Haldimand, ON Size 142 MW 105 MW Project costs (est.) $455M $340M Expected COD Before end of 2012 Q4, 2012 Expected capacity ~35% (5 year wind study) ~35% (3 year wind study) factor Contract 2
Slide 20: Financing of wind power projects
Financing of wind power projects Each project meets our minimum 9% hurdle rate (unlevered, after-tax IRR) for contracted facilities and immediate accretion to earnings after project completion Temporary financing through existing credit lines (~$1.0B available); look to permanently finance after
Slide 21: Keephills construction project update
Keephills 3 construction project update 495 MW coal-fired plant, supercritical boiler technology (same as Genesee 3) Partnership with TransAlta Total project cost of ~$1.9B (CPX 50% portion = $955M) Overall project 87% completed; power island construction 77% completed Boiler hydro test su
Slide 22: Review of 2010 corporate priorities
Review of 2010 corporate priorities Priority Status Operational targets Plant availability of ≥ 94% Challenged due to Clover Bar (Unit 2) outage Sustaining capex of $60M On track Construction / development objectives CPC’s share of final costs for Keephills 3 project On track at ≤ $955M with c
Slide 23: Investment highlights summary
Investment highlights summary Large, high quality generation portfolio Strong cash flow Modern fleet generation in with very good trough market operating conditions history Long-term contracts & Diversified merchant portfolio in position provides attractive North stable cash flows & American upside
Slide 24: Non-GAAP financial measures
Non-GAAP financial measures The Company uses (i) gross margin, (ii) operating margin, (iii) funds from operations, (iv) funds from operations excluding non-controlling interests in CPILP and (v) normalized earnings per share as financial performance measures. These terms are not defined financial me
Slide 25: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) Management considers operating margin to be representative of plant performance as it excludes corporate administration and business development expenses (indirect administration). The presentation of the pro forma consolidated information for the three months en
Slide 26: Non-GAAP financial measures (cont'd)
Non-GAAP financial measures (cont’d) Normalized net income and normalized earnings per share The Company uses normalized earnings per share to measure performance by period on a comparable basis. Normalized earnings per share is based on net income according to Canadian GAAP adjusted for items that
Slide 27: Contact information
Contact information Investor Relations (780) 392-5305 (866) 896-4636 (toll-free) investor@capitalpower.com www.capitalpower.com CONFIDENTIAL 27