Capital Power Corporation

Good day, and thank you for standing by. Welcome to the Capital Power Q3 24 Analyst Conference Call. At this time, while participants are in a listen-only mode, after the 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 that 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 now like to hand the call over to Roy Arthur, Vice President of Investor Relations. Please go ahead.

Good morning and thank you for joining us to review Capital Power's third quarter 2024 results, which we released earlier today. Our third quarter report and the presentation for this conference call are available on our website. During today's call, our President and CEO, Avik Dey, will offer an update on our business by strategic focus area. Following that, Sandra Haskins will present a review of the quarter-end financials for the company. Avik will then wrap up with his closing remarks, after which we will open the floor to questions from analysts in our interactive Q&A session. Before we start, I would like to remind everyone that certain statements about the 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 of our regulatory filings available on CR+. 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 meanings prescribed by GAAP and therefore are unlikely to be comparable to similar measures used by other enterprises. These measures are provided to complement gap measures which are in the analysis of the company's results from management's perspective. Reconciliations of non-gap financial measures to the nearest gap measures can be found in our 2023 Integrated Annual Report. Before we begin our presentation, I would like to acknowledge that Capital Power's 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 Abbott for his remarks.

Thanks, Roy, and good morning, everyone. During the third quarter of 2024, we made 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 a record 11 terawatt hours of reliable and affordable power across our strategically positioned fleet of assets. While the increase in generation was largely driven by the acquisition of new assets at La Paloma and Harkahala, it would still be a record quarter for generation if the assets were in our portfolio in Q3 2023. I will provide more context later in the presentation, but this increase in demand reinforces our conviction that natural gas thermal generation will continue to play a key role in the power grid for the foreseeable future. In addition to generating more megawatts, our portfolio's diversification continues to increase with U.S. assets contributing 53% of Q3 2024 EBITDA. The newly acquired assets, along with our legacy U.S. generating facilities, are now providing upside in our portfolio during a period when Alberta pool prices are depressed, demonstrating the value of our diversification strategy. We also continue to invest in our assets and have completed just over 60% of the scheduled outage days budgeted for 2024, and are on track to meet our guidance range of $180 to $200 million of sustaining capex. From a build perspective, we have continued to advance 10 growth projects across our portfolio that will result in a combined 1.1 gigawatts of incremental capacity. Notably, the Genesee Repower Project has reached a critical milestone. We have started commissioning the repower units. We are proud to announce a three-year agreement with four First Nations, which provides an opportunity to acquire a combined total of 25% of housework to wind. As part of our commitment to reconciliation, the agreement provides an equitable profit-sharing model that supports a pathway for future equity ownership that can support these nations with sustainable income throughout the lifetime of the project's operations. On the data center front, as many of you will have seen, we have two projects in the ASO Connection queue for a total of 1.5 gigawatts of load at the Genesee site. While our discussions have not yet given rise to an announcement, our confidence level in playing a leadership role providing power for the build out of data centers in the U.S. and Canada is rising. I will conclude my remarks with some perspectives on why before handing it over to Sandra. Key markets in the U.S. continue to be a core focus for strategic flexible generation growth because of the strong fundamentals. Allow me to briefly touch on this and then zoom in on our business. Total U.S. combined cycle generation has grown from approximately 1,200 terawatt hours to 1,500 terawatt hours from 2018 to 2023, implying a CAGR of 4%. while total power generation has been much more modest at 0.5 percent CAGR. The growth in net gas power generation with limited new capacity being added has driven up capacity factors at existing facilities. Looking forward, significant incremental capacity build-out is not expected while demand continues to grow. This translates into rising capacity factors at existing facilities in the years to come. We have seen this same trend in our own portfolio, but in a more dramatic fashion. In 2024, year to date, our U.S. thermal and nat gas assets had a capacity factor of 53%. This is up from 31% in 2021. While the increase does not all translate directly into higher cash flow generation, for contracted assets in the corresponding time period, it provides material upside for recontracting the assets and enhances future value of those same assets. For assets with merchant upside, like La Paloma and MCV, higher capacity factors provide benefit from energy exposure. Both of these facilities recorded capacity factors above