Capital Power Corporation · TSX:CPX

Capital Power — Investor Day (December 2012)

110 slides from Capital Power's investor day presentation, Dec 6, 2012

1. Slide 1: Capital Power Investor Day 2012

   CAPITAL POWER INVESTOR DAY 2012 December 6, 2012

2. Slide 2: Forward-looking information

   Forward-looking information Cautionary statement Certain information in today’s presentations 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

3. Slide 3: Today's Presenters

   Brian Vaasjo President & CEO TODAY’S PRESENTERS Darcy Trufyn SVP Operations, Engineering & Construction Bryan DeNeve SVP Corporate Development & Commercial Stuart Lee SVP Finance & CFO

4. Slide 4: Agenda

   Agenda 8:30 – 8:35 Introduction Randy Mah 8:35 – 9:00 Delivering on our strategy Brian Vaasjo 9:00 – 9:25 Optimizing operations Darcy Trufyn 9:25 – 9:55 Merchant markets & portfolio optimization Bryan DeNeve 9:55 – 10:10 Break 10:10 – 10:40 Creating value through disciplined growth Bryan DeNeve 10:4

5. Slide 5: Delivering on our strategy

   DELIVERING ON OUR STRATEGY Corporate strategy and execution Brian Vaasjo, President & CEO

6. Slide 6: Realignment of executive team functions

   Realignment of executive team functions Executive team’s bench strength supports change; realignment and consolidation of functions improve efficiency and effectiveness of Executive team  Reduced executives from 7 to 5  Greater alignment within executive functions Brian Vaasjo, President & CEO Pet

7. Slide 7: Consistent strategy

   Consistent strategy Independent power producer (IPP) strategy designed to create value throughout business cycle Committed to current strategy Market focus despite challenging markets Balance of  Our vision is to be one of North Consistent contracted America's most respected, access to and low cost

8. Slide 8: Current power markets present challenges and opportunities

   Current power markets present challenges and opportunities  Current power markets present challenges in short to medium term • Low natural gas prices, weak US economy, delays in the retirement of uneconomic generation, and over supply • Repositioning Alberta portfolio to address short-term softenin

9. Slide 9: North American footprint & target markets

   North American footprint & target markets Continue to pursue opportunities in target markets Region Constituent jurisdictions BC Canada Alberta, British Columbia AB West Ontario Ontario Ontario US Mid- PJM East (Delaware, Atlantic Maryland, Pennsylvania, US North Carolina, New Jersey, Northeast Virg

10. Slide 10: Balanced portfolio of merchant and contracted generation

    Balanced portfolio of merchant and contracted generation(1) Today - 2012 Year-end 2015E 15 facilities (3,603 MW) 17 facilities (4,048 MW(2)) • 43% capacity contracted • 48% capacity contracted 4% 3% 13% 16% 29% 26% 26% 29% 28% 26% AB commercial US Northeast commercial Mid-Atlantic contracted AB cont

11. Slide 11: Modern fleet

    Modern fleet Helps keep availability high and reduces risk of unplanned outages  Average weighted facility age of the current fleet is 12.0 years(1)  2 new wind projects (195 MW) begin commercial operations in 2013 - 2014 CBEC 3 Facility age CBEC 2 Remaining life CBEC 1 Island Generation Gas Joffr

12. Slide 12: Technology focus

    Technology focus(1) Operations and growth are focused on: natural gas, coal, wind and solar Current By 2015 year-end 15 facilities (3,603 MW) 17 facilities (4,048 MW(2)) 9% 9% 42% 49% 54% 37% Gas Wind Coal & solid fuels Interest in Shepard facility (400 MW) will increase natural gas generation from

13. Slide 13: 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 2012E 2013E Generation (actual) Average plant availability Generation (e

14. Slide 14: Financial strength and access to capital

    Financial strength and access to capital Committed to investment grade credit rating Financial strength  Investment grade credit ratings from S&P (BBB-) and DBRS (BBB)  Debt-to-capital ratio of ~39%(1) remains below long-term target of 40% - 50% Access to capital 100  3 secondary common share 29%

