Capital Power Corporation

Good day. Thank you for standing by. Welcome to the Capital Power Second Quarter 2025 Analyst Conference Call. At this time, all participants are on the 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. Please note that today's conference may be recorded. I will now hand the conference over to your speaker host, Roy Arthur. Vice President, Strategy Planning and Investor Relations. Please go ahead, sir.

Good morning, everyone. My name is Roy Arthur, Vice President, Strategy Planning and Investor Relations. Thank you for joining us to review Capital Power's second quarter 2025 results, which we published earlier today. Our second quarter report and presentation for this conference call are available on our website. During today's call, our President and CEO, Adam Day, will provide an update on our business. Following that, Sandra Haskins, SVP Finance and CFO will review the quarter end and year-to-date financials for the company in addition to our revised guidance for 2025. Abbott will then conclude the formal part of the presentation before we open the floor to questions from analysts in our interactive Q&A. Before we start, I would 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 material from the company's expectations due to material risks and uncertainties associated with our business. Please refer to the cautionary statement on forward-looking information on slide three or our regulatory filings available on CDAR+. In today's discussion, we'll be referring to various non-GAAP financial measures and ratios also noted on slide three. 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 the gap measures, which are provided in the analysis of the company's financial results from management's perspective. Reconciliations of these non-gap financial measures to their nearest gap measures can be found in our quarterly financial statements. We acknowledge that Capital Power's head office in Edmonton is located within the traditional and contemporary home of many Indigenous peoples of Treaty 6 region. and the Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are in these areas, whose presence continues to enrich the community and our lives as we learn about the Indigenous history of the land on which we live and work. With that, I will hand it over to Abik.

Thank you, Roy. Good morning, everyone, and thank you for joining us today. In the second quarter of 2025, we announced and closed our largest acquisition to date, adding 2.2 gigawatts of capacity. This transaction is part of a significant transformation of our business over the past three years, which we will explore in more detail throughout the presentation. Key highlights from Q2 2025 include reaching commercial operation on our Goreway upgrade project with an extended contract term to 2035, progressing growth projects totaling approximately 610 megawatts of capacity, delivering 9 terawatt hours of power across our strategically positioned portfolio, including contributions from our newly acquired PGM assets. And lastly, continuing to deliver operational excellence by optimizing and maintaining our assets, completing 62% of our scheduled outage days for the year. This includes 18 planned turnarounds, 14 on our flexible generation assets, and four on our renewable fleet. In summary, we continue to make tangible progress in delivering on our strategy. None of this would be possible without the enormous contribution of our people, from our exceptional operational staff to our corporate services team and everyone in between. Capital Power is truly a leading North American independent power producer of scale. Our recent transformation has created a more resilient, diversified, and growth-oriented business, anchored by one of the most efficient gas fleets in North America. This, combined with our ability to operate, expand, and optimize safely, efficiently, and economically, continues to set us apart from our peers. We now have operations across five core markets, which means our portfolio is less exposed to the volatility of any single market, enhancing the stability of our cash flows and reinforcing our investment grade credit rating. During the past three years, we've maintained our track record of delivering compelling risk-adjusted returns and are better positioned than ever to grow and create long-term shareholder value. Between 2022 and 2025, we have delivered impressive growth in our U.S. flexible generation portfolio, positioning us as one of the top five natural gas independent power producers in North America. We have expanded our flexible generation asset base by approximately 5 gigawatts and now have over 10 gigawatts of flexible generation capacity in Canada and the U.S. Our growth has largely been through M&A and concentrated in core markets with strong fundamentals. We continue to see opportunities to acquire generation capacity for significantly less cost than new builds. As a result of our significant growth and entry into new markets, we now have 12 gigawatts of total capacity with no single market representing more than 30% of our portfolio. In each of our core markets, we continue to see strong fundamentals. Growing demand has outpaced additions of new supply, driving increased capacity and energy prices in regions such as PJM and MISO. And continued growth demand in Ontario has resulted in more calls for power. Across our portfolio, recontracting continues to be a strong priority for our business. As we strive to maximize the value of the existing generation, current fundamentals give us confidence in the ability to re-contract at compelling prices for longer duration than we have seen in the past. We are engaged in multiple negotiations to extend our current contracts given the growing need for reliable and affordable power across North America. In PJM, where we have recently added 2.2 gigawatts of generation, there is strength in both capacity and energy pricing. Capacity payments typically represent about one-third of the total gross margin from our PJM business, with the remainder coming from energy sales. PJM is the most liquid power trading market globally, an important factor for maximizing value for an organization like ours. This liquidity means access to a broad, high-quality set of counterparties and enables us to transact across a wide range of durations in this rising price environment. Since closing the acquisition, we've moved quickly to implement significant hedges and other contracts covering the balance of 2025 and beyond. We've executed these at pricing levels aligned with our business case and at a pace far exceeding what would be possible in Alberta. The benefits of a diversified portfolio are especially clear when we examine single variable sensitivity to energy price changes in our merchant markets. For example, if we were fully unhedged, a $5 per megawatt hour change in PJM prices would result in a 4% to 5% change in full year adjusted EBITDA. In contrast, the same price movement in Alberta would have a smaller impact, approximately 3% to 4% going forward. This is a significant move down from approximately 7% to 8% in 2023. Our other merchant markets in the US are smaller and contribute even less to overall volatility. So despite having greater merchant capacity in the portfolio, we expect reduced volatility of our cash flows. We have already taken steps and will continue to do so to actively manage risk through hedging in both Alberta and TJM. Our Genesee repowering project is an excellent example of how our growth efforts have contributed to our superior portfolio positioning. Since 2023, Alberta pool pricing has declined by approximately 70%. Despite this decline, Our 2025 year-to-date clean spark spreads at Genesee 1 and 2 have increased through a combination of improved efficiency, lower carbon intensity, and hedging. Our repowered units are now the most efficient in Canada. We've also reduced their carbon intensity below the Alberta tier benchmark threshold, which means we currently pay no carbon tax on these units. Finally, we continue to actively hedge power pricing and input costs to stabilize returns. Overall, through our resilient asset base, Alberta remains a market where we can harvest returns in the short and long term. This includes data center opportunities. Genesee is well positioned to benefit from any data center demand that comes to the province. That said, We continue to believe it represents one of the most compelling sites in North America for a gigawatt-scale data center to be co-located. It offers a comprehensive solution that balances affordability and reliability concerns and allows for a gigawatt-scale data center to move forward in a timely fashion, which is critical in the market today. Under ASO's large load interconnection process, a one gigawatt project is not viable under phase one. However, we will continue to pursue the one gigawatt scale option through phase two and further consultation with government. In addition, we chose not to pursue a smaller project at Genesee. However, we will pursue opportunities to provide PPAs to other DC projects that require a generation partner with available dispatchable power today. The Genesee repowering project, which moved us off pole and our accretive acquisitions have reinforced our strong asset positioning relative to industry peers. We operate a younger, more efficient fleet an important advantage in merchant markets where higher efficiency translates into stronger returns across the cycle. Further, the younger age of our assets implies a longer remaining useful life, which enhances our competitiveness for long-term contracting opportunities. These contracts are key to driving both improved returns and greater stability of our cash flows. With that, I will hand it over to Sandra to walk through our funding considerations and financial results before I conclude the call and open the floor to questions.