Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (January 2012)
35 slides from Capital Power's roadshow presentation, January 2012
Slide 1: Investor Meetings
Investor Meetings Stuart Lee, SVP Finance & CFO January, 2012
Slide 2: Capital Power overview
Capital Power overview Growth-oriented independent power producer (IPP) • Trading on the TSX (CPX: fully diluted market cap ~$2.4B) • Spin-off of power generation assets from EPCOR/IPO in mid-2009 High quality generation portfolio • Young and modern fleet with generation capacity of ~3,300 MW • Gene
Slide 3: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 15 facilities, more than 3,300 MW(1) Segmented owned capacity by MW(1) Additional facilities to come on line • 3 wind projects (397 MW) 4% located in BC, AB, and ON 11% with expected CODs in 2012 & 28% 2013 • 1 wind project (90 MW net) in ON wi
Slide 4: Balanced portfolio of merchant and contracted generation
Balanced portfolio of merchant and contracted generation(1) Continue to have strong exposure to attractive Alberta power market Today - 2012 Year-end 2014E 15 facilities (3,308 MW) 17 facilities (3,755 MW(2)) • 40% capacity contracted • 45% capacity contracted 4% 4% 11% 17% 28% 32% 25% 24% 28% 27% A
Slide 5: Modern fleet
Modern fleet Average weighted facility age of the current fleet is 12.1 years(1) 4 new projects (487 MW) begin commercial operations in 2012 - 2014 CBEC 3 Facility age CBEC 2 CBEC 1 Remaining life Island Generation Gas Joffre (~25 years remaining life) Tiverton Rumford Bridgeport Kingsbridge I W
Slide 6: Technology focus
Technology focus(1) CPC’s operations and growth are focused on four fuel sources: natural gas, coal, wind and solar Current By 2014 year-end 15 facilities (3,308 MW) 17 facilities (3,755 MW(2)) 1% each 14% 44% 54% 47% 39% Gas Wind Hydro Coal & solid fuels Projects in development will increase owne
Slide 7: Proven operating excellence
Proven operating excellence Capital Power has maintained high operating availability over a growing fleet and production volumes Historical and Estimated Operating Performance 16,000 92% 96% 90% 92% 14,000 Generation (GWh) 12,000 10,000 8,000 Q3 6,000 YTD 4,000 2,000 - 2008 2009 2010 2011E Generatio
Slide 8: Proven construction capability
Proven construction capability Foundation of proven capability and processes in construction Significant experience in the construction and operation of both thermal (coal, natural gas) and renewable (wind, biomass, small hydro) facilities Capital Power (predecessor EPCOR Utilities Inc.) led c
Slide 9: Financial strength and access to capital
Financial strength and access to capital Current BBB investment grade credit rating from S&P and DBRS $900M in debt issues since IPO; at ~36%, debt to capitalization ratio(1) remains below long-term target zone Public float growth has enhanced liquidity and equity market access 2.7x increase i
Slide 10: Credit rating agency metrics
Credit rating agency metrics(1) Expect to meet DBRS financial criteria in 2012 Cash flow/Debt EBITDA/Interest coverage 30% 5.0 4.0 20% 3.0 2.0 10% 1.0 0% 0.0 2010 2011E 2012E 2010 2011E 2012E On track to meet S&P financial criteria by 2012 - 2013 AFFO/Adj. Debt AFFO/ Adj. interest 30% 5.0 (2) 4.0 20
Slide 11: Growth from Alberta power market
Growth from Alberta power market Alberta (AB) has a competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO); market has an installed generation capacity of ~13,000 MW No capacity market – power generators must recover all costs through r
Slide 12: Capturing upside from AB power prices
Capturing upside from AB power prices Hedging positions based primarily on generation from Genesee 3 baseload coal plant, output from the Sundance PPA and includes Keephills 3 (COD Sep 1/11) Actively trading (portfolio optimization) throughout various time periods to create incremental value to
Slide 13: Alberta portfolio hedges and sensitivity
Alberta portfolio hedges and sensitivity(1) Well positioned to capture upside from rising power prices Alberta (baseload plants & PPA) hedged positions as of Nov 30/11 2012 2013 2014 Hedged positions (% hedged) ~50% ~20% ~5% Average hedged prices Mid-$60/MWh Mid-$60/MWh Low-$60/MWh Sensitivity a
Slide 14: New England power price sensitivities
New England power price sensitivities(1) Sensitivity analysis to +$2.50 and -$2.50 MWh change in New England spark spreads • 2012: +$7M and -$6M to EBITDA • 2013: +$7M and -$6M to EBITDA • 2014: +$15M and -$13M to EBITDA Capacity payments represent ~40% to 45% of expected EBITDA until 2014 Alt
Slide 15: Framework for disciplined growth
Framework for disciplined growth Capital Power’s strategy drives opportunity evaluation Merchant Geography Technology Financial Flexibility Develop within Target Acquire Zone Contracted 15
Slide 16: North American footprint & target markets
North American footprint & target markets Ownership interest in 15 facilities with more than 3,300 MW Developing 4 wind projects in BC, AB & Western Canada ON that will add 487 MW between 2012-14 Ontario Continue to invest in attractive AB power market (53% of owned US Northeast capacity is in A
Slide 17: Creating value through disciplined growth
Creating value through disciplined growth Development and acquisition activity has been in-line with strategy Contracted assets account for 65% of growth on committed capital basis; established hub in US NE with 1,050 MW of generation assets Projected unlevered returns range from 9% to 11% with