15. Slide 15: 2012 accomplishments

    2012 accomplishments Commission 292 MW from two wind projects on time and under budgets  Quality Wind - COD Nov/12 and ~10% under budget  Halkirk - COD Dec/12 and ~3% under budget Aligned Capital Power’s fleet with the business strategy  Divestiture of small hydro facilities rationalized fleet an

16. Slide 16: Shepard Energy Centre

    Shepard Energy Centre Signed an agreement for a 50% interest in Enmax’s Shepard Energy Centre  800 MW natural gas combined cycle facility located SE of Calgary  Currently under construction, ~50% complete and expected COD in early 2015  20-year tolling agreement with Enmax with a fixed capacity c

17. Slide 17: Construction of new Capital Power Energy Centre

    Construction of new Capital Power Energy Centre Expands our market share in the attractive Alberta market  Announced today our intention to build a large (up to 900 MW) gas-fired power generation facility in AB to meet province’s power needs  Additional supply projected to be required in the 2017-

18. Slide 18: Re-positioning Alberta portfolio

    Re-positioning Alberta portfolio  Capital Power will own the best fleet of power generation assets in the fastest growing power market in North America • Best peaking responsiveness • Best coal reliability • Lowest environmental impact and lowest cost • Most competitive natural gas combined cycle P

19. Slide 19: Capital Power's growth

    Capital Power’s growth(1) In 6 years, generation capacity (owned) will nearly have tripled 4,500 4,000 3,500 3,000 (MW) 2,500 Development projects 2,000 Acquisitions 1,500 1,000 Completed construction and developments 500 CPC base at IPO 0 2009 2010 2011 2012E 2013E 2014E 2015E (1) Based on MW capac

20. Slide 20: Achieving corporate priorities and vision

    Achieving corporate priorities and vision  Develop competitive advantages in people, market intelligence and plant development  Continue to pursue multi-year initiatives to improve efficiencies and effectiveness • Reducing core sustaining capital from ~$45M to ~$29M • Reducing expenses by ~$20M be

21. Slide 21: Optimizing operations

    OPTIMIZING OPERATIONS Facilities and operating performance Darcy Trufyn, SVP Operations, Engineering & Construction

22. Slide 22: Fleet availability and safety performance

    Fleet availability and safety performance Focus on safe, high-availability, low-cost operations from CPC’s modern, young fleet TRIF(1) TRIF Availability (3-Yr Rolling Average) 2011 2012E 2013E 2011 2012E 2013E CDN Plants 1.95 3.02 1.76 1.58 93% 94% 96% US Plants 2.25 2.32 2.03 1.82 88% 85% 88% Total

23. Slide 23: Current state

    Current state  Market rewards for reliable power  Significant opportunities to improve on earnings through Operations and Maintenance  Capital Power began its cost improvement journey in 2011 including: • Implemented industry leading reliability program • Improved sharing of best practices across

24. Slide 24: Challenges and opportunities

    Challenges and opportunities North Carolina assets • Continue to maintain controllable costs at the plants • Pursue long term fuel supply and ash removal contracts for the plants • Alternate fuel capability under consideration at Southport New England assets • Focus on controllable expenses • Mainta

25. Slide 25: Driving cost efficiency

    Driving cost efficiency Controllable costs for sample plants: Genesee, Tiverton & Rumford 2012 2013 (Forecast) (Forecast) Genesee $71M $68M Tiverton $7M $6M Rumford $6M $5M 25

26. Slide 26: Reliability program - objectives

    Reliability program - objectives Continually improving business practices in order to: Maintain and enhance the availability of our generating plants Reduce operating and maintenance costs Maintain a reliability focused culture 26

27. Slide 27: Reliability program – expected results

    Reliability program – expected results Standardization of maintenance best practices between plants Promote culture focused on optimal proactive vs. reactive maintenance Improvement in safety and environmental performance Reduction in insurance premiums Ultimately result in long term reduction in O&