the average this quarter, and boosted our U.S. EBITDA contribution to the contribution of the total portfolio. These broad-based and strong fundamentals increase our confidence in re-contracting all our U.S. flexible generation assets in the medium to long term. Currently, the weighted average contract life of our U.S. assets is about five to seven years. we are actively engaged in negotiation with respect to amending and extending these agreements. This dynamic stands in contrast to the typical timeline for contract renegotiation. Ordinarily, we would negotiate contract extensions with 18 to 24 months prior to contract expiry. There's been a clear shift in that timeline. As a result, we anticipate the negotiations to result in terms that more accurately reflect the value of these facilities. Even without the benefit of recontracting, the contribution from our US assets continues to rise in the overall portfolio. From a generation perspective, US assets represented 54% of the record 11 terawatt hours we generated this quarter. EBITDA contribution from the US has risen to a similar level of 53% for Q3 2024, up from 40% in the same period last year. The foundation of our business continues to be our sound contractual underpinning. However, cash flow growth is coming into focus through re-contracting and expansion as it becomes clear that natural gas fire generation will play an essential role in reliable and affordable grids across North America for longer than many had anticipated. While the longer term is exciting, near term we remain focused on growth projects underway. I will now briefly touch on this, starting with our flexible generation portfolio. Currently, we are building six flexible generation projects. Genesee Repower, plus our five projects in Ontario, for a total of approximately 850 megawatts of incremental capacity. These projects are slated to achieve in-service dates in late 2024 to 2026. The bulk of this incremental capacity is the Genesee repower project. Whereas noted earlier, we are in the process of commissioning Unit 1 for combined cycle operations. This unit has now dispatched megawatts as part of commissioning and is approaching COD. Unit 2 has begun commissioning and is on track for combined cycle commercial, and we are reaffirming our existing CapEx estimates of $1.55 to $1.65 billion for the Genesee Repower Project. The battery energy storage solutions at York and Goraway mobilized and commenced construction during the third quarter. At this point in time, there is no further update to our CapEx estimate of $600 million for the Ontario BEST projects and the East Windsor expansion. Lastly, our uprate projects at Gorway and York are proceeding on time and favorable relative to budget. We have completed one out of three of the outages for the Gorway uprate and expect to have approximately 26 megawatts of incremental capacity at the facility online by the end of the year. Moving to renewables, our development portfolio, we are advancing four different projects with approximately 300 megawatts of capacity and commercial operation dates ranging from late 2024 and into 2027. This consists of three solar projects with a total of 180 megawatts of capacity located in North Carolina. These assets are contracted with a weighted average life of 15 years. Additionally, we have one wind project, Halcurt II, which is approaching completion by the end of this year in Alberta. As discussed at the beginning of the call, we are proud of our partnership agreement with Maskwacis First Nations at Halcurt II. It is one example of our ability to constructively engage with stakeholders that distinguishes us from many other operators. Legally formalizing this agreement was the culmination of long-term relationship building informed by a deep understanding of the goals of the counterparties at the table. I will conclude my business update by highlighting our ability to create balanced energy solutions with a focus on data centers. As I previously mentioned, we have two projects in the ISO connection queue for a total of 1.5 gigawatts of load. We felt this was a logical time to initiate a filing for data center load to be co-located at the Genesee site. While we are not yet in a position to provide a specific update, we believe we are well positioned to play a leadership role in this rapidly growing market. Here are some quick perspectives as to why. We have an existing fleet of flexible generation in Canada and the U.S. with total capacity of 7.8 gigawatts across 14 sites with a combined 18,000 acres of developable land. At Genesee, we have approximately 13,000 acres of land alone and 1.8 gigawatt of existing reliable generation capacity with significant expansion potential. Our land positions are near major population centers and can access fiber. We have a dedicated in-house operational team with engineering, HSS&E, and supply chain experts. We pride ourselves on our constructive stakeholder and government relationships engagement in both U.S. and Canada. Lastly, we have a thoughtful and creative approach to commercial discussions and creating comprehensive solutions, which is supported by our investment credit rating. This combination means we can provide a superior value proposition, speed to market with confidence. This is what positions us to meet the unique needs of a growing market with demand at a scale not ever seen before. As we continue our journey, we will provide more updates on our progress. With that, I will hand it over to Sandra to provide financial highlights for the quarter.