Capital Power Corporation

Hello and welcome to Capitol Power fourth quarter and year end 2024 analyst conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask the 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. I would now like to turn the conference over to Rory Arthur, Vice President, Strategic Planning and Investor Relations. Sir, you may begin.

Good morning, everyone, and thank you for joining us to review Capital Power's achievements in financial performance for the fourth quarter and year-end 2024. Our presentation and the accompanying materials are available on our website at www.capitalpower.com. Today's agenda includes business highlights, a financial review, closing remarks, and a Q&A session. Avik Day, our President and CEO, will kick off today's presentation with our business highlights for the year, followed by Sandra Haskins, our SVP, Finance, and CFO, who will present the financial review. Avik will then provide some closing remarks and open the door to questions from analysts. Before we dive into the details, I want to remind everyone that certain information in this presentation contains forward-looking statements. These statements are based on assumptions and analysis made by the company, and actual results could differ materially due to various risks and uncertainties. Please refer to slide 20 and our fourth quarter MD&A for more information on those risks and assumptions. Additionally, we will be referring to non-GAAP financial measures and ratios, which are provided to complement GAAP measures in analyzing our results from managers' perspective. Reconciliations of these non-GAAP measures to their nearest GAAP measures can be found in our 2024 Integrated Annual Report. In the spirit of reconciliation, we respectfully acknowledge that Capital Power operates within the ancestral homelands of Treaty Territories of Indigenous Peoples. Our head offices are located within the traditional home of many Indigenous communities in Treaty 6 Territory and Métis Nation Alberta Region 4.