28. Slide 28: World class maintenance and reliability at our Kingsbridge I wind farm

    World class maintenance and reliability at our Kingsbridge I wind farm  One of the best performing wind farms across the Vestas global footprint  High availability and reliability We will leverage our expertise and leadership onto our 3 new assets (Quality Wind, Halkirk, Port Dover & Nanticoke) 28

29. Slide 29: Effective utilization of expertise

    Effective utilization of expertise Recent reorganization has integrated overlapping areas to allow us to create efficiencies, reduce duplication and share best practices and expertise throughout the fleet Examples:  Outage team (Genesee)  Shared Engineering / Specialist (placing them closer to the

30. Slide 30: Benchmarking

    Benchmarking Committed to benchmarking ourselves against the industry as we continue on our continuous improvement journey We utilize industry-leading sources of information including:  Solomon and Reliability Assessments (IDCON) Findings • Genesee 1 and 2 top decile availability • Improved reliabi

31. Slide 31: Continuous improvements

    Continuous improvements CBEC Unit 1 (LM 6000)  Inlet fogging  Improved heat rate; reduced emissions  Output up by 2-3 MW  Payback under one year Genesee 1 and 2  Capacity increased from 385 MW to 400 MW with no additional cost  Historical O&M spend higher than recovered in PPA  Availability ~

32. Slide 32: Continuous learning

    Continuous learning Promoting a culture of continuous learning and striving for excellence  Genesee 3 High Energy Piping (HEP) Program – Safety is #1 • Major issue identified during a scheduled outage; proactively remediated to mitigate future risks • Proactively built into Keephills 3  CBEC – Imp

33. Slide 33: Overview of planned major outages

    Overview of planned major outages Regular maintenance is key to delivering long-term high availability. Focus on trade-off between outage frequency/timing and impact on availability Cdn plants 2013 2014 Genesee Unit 1 – 27 Unit 2 – 24 days, $17M days, $18M Unit 3 – 27 days, $9M US plants 2013 2014 U

34. Slide 34: Summary

    Summary Revenue / Efficiency Cost Control Improvement Key Focus Areas Achieved through:  Comprehensive measuring of where we are strong and where we need to improve (Solomon)  Industry-leading reliability program  Improved sharing of best practices across the fleet; internal reorganization to pla

35. Slide 35: Merchant markets and portfolio optimization

    MERCHANT MARKETS AND PORTFOLIO OPTIMIZATION Bryan DeNeve, SVP Corporate Development & Commercial

36. Slide 36: Merchant markets

    Merchant markets Alberta US Northeast Plants under construction or development Plants in operation 36

37. Slide 37: Commodity portfolio risk management & optimization

    Commodity portfolio risk management & optimization Wholesale Markets Generation • Bi-lateral markets AB Commercial • Exchanges / ISO’s • Genesee 3 Commodity • Import / Export • CBEC Portfolio • Joffre Risk • Keephills 3 Management • Halkirk Wind • Sundance 5&6 (PPA) & Optimization Customers US NE Co

38. Slide 38: Managing power portfolios

    Managing power portfolios Risk management and optimization of power portfolios  Commodity operations – offering plant production into Energy Market and Ancillary Service market on a 24/7/365 basis  Optimization & trading – managing forward power portfolio exposures according to market views and co

39. Slide 39: 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 Source: AESO and CPC Estimates 39

40. Slide 40: Increasing certainty of coal unit retirement schedule

    Increasing certainty of coal unit retirement schedule Annual coal unit 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 retirements under 0 the recent federal Capital Stock -200 Turnover regulations -400 CASA regulations may result in coal

41. Slide 41: AB market design

    AB 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 capacity

42. Slide 42: Managing Alberta market exposures

    Managing Alberta market exposures Portfolio positioned to continue to capture upside volatility in the AB power market % of merchant position contracted 2013 2014 2015 Pre-Shepard 30% 4% 4% Post-Shepard 44% 44% 17% Portfolio price versus current forward prices $65 $60 $55 $50 2013 2014 2015 Contract

