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Project Pioneer designed to sequester 1 million tonnes of CO2 annually from power plant emissions

EDMONTON, Alberta – October 14, 2009 – Capital Power Corporation (TSX: CPX) is partnering with TransAlta and Alstom Canada (Alstom) to develop what will be one of the world’s largest Carbon Capture and Storage (CCS) projects, Project Pioneer (Pioneer).

A Letter of Intent has been signed with the Province of Alberta, under which Pioneer will be eligible to receive funding from the province’s $2 billion CCS fund. The Government of Canada is also contributing toward the project through its Clean Energy Fund.

Pioneer entails the development of a CCS facility at the Keephills 3 power plant, currently under construction west of Edmonton. Keephills 3 is a joint venture of Capital Power and TransAlta. Using Alstom’s Chilled Ammonia Process, Pioneer will be designed to capture one million tonnes of greenhouse gas emissions annually.

“Capital Power and TransAlta partnered to develop Canada’s most advanced coal-fired power plants, Genesee 3 and Keephills 3, with greenhouse gas emissions 18% lower than vintage facilities,” said Brian Vaasjo, President and CEO of Capital Power. “Project Pioneer will build on this record by delivering a further 31% reduction in CO2 emissions from Keephills 3, helping meet provincial and federal greenhouse gas reduction targets.”

The second phase of Front End Engineering and Design (FEED) for Pioneer is scheduled to be complete by June 2010, and will include detailed engineering and procurement planning. The development of Pioneer will not affect the construction schedule for Keephills 3, which is expected to enter commercial operation in early 2011.

In addition to Project Pioneer, Capital Power is completing FEED work on a pre-combustion CCS project, the Genesee Integrated Gasification Combined Cycle (IGCC) power facility. The FEED project is being conducted in conjunction with the Canadian Clean Power Coalition, in partnership with the Alberta Energy Research Institute and Natural Resources Canada.

“Our work to date has demonstrated that gasification technology has a promising future as a near-zero emission source of baseload power generation, but it is not economic in today’s power price environment,” said Capital Power Senior Vice President, Dr. David Lewin. “Although Capital Power will not be pursuing the development of an IGCC facility at this time, and the IGCC project is no longer being considered for funding from the Province of Alberta’s CCS fund, the FEED study results will provide a blueprint for the potential future development of a gasification and CCS plant.”

About Capital Power

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 31 facilities in Canada and the U.S. totaling approximately 3,300 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/.

Forward-Looking Statements

This news release contains forward-looking statements, including “forward-looking statements” within the meaning of applicable Canadian and United States securities laws. Such forward-looking statements include, without limitation, (i) the expected emission reductions achieved by Project Pioneer’s CCS technology, (ii) Keephills 3 construction will be completed in 2011, (iii) Project Pioneer will not affect the construction schedule for Keephills 3, and (iv) Project Pioneer’s second phase FEED is scheduled to be complete by June 2010. Where statements by Capital Power express or imply an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Capital Power expressly disclaims any obligation to release publicly revisions to any forward looking statement to reflect events or circumstances after the date of this news release, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.