acknowledge the diverse indigenous communities that are located in these areas and whose presence continues to enrich the community and our lives with that i will hand it over to attic good morning everyone today we will be highlighting our q4 and year end 2024 results and underscoring how we are creating shareholder value during this pivotal time when energy demand is expanding and providing significant opportunities for our company as demonstrated throughout the year we have an exceptional ability to acquire, maintain, expand, and optimize natural gas generation assets. We are continuing to advance growth in our portfolio with an advantage position in a power market that is undergoing long-term expansion driven by multiple sources, including reshoring, residential, commercial, and industrial demand. And finally, growth in data centers. 2024 saw Capital Power strategically position itself for future growth and opportunities across our portfolio. During the year, we made strides aligned to our three strategic areas of focus. Firstly, we delivered approximately 38 terawatt hours across our fleet, marking record annual generation from our growing portfolio. To maximize and crystallize the value of our assets in 2024, We executed turnarounds at seven facilities as part of our effort to enhance the reliability and efficiency at our sites for the long term. And we sold down two renewable assets for $333 million of pre-tax cash proceeds. Secondly, in the build category, we proudly completed our Genesee repowering project, transitioning the dual fuel facility off coal and to 100% natural gas. This roughly $1.6 billion investment increased the overall capacity of the facility by 512 megawatts, while reducing Scope 1 greenhouse gas emissions by 3.4 million tons per annum. We advanced our Ontario projects, which include upgrades, expansions, and battery energy storage systems, adding strategic long-term contracted capacity to our portfolio in Canada's largest markets. From a renewables perspective, we anticipate achieving full commercial operations on Haukert II wind in the first half of 2025, and the North Carolina solar projects are expected to be online between 26 and 27. Lastly, in order to create future optionality and further our ability to grow and respond to the opportunities we are seeing, we made tangible progress on advancing data center opportunities in Alberta and the US. qualified for $13 million in funding for a small modular reactor feasibility assessment that we continue to advance with our partner, OPG. With that high-level overview, I will now provide some incremental detail on specific areas of the portfolio. We have talked in the past about the multiple ways we can create long-term shareholder value. Our record annual generation and how we achieved it over the past five years exemplifies our track record of doing those very things. From 2020 to the end of 24, we have grown our portfolio from 6.5 gigawatts to 10 gigawatts of capacity. This expanded power generation footprint positioned us to deliver annual generation of 38 terawatt hours. This portfolio growth was accomplished through adding new assets to the portfolio through development efforts including 150 megawatts of wind, and 120 megawatts of solar projects, as well as the acquisition of 2,600 megawatts of natural gas capacity, which expanded our U.S. presence with the additions of NCV, La Paloma, Fredrickson One, and Harkahala. In addition, we expanded our existing facilities by 590 megawatts by repowering at Genesee and also upgrading at Decatur. These efforts increased our scale diversification, contractual underpinning, and our overall competitiveness. It sets the stage for the future growth that we are so excited about. We demonstrated the successes of our expansion diversification strategy in 2024 as well, with approximately 45% of our adjusted EBITDA contribution coming from our US assets. The addition of the US assets since 2020 has reduced the volatility of the cash flows in our business and augmented the contractual underpinning of the flexible generation part of our business. Our U.S. portfolio is highly contracted with a weighted average contract life of five to seven years, which provides near-term stability of our cash flows and long-term upside upon recontracting. We are engaged in negotiations to amend and extend our current contracts given the growing need for reliable and affordable power. Broad-based and strong market fundamentals increase our confidence that we will be able to recontract at superior pricing for longer duration. We see significant upside in our assets with economic plant life aligning more closely with operating life. As discussed during our 25 guidance call, one of our key priorities is to expand our portfolio flexible generation assets through acquisitions. The growth in our U.S. EBITDA from 20 to 24 demonstrates our ability to successfully acquire and integrate natural gas assets in key markets. We expect this to continue. We remain excited about our U.S. growth achieved to date and what we expect to do in the future. At the same time, we have continued to advance shareholder value creation in our Canadian business. For example, in Ontario, we are making significant investments in our assets and are on track to add approximately 355 megawatts of additional capacity. This enhances our position in Canada's largest market and demonstrates our ability to support grid reliability with thermal generation and battery storage. These projects are expected to be in service between 2025 and 2026. The value of these investments was also enhanced through contract extension for the existing capacity at our three Ontario flexible generation sites. These investments will strengthen our presence in Ontario, increase our weighted average contract life, and contribute to our long-term success. Turning to Alberta, our Genesee generating station has delivered reliable and affordable power for Alberta's economy for over 30 years, and is now Canada's most efficient natural gas combined cycle facility. Achieving COD on repowering has positioned us to succeed by increasing capacity while reducing operating costs, overall emissions, and emission intensity, demonstrating our clear ability to transform existing infrastructure to meet the long-term needs of the energy expansion. It has also better positioned us to attract co-located large loads such as a data center. I can appreciate that many of you are wondering when we will have a formal announcement on this front. Navigating the complexity and size of these projects takes time, but we continue to progress. To put the scale of our ambition into perspective, our ASO connection queue for load of approximately 1.5 gigawatts is comparable to typical daily power usage for the City of Calgary. We continue to believe that a project of this scale or larger is achievable but will occur in phases over time. The specific size and timing of the phases is part of our ongoing work, and we look forward to providing more detailed updates when we are in a position to do so. Because of our significant investment at the site, resulting in the COD of the repowering project, the Genesee Generating Station is extremely well positioned for the opportunity we are pursuing. The combination of uncontracted capacity, future growth potential, surplus land available in Alberta, given the temperate climate, supportive regulatory backdrop, and excess power supply, continues to give us confidence that we can be competitive. We have talked in the past about our intentions to recycle capital in order to maximize value. In November of 2024, we announced the sell-down of two Canadian wind assets. The transaction resulted in approximately $333 million in pre-tax cash proceeds, and a 49% reduction in ownership of our quality wind and Port Dover and Nanticoke wind facilities. This aligns with our strategy to optimize our portfolio and represented the crystallization of returns in excess of our targeted thresholds for renewable assets. This is an example of our prudent capital allocation strategy, better positioning us to pursue future growth including acquisitions as part of our shareholder value maximization efforts while maintaining financial stability. Before I discuss our investment thesis and hand it over to Sandra, I would like to touch on the subject of tariffs. Our business is largely insulated from the impact of potential U.S. tariffs, with fuel purchased and power sold to local markets. For example, in Ontario, we procure gas from a local hub and power is sold to the Ontario ISO to support growing local demand. Our Canadian and US businesses operate independently with separate high-quality counterparties in each country. Our long-term contracts and hedges not only stabilize our cash flows, but who we sell our product to over time. From a supply chain perspective, we do not foresee a significant impact on our largest projects in the near term. given domestic content requirements for our U.S. solar facilities and large components for our Canadian projects already received. We will continue to monitor the developments related to tariffs and their potential impact to the economy and indirect impacts to our business. However, at this point, we do not believe the direct impacts to capital power are significant. While there has been considerable movement in capital markets resulting from tariffs, AI technology, and M&A, Our investment thesis has not changed. From a market standpoint, we believe that the strong fundamentals we are seeing indicate that natural gas will play a permanent and meaningful role in meeting the needs of society and our customers. We see this dynamic benefiting our large and diversified footprint of strategically positioned assets now and in the future. You should expect to see us prioritize creating shareholder value utilizing our in-house operational and commercial expertise at our existing assets. Furthermore, we look to expand our footprint through acquisitions building on our established track record. Our stable and highly contracted cash flow base augmented by our access to low-cost capital will fund the growth. We continue to be excited about the value proposition our business presents. With that, I will now pass it over to Sandra to review our 2024 financial performance.