43. Slide 43: Clover Bar and Capital Power's portfolio

    Clover Bar and Capital Power’s portfolio Flexible peaking units used to supplement our AB network hub  Clover Bar units are used in a variety of ways to complement company’s portfolio strategies: • Backstop planned and unplanned outages • Capture upside in the event of power volatility and price sp

44. Slide 44: 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

45. Slide 45: New England Market

    New England Market Attractive long term supply dynamics Capacity market rule changes – floor likely to disappear Market in balance by 2017 Source: ISO-NE and CPC Estimates 45

46. Slide 46: Portfolio optimization

    Portfolio optimization Northeast ISONE market position update Hedged energy generation capacity 2013 2014 2015 ~50% 0% 0%  Lower power prices driven by a low gas price environment  2012 sparks spreads reflect additional generation coming online in 2011 and flat demand growth  Less earnings volati

47. Slide 47: Environmental commodities portfolio

    Environmental commodities portfolio Back-drop of increasing environmental regulation across all of the existing and targeted geographies that CPC operates in Alberta Market CPC action Natural Gas Combined Cycle GHG Emissions Trading AB/Canada GHG trading and (offsets) function has hedged exposure Sp

48. Slide 48: Commodity risk management

    Commodity risk management Approach and governance  Segregation of accountabilities across Front, Middle and Back Office areas  Control framework integrated within CPC’s Commodity Risk Policy, Procedures and Guidelines  Policy establishes framework for determining Commodity Risk Limits based on ab

49. Slide 49: Processes, systems and analytics

    Processes, systems and analytics New ETRM system went live in Oct/12, providing a more sophisticated portfolio optimization and growth 49

50. Slide 50: Commercial value creation – BC / Alberta

    Commercial value creation – BC / Alberta Optimizing plant inputs and outputs to deliver incremental bottom line value to the shareholder  Identify and implement non-commodity commercial actions to derive additional contribution from the AB and BC fleet of generation assets  Target exceeded in 2011

51. Slide 51: Commercial value creation - US NE and Mid-Atlantic

    Commercial value creation - US NE and Mid-Atlantic Optimizing plant inputs and outputs and the portfolio to deliver incremental bottom line value to the shareholder  Utilize Bridgeport’s designation as a Class Resource to participate in the Connecticut Renewable Portfolio Standard Objectives  Incr

52. Slide 52: Creating value through disciplined growth

    CREATING VALUE THROUGH DISCIPLINED GROWTH Bryan DeNeve, SVP Corporate Development & Commercial

53. Slide 53: Target markets

    Target markets B.C. Alberta Ontario US Northeast US Mid-Atlantic US Southwest Plants under construction or development Plants in operation 53

54. Slide 54: Framework for disciplined growth

    Framework for disciplined growth Capital Power’s strategy drives opportunity evaluation Merchant Geography Technology Flexibility Develop within Target Acquire Zone Financial Contracted 54

55. Slide 55: Alberta opportunities

    Alberta opportunities  Beyond Shepard, new generation is expected to be needed in the 2017- 2020 timeframe  Alberta market design is expected to continue to Capital Power provide timely pricing signals Energy Centre for the addition of new supply Shepard Energy Centre 55

56. Slide 56: Shepard Energy Centre (SEC)

    Shepard Energy Centre (SEC)  Acquired 50% interest in ENMAX’s Shepard facility  Project is 50% complete with a projected cost of $1.6B  Project is projected to be 5-10 cents accretive per year over first five years  After-tax unlevered returns expected to exceed 10% over project life Shepard Ene

57. Slide 57: Shepard is a strategic fit for Capital Power

    Shepard is a strategic fit for Capital Power Target region and networked hub  Alberta location adds to existing network hub which will facilitate additional economies of scale and trading synergies Sustainable cash flows  20-year tolling agreement on 50% of owned capacity with ENMAX  Additional 2

