Capital Power Reports First Quarter 2010 Results
Edmonton, Alberta – April 30, 2010 – Capital Power Corporation (“Capital Power”, or the “Company”) (TSX: CPX) today released its financial results for the three month period ended March 31, 2010. Normalized net income, after adjusting for one-time items and fair value adjustments, was $12 million or $0.55 per share in the first quarter of 2010.
“The Company’s performance in the first quarter of 2010 was ahead of management’s expectations,” said Brian Vaasjo, President and Chief Executive Officer of Capital Power Corporation. “Alberta spot power prices continued to remain low in the first quarter; however, the Company’s strategy to sell forward a substantial portion of its Alberta power portfolio for the first quarter proved to be prudent as the captured price was approximately 63% higher than Alberta spot power prices.”
“Our recent announcements on long-term contract wins for our Quality Wind and Port Dover & Nanticoke projects, with BC Hydro and the Ontario Power Authority respectively, continue our successful execution of Capital Power’s growth strategy,” continued Vaasjo. “We will be investing nearly $800 million into wind projects, exceeding our 2010 target of committing at least $500 million to capital opportunities. Once construction of the wind projects is completed in late 2012 and early 2013, they will provide an additional 247 megawatts of generation capacity.”
| Operational and Financial Highlights(1) (unaudited) |
Three months ended March 31, 2010 |
Three months ended December 31, 2009 |
Three months ended September 30, 2009(3) |
| (millions of dollars except per share and operational amounts) | |||
| Electricity generation (GWh) | 3,529 | 3,481 | 3,534 |
| Generation plant availability (%) | 96% | 92% | 95% |
| Revenues | $499 | $497 | $511 |
| Gross margin(2) | $216 | $216 | $218 |
| Operating margin(2) | $167 | $154 | $169 |
| Normalized net income(2) | $12 | $4 | $9 |
| Normalized earnings per share(2) | $0.55 | $0.18 | $0.42 |
| Net income | $13 | $7 | $14 |
| Earnings per share | $0.60 | $0.33 | $0.64 |
| Dividends declared per share | $0.315 | $0.315 | $0.315 |
| Funds from operations(2) | $112 | $71 | $93 |
| Funds from operations excluding non-controlling interests in CPILP(2) | $87 | $49 | $70 |
| Capital expenditures | $78 | $127 | $108 |
(1) The operational and financial highlights in this press release should be read in conjunction with Management’s Discussion and Analysis and the Consolidated Financial Statements for the three months ended March 31, 2010.
(2) Gross margin, Operating margin, Normalized net income, Normalized earnings per share, Funds from operations, and Funds from operations excluding non-controlling interests in CPILP are non-GAAP financial measures and do not have standardized meanings under Canadian GAAP, and therefore, may not be comparable to similar measures used by other enterprises. Reconciliations of these non-GAAP financial measures to net income are included in the Company’s Management’s Discussion and Analysis dated April 30, 2010.
(3) Revenues for the three months ended September 30, 2009 have been restated for a reclassification which resulted in a reduction of revenue and energy purchases by $14 million each. The restatement had no impact on gross margin, operating margin or net income.
Corporate Updates
Sale of interest in Battle River PSA
On January 15, 2010, the Company sold its remaining 15% interest in the Battle River Power Syndicate Agreement (PSA) for cash proceeds of $64 million resulting in a pre-tax gain of $28 million and $2 million of associated income taxes.
This sale was pursuant to the agreement entered into in June 2006 whereby the Company agreed to sell its Battle River Power Purchase Arrangement (PPA) and related interest in the Battle River PSA to ENMAX Corporation over a four-year period ending in January 2010. An initial interest of 55% was sold for cash proceeds of $343 million in June 2006, followed by the sale of 10% interests on each of January 1, 2007, January 15, 2008 and January 15, 2009 for cash proceeds of $59 million, $53 million and $47 million, respectively.
The after-tax gain was $26 million for the sale of the 15% interest in January 2010 compared with $26 million for the sale of the 10% interest in January 2009. The proportionately lower gain in 2010 reflected the increase in the asset’s carrying amount in July 2009 when it was acquired in conjunction with the Company’s initial public offering, reorganization and acquisition of the power generation business from EPCOR. The Company’s purchase price for the acquisition from EPCOR was allocated to the assets acquired and liabilities assumed based on their estimated fair values. Accordingly, approximately $11 million was added to the carrying amount for the 15% interest in the Battle River PSA at the time of the acquisition from EPCOR, representing the Company’s 27.8% interest in the asset’s fair value increment. As a result, the sale had no impact on the Company’s net income after the deduction of the non-controlling interests.
Quality Wind Project
On March 11, 2010, the Company’s Quality Wind project was selected by BC Hydro for the award of an Energy Purchase Agreement, which has since been signed by the two parties. The project is for the development of a 142-MW wind farm near Tumbler Ridge, BC and is expected to cost approximately $455 million. Construction of the project is subject to regulatory approvals, including completion of the provincial environmental assessment which is currently in progress, and approval of the Energy Purchase Agreement by the BC Utilities Commission. The Company anticipates commercial operation of this project to commence no later than the spring of 2013 when clean renewable energy generated by Quality Wind will be sold under a 25-year Energy Purchase Agreement with BC Hydro.
The Energy Purchase Agreement supports the Company’s strategy to maintain a balance between long-term contracted and merchant generation. The project also complements the Company’s portfolio of assets which is predominantly coal and natural gas power sourced.
Port Dover & Nanticoke Wind Project
On April 8, 2010, the Ontario Power Authority (OPA) selected the Company’s Port Dover & Nanticoke Wind development project for the award of a contract to sell power. The 105-MW project is being proposed in an area in southern Ontario where the Company has optioned lands totaling over 8,900 acres. The project has an expected cost of up to $340 million and is anticipated to enter commercial operation in the fourth quarter of 2012.
Under the terms of the OPA’s Feed-in-Tariff program, the contracted price for power at commercial operation of the project will be $135 per MWh escalated by inflation between the contract signing date and commercial operation date. Thereafter, 20 per cent of the contract price will escalate annually at inflation throughout the 20-year contract term.
Construction of the project is subject to regulatory approvals, including Ontario’s Renewable Energy Approval process which is currently in progress for the project.
Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on May 3, 2010 at 1:00 pm (ET) to discuss first quarter results. The conference call dial-in numbers are: (416) 340-8018 or (866) 223-7781 (toll-free). Interested parties may access the webcast on the Company’s website at www.capitalpower.com. An archive of the webcast will be available on the website.
A replay of the conference call will be available following the call at: (416) 695-5800 or (800) 408-3053 (toll-free) and entering pass code 3681404. The replay will be available until 11:59 p.m. (ET) on May 10, 2010.
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 3,500 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources.