Capital Power Corporation

Good day, and thank you for standing by. Welcome to the 2024 Second Quarter Capital Power Analyst Conference Call. At this time, all participants are in listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your first speaker today, Roy Arthur, Vice President of Investment Relations. Please go ahead.

Good morning, and thank you for joining us to review Capital Power's second quarter 2024 results, which we released earlier today. Our second quarter report and the presentation for this conference call are posted on our website at CapitalPower.com. First, our call will feature business highlights that will be presented by Avik Dey, President and CEO. Then Sandra Haskins, our Senior Vice President of Finance and CFO, will provide a review of the financial performance of the business. Once we have finished discussing the quarter for Capital Power, Pauline McLean, our Senior Vice President, External Relations and Chief Legal Officer, will provide a brief Alberta regulatory update. At that time, Abic will provide some closing remarks and we will then welcome questions from the analysts in our interactive Q&A session. Before we start, I'd like to remind everyone that certain statements about future events made on the call are forward-looking in nature and are based on certain assumptions and analysis made by the company. Actual results could differ materially from the company's expectations due to various risks and uncertainties associated with our business. please refer to the cautionary statement on forward-looking information on slide 3 or our regulatory filings available on CDAR+. In today's discussion, we will be referring to various non-GAAP financial measures and ratios, also noted on slide 3. These measures are not defined financial measures according to GAAP and do not have standardized meetings prescribed by GAAP and therefore are unlikely to be comparable to similar measures used by other enterprises. These measures are provided to complement the gap measures which are provided in the analysis of the company's results from management's perspective. Reconciliations of these non-gap financial measures to their nearest gap measures can be found in our 2023 Integrated Annual Report. Before we begin the presentation, I would like to acknowledge that Capital Powers Head Office in Edmonton, is located within the traditional and contemporary home of many Indigenous peoples of the Treaty 6 region and the Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are in these areas and whose presence continues to enrich the community and our lives as we learn more about the Indigenous history of the lands on which we live and work. With that, I will turn it over to Avik for his remarks.

Thanks, Roy, and good morning, everyone. During the second quarter of 2024, we continued to make significant strides across our three strategic areas of focus as we continue our journey of powering change by changing power. In this quarter, we delivered nine terawatt hours of reliable and affordable power across our strategically positioned fleet of assets, adding to the generation delivered for the quarter or the megawatts from our newly acquired assets that continue to perform well and enhance the diversification of our fleet. As part of our ongoing commitment to investing in and optimizing our assets to maximize their operational efficiency in life, we have progressed our prescribed asset maintenance schedule. Year-to-date, we have finished approximately half of our 295 scheduled outage days for 2024 on our fleet and remain on track to our guided range of $180 to $200 million of sustaining capex. We are proud of our significant milestone of being 100% off call, five years ahead of the government mandate, achieving simple cycle commercial operation on Genesee 1 and 2 this quarter. As we will talk about, our Ontario portfolio continues to generate steady cash flows and is proceeding with respect to our five projects that upon completion will add 350 megawatts to our portfolio. In addition, we entered into a PPA with Duke Energy for the North Carolina solar projects as part of our ongoing effort to de-risk the cash flows in our business and create value for our customers. Lastly, we continue to pursue the creation of end-to-end solutions for our customers as we are actively pursuing data center opportunities in Canada and the US. This effort has been more focused on the US until recently, However, for reasons Pauline will discuss later in the call, our confidence level is growing for this type of load coming to Alberta. Regarding Genesee, we are continuing to advance this project and will briefly touch on the significant milestones. In Q2, we achieved simple cycle commercial operations on both Unit 1 and Unit 2, resulting in 411 megawatts of capacity for each of Unit 1 and Unit 2. You will have seen these units, Genesee Repower 1 and 2, contributing base load megawatts to the grid on the ASO website. We are now advancing toward combined cycle operation of Unit 1, occurring as early as October, and aiming for Unit 2 shortly thereafter. This will take us to 466 megawatts of total capacity. Finally, in the new year, we will aim to implement a technical solution allowing us to exceed the current MSCC set by the ASO, taking us to 566 megawatts. As a reminder, total capacity for these units is close to 666 megawatts, meaning the total capacity for G1 and G2 is about 1300 megawatts. 512 megawatts higher than the combined capacity of the legacy dual fuel units. As we discussed at Investor Day, we see upside and look forward to working with the ASO on a solution to unlock the total capacity of Genesee 1 and 2 for Alberta. Our Ontario asset base continues to contribute stable contracted revenues in addition to compelling risk-adjusted return potential for our growth project. At Gorway, we saw generation of 552 gigawatt hours due to execution of scheduled turnarounds. When combined with our Q1 generation of 799 gigawatt hours, we are on pace for a generation close to what we saw in 2023, which was a record year for generation at this facility. The battery energy storage solutions at York and Gorway will mobilize and commence construction in Q3 of 2024. We now have greater visibility to the total cost, which is why we're able to reduce our total cost estimate for the two best projects and the East Windsor expansion to $600 million from $650 million as we indicated in Q1. Lastly, our upgrade projects at Gorway and York are proceeding on time and favorable relative to budget. I would like to provide an update on our US business, which has continued to grow and demonstrate the resilience of our business model. As a result of our recent M&A, this business currently comprises 10 generation facilities and just over 50% of our total capacity. This is up from approximately 39% in Q2 of 2023. From an adjusted EBITDA standpoint, we have seen the U.S. contribution rise from 26% in Q2 of 2023 to 43% in Q2 2024. While our strong contractual underpinning drives cash flow stability near term, longer term the strong fundamentals continue to support the thesis of natural gas fire generation playing an essential role. in reliable and affordable grids for North America. The specific trends we continue to see are, one, strong demand growth that we expect to continue long-term, such as reshoring EV mandates data centers, two, continued retirements of coal-fired facilities, and three, further advancement of renewable generation capacity. Now I would like to zoom in a bit and provide some additional data points that we believe reaffirm our long-term strategy and outlook for natural gas fire generation. Our U.S. thermal portfolio now encompasses 4.2 gigawatts of capacity, resulting in nearly four terawatt hours of generation in Q2 2024. For this quarter, I would like to highlight the performance of Midland Cogeneration Venture, which we acquired in 2022. This asset has contributed seven full quarters in our portfolio and has seen steadily rising utilization during that time. In Q2 2024, MCV achieved 1.45 terawatt hour of generation, implying a capacity factor of just over 80%, making it a record in this asset's 34-year history. This is a tangible example of the strong fundamentals we have sought out in our M&A strategy coming to fruition. Looking more broadly at our U.S. thermal portfolio, we have six facilities with approximately 5,000 acres of surplus land. We believe the strong fundamentals we continue to see strengthen the case for recontracting, optimization, and expansion of existing facilities in the near to medium term. Long-term, our surplus land can be used for other balanced energy solutions up to and including greenfield growth. We look forward to providing further updates as we advance commercial dialogue on these fronts. And with that, I will hand it over to Sandra to provide a financial update for the quarter.