58. Slide 58: Halkirk

    Halkirk Financing plans for Shepard facility includes the planned divestiture of Halkirk in 2013 58

59. Slide 59: Shepard impact on contracted/merchant mix

    Shepard impact on contracted/merchant mix  Contracted operating margin improves Capital Power’s contracted / merchant mix from 2014 through 2016  Average weighted-age of our contracted EBITDA at 2015F would improve to 12.5 years with Shepard project compared to 10.6 years without the project Contr

60. Slide 60: Capital Power Energy Centre

    Capital Power Energy Centre  New gas-fired combined cycle facility in Alberta  Capacity is expected to be up to 900 MW  Expected to be completed in the 2017-2020 timeframe  Will utilize GE’s latest gas turbine technology  Assessing two attractive brownfield sites  Extensive construction experi

61. Slide 61: B.C. opportunities

    B.C. opportunities  Limited wind opportunities in the near term  Natural gas is gaining acceptance for electricity generation  Province is expected to continue to support IPPs  LNG may provide opportunities 61

62. Slide 62: US Southwest

    US Southwest  Low load growth and RPS has pushed out need for new supply  Continued uncertainty around market structure  Focused on developing fully contracted assets Nevada California Arizona New Mexico Sun Valley Southern CA opportunity 62

63. Slide 63: Sun Valley Energy Center

    Sun Valley Energy Center  300 MW of solar PV • Targeting long term PPAs with California LSEs • Projected COD in 2016-17 • Projected capital cost of ~$720M  300 MW of gas-fired generation • Targeting long-term PPAs with Arizona LSEs • Projected capital cost of ~$300M 63

64. Slide 64: Southern CA development opportunity

    Southern CA development opportunity  Up to 800 MW combined cycle opportunity targeting long term PPA with SDG&E  RFP expected in Q1 2013  Projected capital cost of up to $1B Development activities have been delayed to provide more time for stakeholder involvement and to better align with expected

65. Slide 65: Ontario

    Ontario  FIT unlikely to provide material opportunities in near term  Minimal development opportunities given slow load growth and nuclear life extension  Longer term renewable and natural gas opportunities K2 Wind Port Dover & Nanticoke 65

66. Slide 66: Development of K2 Wind Ontario

    Development of K2 Wind Ontario  Capital Power, Samsung and Pattern have formed a limited partnership agreement to construction and operate  270 MW wind project located in southwestern Ontario  20-year PPA with Ontario Power Authority for $135/MWh  Submitted REA Q4/12, approval REA expected in Q2

67. Slide 67: Creating value through disciplined growth

    Creating value through disciplined growth  Since the formation of Capital Power, growth includes: • Development of four wind projects (Quality Wind, Halkirk, PD&N and K2) • Acquisition of Island Generation and Target the US NE assets (Rumford, Tiverton and Bridgeport) Zone • 50% JV on the Shepard a

68. Slide 68: Actual performance has met expectations

    Actual performance has met expectations Total business case of $334M in EBITDA; compared to actual of $330M EBITDA ($M) Plant availability $140 100% 90% $120 80% $100 70% $80 60% 50% $60 40% $40 30% 20% $20 10% $- 0% US NE Keephills 3 Island CBEC US NE Keephills 3 Island CBEC Plants Generation Plant

69. Slide 69: Strong financial performance of wind projects

    Strong financial performance of wind projects  Wind projects are forecast to provide $165M - $175M of annual cash flow before financing  Strong accretion of ~$1.05 - $1.10 in cash flow per share and ~$0.35 - $0.40 in EPS for all 4 wind projects Forecast cash flow from wind projects 180,000 160,000

70. Slide 70: Managing development: a competitive advantage

    MANAGING DEVELOPMENT A Competitive Advantage Darcy Trufyn, SVP Operations, Engineering & Construction