Slide 18: Capital Power's growth
Capital Power’s growth(1) 487 MW of committed projects will increase contracted cash flows in 2012-2014 4,000 K2 Wind Ontario 3,500 Port Dover & Nanticoke Halkirk Wind 3,000 Quality Wind Roxboro & Southport 2,500 Keephills 3 MW 2,000 New England Island Generation 1,500 CBEC 2 & 3 CPC base at IPO 1,0
Slide 19: Strong cash flow generation
Strong cash flow generation Generating significant discretionary cash flow net of dividends and maintenance capex Discretionary cash flow represents 47% of Funds from operations(1) Wind projects will add $140-$160M of EBITDA in 2014 Keephills 3 will start generating full year cash flows in 201
Slide 20: Financial targets reflect organic growth
Financial targets reflect organic growth(1) At an Alberta power price of $74/MWh, targeting normalized EPS to rise to $1.50 - $1.70, and CFPS to rise to $3.90 - $4.30 Normalized EPS targets Funds from operations targets ($M) $2.00 $500 $1.50 Est. $1.50–$1.70 $400 Est. $380–$420 $1.25 $337 $300 $1.00
Slide 21: 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 22: AB reserve margin forecast
Appendix AB reserve margin forecast Supply-demand balance (reserve margin) expected to be tight until Shepard (800 MW) COD in 2015, and then gradually tighten through the early 2020s • Bringing significant upside to power prices in AB market When AB net reserve margin falls below 10%, new genera
Slide 23: AB system heat rate forecast
Appendix AB system heat rate forecast Portfolio bidding keeping prices and system heat rates high Alberta expected to grow at above-national average rates due to the impact of oil sands activity Capital Stock Turnover expected to drive major coal retirements with upward impact on prices 2015 o
Slide 24: AB cost of generation (COG)
Appendix AB cost of generation (COG) Sustained higher power prices are required to incent new builds Current market fairly well-supplied, significantly tighter now due to shutdown of Sundance 1 & 2 & COD of Keephills 3 Source: Internal forecast – Fall 2011 After Shepard COD in 2015, additional
Slide 25: AB power market (new builds/retirements)
Appendix AB power market (new builds/retirements)(1) New builds/retirements (major projects of 100+ MW) over the next 5 years based on internal assumptions Project Capacity Developer Type COD year (MW) Halkirk 150 Capital Power Wind 2012 Shepard Energy 800 Enmax Combined 2015 Centre cycle Facility
Slide 26: Summary of assets
Appendix Summary of assets Clover Bar Energy Clover Bar Genesee 1 Genesee 2 Genesee 3 Keephills 3 Joffre Centre Landfill Alberta Contracted Alberta Commercial Electric 410 MW 410 MW 495 MW 495 MW 480 MW 243 MW 4.8 MW Capacity % owned / 100 / 100 100 / 100 50 / 100 50 / 0 40 / 0 100 / 100 100 / 100 o
Slide 27: Summary of assets (cont'd)
Appendix Summary of assets (cont’d) Island Kingsbridge 1 Miller Creek Brown Lake Generation Tiverton Rumford Bridgeport Ontario & British Columbia Contracted US Northeast Commercial Electric 40 MW 33 MW 7 MW 275 MW 279 MW 270 MW 520 MW Capacity % owned / 100 / 100 100 / 100 100 / 100 100 / 100 100 /
Slide 28: Summary of projects under development
Appendix Summary of projects under development Halkirk K2 Wind Ontario Quality Wind Port Dover & Nanticoke Alberta Commercial & Ontario & British Columbia Contracted Contracted Electric Capacity 150 MW 270 MW 142 MW 105 MW % owned / operated 100 / 100 33.3% owned 100 / 100 100 / 100 Location Halkirk
Slide 29: Non-IFRS financial measures
Non-IFRS financial measures The Company uses (i) funds from operations, (ii) funds from operations excluding non-controlling interests in CPILP, (iii) cash flow per share, (iv) dividend coverage ratio as financial performance measures, (v) normalized earnings attributable to common shareholders, and
Slide 30: Non-IFRS financial measures (cont'd)
Non-IFRS financial measures (cont’d) A reconciliation of (i) funds from operations and (ii) funds from operations excluding non-controlling interests in CPILP, to cash flows from operating activities is as follows: (unaudited, $millions) Nine months Year Six months ended ended ended Sept 30, 2011 De
Slide 31: Non-IFRS financial measures (cont'd)
Non-IFRS financial measures (cont’d) Dividend Coverage Ratio Capital Power uses the dividend coverage ratio as a measure of the Company’s ability to pay dividends and distributions to its shareholders and CPLP’s exchangeable common limited partnership unitholders from funds it generates from operati
Slide 32: Non-IFRS financial measures (cont'd)
Non-IFRS financial measures (cont’d) Nine months Year Six months (unaudited, $millions except earnings (loss) per share) ended ended ended Sept 30, 2011 Dec 31, 2010 Dec 31, 2009 (1) Earnings (loss) per share $ (0.27) $ 0.77 $ 0.97 Net income (loss) attributable to shareholders (7) 17 21 Preferred s
Slide 33: 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 34: Forward-looking information (cont'd)
Forward-looking information (cont’d) assumptions used to develop these forward-looking statements include, but are not limited to: (i) the operation of Capital Power's facilities; (ii) power plant availability and dispatch; (iii) Capital Power's financial position and credit facilities and sources o
Slide 35: 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 35