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EDMONTON, Alberta – December 1, 2010 – Capital Power Corporation (“Capital Power”) (TSX:CPX) announced today that it will issue 5,000,000 Cumulative Rate Reset Preference Shares, Series 1 (the “Series 1 Shares”) at a price of $25 per Series 1 Share (the “Offering”) for aggregate gross proceeds of $125 million on a bought deal basis with a syndicate of underwriters, led by TD Securities Inc. and RBC Capital Markets.

The Series 1 Shares will pay fixed cumulative dividends of $1.15 per share per annum, yielding 4.60% per annum, payable on the last day of March, June, September and December of each year, as and when declared by the board of directors of Capital Power, for the initial five-year period ending December 31, 2015. The first quarterly dividend of $0.3308 per share is expected to be paid on March 31, 2011. The dividend rate will be reset on December 31, 2015 and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield and 2.17%. The Series 1 Shares are redeemable by Capital Power, at its option, on December 31, 2015 and on December 31 of every fifth year thereafter.

Holders of Series 1 Shares will have the right to convert all or any part of their shares into Cumulative Floating Rate Preference Shares, Series 2 (the “Series 2 Shares”), subject to certain conditions, on December 31, 2015 and on December 31 of every fifth year thereafter. Holders of Series 2 Shares will be entitled to receive a cumulative quarterly floating dividend at a rate equal to the sum of the then 90-day Government of Canada Treasury Bill yield plus 2.17%, as and when declared by the board of directors of Capital Power.

The Offering is expected to close on or about December 16, 2010. Net proceeds will be lent to Capital Power L.P. pursuant to a subordinated debt agreement. Capital Power L.P. will use the funds to repay a portion of the outstanding balance under its credit facilities which were used to fund the acquisition of Island Generation and for general corporate purposes.

Standard & Poor’s, a division of the McGraw Hill Companies, Inc. (“S&P”) has assigned a preliminary rating of P-3 (High) for the Series 1 Shares and DBRS Limited (“DBRS”) has assigned a rating of Pfd-3 (low) for the Series 1 Shares.

The Series 1 Shares will be issued pursuant to a short form prospectus that will be filed with securities regulatory authorities in Canada. The Offering is subject to receipt of all necessary regulatory and stock exchange approvals.

The Series 1 Shares have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from registration requirements. This news release does not constitute an offer to sell or the solicitation of an offer to buy any security, and shall not constitute an offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

About Capital Power Corporation

Capital Power is a growth-oriented North American independent power producer, building on more than a century of innovation and reliable performance. The company’s vision is to be recognized as one of North America’s most respected, reliable and competitive power generators. Headquartered in Edmonton, Alberta, Capital Power has interests in 32 facilities in Canada and the U.S. totaling nearly 3,800 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources. The company’s web site can be accessed at https://www.capitalpower.com/.