71. Slide 71: Developments – a competitive advantage

    Developments – a competitive advantage Successful completion of Quality Wind Successful completion of Halkirk Wind Port Dover & Nanticoke – construction underway 71

72. Slide 72: Quality Wind Project

    QUALITY WIND PROJECT On time and under budget

73. Slide 73: Quality Wind

    Quality Wind Developing on time and under budget Project Scope:  142 MW; near Tumbler Ridge, B.C.  79 Vestas V90/V100 1.8 MW turbines  43 kilometers of roads  22 kilometer of HV transmission Successful execution:  COD achieved Nov 8/12  Forecast cost 10%< $455M budget 73

74. Slide 74: Quality Wind

    Quality Wind Successful wind development that demonstrates CPC’s capabilities  A “quality” Capital Power development • CPC managed project to ensure a well built and safe installation • Built in difficult terrain and conditions • Industry leading equipment – Vestas • Optimized layout using a combin

75. Slide 75: Halkirk Wind Project

    HALKIRK WIND PROJECT Ahead of schedule and under budget

76. Slide 76: Halkirk Wind

    Halkirk Wind Developed under budget and ahead of schedule Project Scope  150 MW; Halkirk, Alberta  83 Vestas V80 1.8 MW turbines  31 kilometers of roads  80 kilometers of underground collectors Another Successful Execution  COD achieved Dec 1/12 – 14 days ahead of planned schedule  Forecast co

77. Slide 77: Halkirk Wind

    Halkirk Wind Another successful development • CPC managed project – well built and a safe installation • Built ahead of schedule in spite of project challenges • Industry leading equipment – Vestas • Strong community relations established – delivered on our commitments • Safety – no lost time incide

78. Slide 78: Port Dover & Nanticoke Wind Project

    Port Dover & Nanticoke Wind Project Building upon our competitive advantage

79. Slide 79: Port Dover & Nanticoke

    Port Dover & Nanticoke Building on success Project Scope  105 MW; near Port Dover & Nanticoke, Ontario  58 Vestas V90 1.8 MW turbines  28 kilometers of roads  32 kilometers of underground collectors Key indicators  REA received Jul/12. Appeal to be released Jan/13  Construction commenced Sep/1

80. Slide 80: Port Dover & Nanticoke

    Port Dover & Nanticoke Another anticipated Capital Power success A “quality” development  CPC managed project. All major project elements secured on a firm price basis  Land swap with neighboring wind farm created more efficient project  Delays in project approval have allowed more front end plan

81. Slide 81: Development - a competitive advantage

    Development - a competitive advantage We have invested in our future  Strong management team with proven capabilities  “In house” expertise and depth in power plants of all types  Established systems, tools and processes for reliable and effective execution  Excellent risk management processes C

82. Slide 82: Quality Wind - Video

    Quality Wind - Video 7 Capital¢S REY, apial®

83. Slide 83: Growing cash flows and shareholder value

    GROWING CASH FLOWS AND SHAREHOLDER VALUE Finance Overview Stuart Lee, SVP Finance & CFO

84. Slide 84: Financial strategy

    Financial strategy Investment grade credit rating Manage Well F/X and spread interest debt rate risk maturities Maintain ongoing access Financial to cost competitive Strategy capital to fund sustainable growth Economic throughout business Financial discipline in flexibility cycle growth Stable divid

85. Slide 85: Financial strength and access to capital

    Financial strength and access to capital Strong balance sheet  Assets of ~$5.0B with ~$1.6B of long-term debt  $1.2B in credit facilities, of which ~$1.0B available • In 2012 added $300M accordion feature Debt to Total Capitalization 50% Long-term target 40% - 50% 40% 30% 20% 36% 36% 34% 10% 0% (1

86. Slide 86: Capital markets financings & liquidity

    Capital markets financings & liquidity $250M raised from issuances of debt in 2012  $250M, 7-year medium term note in Feb/12 Secondary offering of common shares by EPCOR in 2012  Apr/12, 9.8 M shares, ~$230M gross proceeds to EPCOR Increased public float & improved liquidity 100  Fully diluted ma

