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EDMONTON, Alberta – Capital Power Corporation (TSX: CPX) (“Capital Power” or “the Company”) announced today the execution of a 6-year tolling agreement extension through October 2031 for its Arlington Valley (Arlington) facility with the current counterparty. Arlington is a 600-megawatt natural gas-fired combined cycle facility located west of Phoenix, Arizona that began commercial operations in 2002 and was acquired by Capital Power in late 2018.

“Consistent with our natural gas strategy of acquiring mid-life contracted natural gas assets that are strategically located in markets with strong fundamentals and have a high probability for recontracting, Arlington Valley is our second natural gas facility at which we have executed a long-term extension after the facility was acquired,” said Brian Vaasjo, President and CEO of Capital Power. “Arlington operates in the attractive Desert Southwest (DSW) power market where there is a significant need for reliable, dispatchable gas-fired generation to address reductions in baseload coal capacity, meet growing demand, and help with the integration of renewables.”

Arlington currently sells capacity and electricity to an investment grade load serving utility (credit ratings of A3/BBB+ from Moody’s and S&P, respectively) under a tolling agreement during the summer months through 2025. For the non-summer months through 2025, Arlington produces power to support a Heat Rate Call Option (HRCO) with another investment grade counterparty when called upon. When not called to support the HRCO, Arlington may sell energy into the DSW or the California Independent System Operator (CAISO) wholesale markets. Under the extension, the tolling agreement will cover six months of the year starting in 2026 compared to the four summer months currently.

When Capital Power announced the acquisition of Arlington in 2018, the Company provided a forecasted average adjusted EBITDA of US$35 million per year (ranging from US$32 million to US$38 million) and US$16 million of adjusted funds from operations (AFFO) during the 6-year period from 2020 to 2025. Under the terms of the tolling agreement extension, adjusted EBITDA will move towards the low end of the original guidance range for 2024 and 2025 before increasing to an average of US$47 million (ranging from US$42 million to US$49 million) per year and US$34 million of AFFO per year for the 6-year period from 2026 to 2031.

Non-GAAP Financial Measures

The Company uses (i) earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from joint venture interests, gains or losses on disposals and unrealized changes in fair value of commodity derivatives and emission credits (adjusted EBITDA) and (ii) AFFO as financial performance measures.

These terms 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 should not be considered alternatives to net income, net cash flows from operating activities or other measures of financial performance calculated in accordance with GAAP. Rather, these measures are provided to complement GAAP measures in the analysis of the Company’s results of operations from management’s perspective.

Additional disclosure around the Company’s non-GAAP financial measures, including reconciliations of these non-GAAP financial measures to their nearest GAAP financial measures are disclosed in the Company’s Management’s Discussion and Analysis prepared each quarter, most recently prepared as of October 26, 2021 for the third quarter of 2021, which is available under the Company’s profile on SEDAR at SEDAR.com and on the Company’s website at capitalpower.com.

Forward-looking Information

Forward-looking information or statements included in this press release are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.

Material forward-looking information in this press release includes expectations around: future adjusted EBITDA and AFFO of the Arlington facility.

These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate including its review of purchased businesses and assets. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity, other energy and carbon prices, (ii) Arlington facility performance, (iii) status of and impact of policy, legislation and regulations and (iv) effective tax rates.

Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity prices in markets in which the Company operates, (ii) changes in energy commodity market prices and use of derivatives, (iii) regulatory and political environments including changes to environmental, financial reporting, market structure and tax legislation, (iv) Arlington facility availability and performance including maintenance expenditures, (v) ability to fund current and future capital and working capital needs, (vi) changes in market prices and availability of fuel, and (vii) changes in general economic and competitive conditions. See Risks and Risk Management in the Company’s Management’s Discussion and Analysis for both the nine months ended September 30, 2021, prepared as of October 26, 2021 and for the year ended December 31, 2020, prepared as of February 18, 2021, for further discussion of these and other risks.

Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the news release date. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.

About Capital Power

Capital Power is a growth-oriented North American wholesale power producer with a strategic focus on sustainable energy headquartered in Edmonton, Alberta. We build, own and operate high-quality, utility-scale generation facilities that include renewables and thermal. We have also made significant investments in carbon capture and utilization to reduce carbon impacts and are committed to be off coal in 2023. Capital Power owns approximately 6,600 MW of power generation capacity at 26 facilities across North America. Projects in advanced development include approximately 425 MW of owned renewable generation capacity in North Carolina and Alberta and 560 MW of incremental natural gas combined cycle capacity, from the repowering of Genesee 1 and 2 in Alberta.