87. Slide 87: 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 $350 $314 $305 $300 $255 $250 US$230 $200 $179 ($M) $150 $144 $106 $100 US$65 $50 $19 $13 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2026 EPCOR Debt Capita

88. Slide 88: Development projects - capex

    Development projects - capex Prior to Project ($M) 2012 2012E 2013E 2014E Total Halkirk $183 $137 $25 - $345(1) Quality Wind $155 $255 - - $410 Port Dover Nanticoke $49 $40 $251 - $340 K2 Wind Ontario $1 $3 $21 $33 $58(2) Shepard Centre - $50 $335 $470 $855 Total growth capex $485 $632 $503 Continue

89. Slide 89: Sustaining capital expenditures

    Sustaining capital expenditures ($M) 2012E 2013E Plant maintenance capex • Planned outages $34 $49 • Sustaining capex $61 $37 Other $24 $11 Total sustaining capex $119 $97 Genesee land expense $18 $9  2013 major planned outages; Genesee 1 and Keephills 3  Other Canadian plants $16M and US plants $

90. Slide 90: Operating expenses

    Operating expenses Expected operating expenses in 2013 relatively flat to 2012 levels  Offset inflationary costs and additional plant costs through cost control measures ($M) 2010 2011 2012E 2013E Other raw materials $104 $149 $136 $133 Staff costs $175 $155 $146 $146 Admin and Other Expenses $75 $

91. Slide 91: 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) 33% ~ 37% $300  32%-40% of 2010-12 FFO is 35% discretionary cash flow ($M) $250 35%  Additional cash flows in 2013 from: $200 35% ~ 27

92. Slide 92: Strong cash flow supports stability of dividend

    Strong cash flow supports stability of dividend  Targeting $385M - $415M in FFO in 2013 • ~36% expected to be discretionary cash flow  Additional cash flows from recently completed wind projects (Quality Wind, Halkirk) in 2012 with incremental cash flows from PD&N, K2 Wind Ontario and interest in

93. Slide 93: Attractive yields relative to peers

    Attractive yields relative to peers 2012E Dividend and AFFO yields(1) Capital Power 5.7% 12.8% Atlantic Power Corp. 9.7% 12.0% Canadian Utilities 2.7% 11.1% Capstone Infrastructure Corp. 7.4% 10.9% Boralex Inc. 10.6% TransCanada Corp. 3.9% 9.0% Dividend yield TransAlta Corp. 7.6% 8.8% average = 5.2%

94. Slide 94: 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  Financing PD&N and K2 development projects with internally generated funds  In 2014, expect Shepard construction costs to be financed through cash from operations and mo

95. Slide 95: AB commercial portfolio positions

    AB commercial portfolio positions Acquisition of 50% interest in Shepard increases our hedged position  Alberta portfolio hedged positions for AB baseload plants and Sundance PPA (% sold forward) 2013 2014 2015 Hedged positions (% hedged) 44% 44% 17% Average hedged prices ($/MWh) Mid-$60 Mid-$50 Mi

96. Slide 96: New England power price sensitivities

    New England power price sensitivities  Sensitivity analysis(1) to +/- $1.00 MWh change in New England spark spreads • 2013: +$5.7M and -$6.0M to EBITDA • 2014: +$6.5M and -$7.1M to EBITDA • 2015: +$7.4M and -$7M to EBITDA Expect market fundamentals in US Eastern region will normalize in future year

97. Slide 97: Accounting and accretion for Halkirk Wind

    Accounting and accretion for Halkirk Wind Halkirk Wind  COD Dec 1/12 with costs slightly under budget  Project is not a finance lease and will have depreciation impact. Lower EPS impact, strong cash flow  Annual cash flow of $22M ($0.20 - $0.25 per share) after financing costs  Project expected

98. Slide 98: Accounting and accretion for Quality Wind

    Accounting and accretion for Quality Wind Quality Wind  Finance lease – Interest income with a portion of revenue going to the balance sheet to reduce long term accounts receivables  No depreciation  COD Nov 8/12, costs ~10% under budget  Annual cash flow of $28M ($0.25 - $0.30 per share) after

99. Slide 99: Financial outlook – 2013 vs. 2012

    Financial outlook – 2013 vs. 2012 Expect year-over-year increase in capacity and production  Full year of operations from Quality Wind and Halkirk Wind  EBITDA from North Carolina plants expected to be comparable to 2012 based on better operating performance partially offset by lower contract REC

100. Slide 100: 2013 Financial targets

     2013 Financial targets(1) Normalized EPS of $1.20 - $1.40 and CFPS of $3.80 - $4.20 are based on a forecasted average Alberta power price of $58/MWh Normalized EPS target Funds from operations target ($M) $2.00 $500 $1.50 to $380 to $1.50 $400 $385 to $1.70 $1.20 to $420 $415 $1.40 $300 $1.00 $200 $

101. Slide 101: 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 4.0 15% 3.0 10% 2.0 5% 1.0 0% 0.0 2012E 2013E 2012E 2013E Above S&P financial criteria for investment grade rating AFFO/Adj. Debt Corporate Liquidity(2) 25

102. Slide 102: Good track record on achieving annual financial guidance

     Good track record on achieving annual financial guidance Do not provide or manage quarterly guidance due to power price exposure and timing of major outages  Seasonality in quarterly results • Q2 results are historically lower due to Genesee outages and shoulder season power prices and not reflecte

103. Slide 103: Delivering on financial strategy

     Delivering on financial strategy Capital Power remains committed to the financial strategy established at the IPO  Maintained strong balance sheet with relatively conservative long term debt to total capitalization ratio of 40-50%  Committed to maintaining investment grade credit rating  Strong d

104. Slide 104: Focused on the future

     Focused on the future 2013 corporate priorities and summary Brian Vaasjo, President & CEO

105. Slide 105: 2013 Corporate priorities

     2013 Corporate priorities Priority: Deliver strong operational performance from a young, well- maintained generation fleet Operational Targets ≥ 93% Capacity-weighted plant availability (reflects two planned turnarounds at Genesee 1 and Keephills 3) ≤ $105M Maintenance capital (plant maintenance cap

106. Slide 106: 2013 Corporate priorities (cont'd)

     2013 Corporate priorities (cont’d) Priority: Enhance value for shareholders by delivering accretive growth from current developments and identifying and committing to new opportunities that meet investment criteria Development and Construction Targets On-time, on-budget and Port Dover & Nanticoke wi

107. Slide 107: 2013 Financial targets

     2013 Financial targets(1) Normalized EPS of $1.20 - $1.40 and CFPS of $3.80 - $4.20 are based on a forecasted average Alberta power price of $58/MWh Normalized EPS target Funds from operations target ($M) $2.00 $500 $1.50 to $380 to $1.50 $400 $385 to $1.70 $1.20 to $420 $415 $1.40 $300 $1.00 $200 $

108. Slide 108: Summary

     Summary Capital Power is well-positioned to deliver shareholder value  Strategy is designed to create value throughout a business cycle  One of the dominant power producers in the Alberta power market • Repositioned AB portfolio to reduce downside and increase upside • Recognizing future opportuni

109. Slide 109: Non-GAAP financial measures

     Non-GAAP financial measures The Company uses (i) EBITDA, (ii) funds from operations, (iii) funds from operations excluding non-controlling interests in CPILP, (iv) cash flow per share, (v) dividend coverage ratio, (vi) normalized earnings attributable to common shareholders, (vii) normalized earning

110. Slide 110: Forward-looking information

     Forward-looking information Certain information in this Investor Day presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial and operating performance, events or strategies. The forward-looking information or statements are provided to in

Capital Power — Investor Day (December 2012) on 6ix