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EDMONTON, Alberta – Capital Power Corporation (“Capital Power”, or the “Company”) (TSX: CPX) today released its financial results for the three and six month periods ended June 30, 2010.  Normalized net income, after adjusting for one-time items and fair value adjustments, was $1 million or $0.05 per share in the second quarter of 2010.  For the six month period ending June 30, 2010, normalized net income was $13 million or $0.60 per share.

“The Company’s performance in the second quarter of 2010 was below management’s expectations,” said Brian Vaasjo, President and Chief Executive Officer of Capital Power Corporation. “This was primarily attributable to two factors that were specific to the period. First, we experienced a greater-than-expected impact from the 21-day planned outage at our Genesee 2 facility; although we anticipated availability penalties from the planned outage, the penalties were higher-than-expected. This was due to high Alberta pool prices during the outage resulting partially from generation curtailments at all three units at Genesee to accommodate transmission system upgrades and from other plant outages in the province. Second, the commodity optimization strategies that led to strong earnings in the first quarter of 2010 moved against us in the second quarter, resulting in weak results from our commodity portfolio management area. In addition to these two factors the $0.37 loss per share in the quarter is primarily due to $58 million in fair value changes which are not indicative of economic performance. While these quarterly results were below expectations, our performance in the first half of the year is tracking close to our plan and our outlook for the year is unchanged from earlier guidance.”

Operational and Financial Highlights(1) (unaudited) (millions of dollars except per share and operational amounts)	Three months ended June 30, 2010	Six months ended June 30, 2010
Electricity generation (GWh)	3,187	6,717
Generation plant availability (%)	86%	90%
Revenues	$313	$812
Gross margin(2)	$120	$336
Operating margin(2)	$55	$222
Normalized net income (loss)(2)	$1	$13
Normalized earnings per share(2)	$0.05	$0.60
Net income (loss)	$(8)	$5
Earnings (loss) per share	$(0.37)	$0.23
Dividends declared per share	$0.315	$0.63
Funds from operations(2)	$53	$165
Funds from operations excluding non-controlling interests in CPILP(2)	$34	$121
Capital expenditures	$133	$211

  (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 six months ended June 30, 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 August 2, 2010.

Corporate Updates

Canadian Federal Government Greenhouse Gas Regulation for Coal-Fired Generation
On June 23, 2010, the Canadian Environment Minister announced the Government of Canada’s plan for new greenhouse gas (GHG) emission regulation for coal-fired electricity generation units. The proposed plan will apply a new GHG emissions performance standard to new coal-fired electricity generation units and those coal-fired units that have reached the end of their economic life. The purpose of the regulation is to ensure that conventional coal-fired electricity generation is phased out in an orderly manner and replaced with lower GHG emission power generation.

Very limited details are available but it is expected that the economic life will be set at 45 years with some exceptions to avoid stranding recent investments in older facilities. New performance standards will likely be similar to a natural gas combined cycle unit. Existing facilities that will be exempt from the regulation until they reach the end of their economic useful life are expected to be those that have commercial operation dates prior to January 1, 2012. Clarity regarding the draft regulations will be provided when they are published in the Canada Gazette which is expected to occur in early 2011, with final regulations expected later that year. Because the proposed regulations allow coal-fired generation assets to operate for their economic life and no additional charges for GHG emissions are anticipated, the regulations provide some certainty and are expected to be favourable to Capital Power’s Genesee units and Keephills 3.

It is not clear whether the proposed federal GHG emission regulations will replace the Alberta Specified Gas Emitters Regulations (SGER). The current SGER will expire in 2014. If this date is extended then the Company’s Alberta facilities may face continued charges under the SGER, which have historically been approximately $5 million per year. Currently there is insufficient information to reasonably predict what action the Alberta Government will take in respect of the SGER.

Wind Projects Update
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 through the OPA’s Feed-in-Tariff (FIT) program. 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. The contract to sell power has since been signed and under the terms of the OPA’s FIT 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 Port Dover and Nanticoke Wind project is subject to regulatory approvals, including Ontario’s Renewable Energy Approval process which is currently in progress for the project.

The Company has selected Vestas (NASDAQ OMX Copenhagen:VWS) for the supply and maintenance of wind turbines for this project, as well as for the proposed Quality Wind project in northeastern B.C. and the Kingsbridge II project in Ontario. The Quality Wind energy purchase agreement with BC Hydro was signed in April 2010 and the Environmental Assessment Certificate for the project was received from the Government of British Columbia in July 2010. Development of the Kingsbridge II project remains subject to approval under the OPA’s FIT program.

Acquisition of Island Generation Facility
On August 2, 2010, Capital Power LP (CPLP) entered into an agreement to acquire the Island Generation Facility (Island Generation), a 275 MW gas-fired combined cycle power plant at Campbell River, British Columbia. The transaction is expected to close in the fourth quarter of 2010, subject to regulatory and other approvals. The purchase and sale agreement for the transaction is between CPLP and Kelson Canada Inc. Subject to market conditions, the Company expects to finance the purchase price of approximately $207 million, plus closing costs and normal working capital adjustments, with a combination of debt and equity.

Island Generation is fully contracted from April 1, 2010 to April 2022 under a tolling arrangement with BC Hydro. BC Hydro will be responsible for the fuel supply to the facility. Commissioned in 2002, Island Generation is consistent with Capital Power’s fleet of young assets that deploy efficient technologies.

Forward-looking Information
Certain information in this news release is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, and expect or similar words suggest future outcomes. Forward-looking information in this news release includes, among other things, information relating to: (i) expected timing of commercial operation and expected project costs of the Port Dover & Nanticoke Wind project; (ii) expected contracted price for power under the OPA’s FIT program for the Port Dover & Nanticoke Wind project; (iii) expectations regarding the impact on Capital Power of the plan for a new GHG emission regulation as announced by the Canadian Environment Minister in June 2010 and expectations with respect to additional charges for GHG emissions; (iv) expectations regarding the economic life of, and new performance standards for, coal-fired electricity generation units pursuant to the proposed new GHG regulation, and regarding the applicability of exemptions from the proposed new GHG regulation and the GHG requirement being brought into force; (v) expectations regarding the timing of the draft and final GHG regulations; (vi) impact of proposed federal GHG emission regulations on SGER and consequential impact on the Company’s Alberta facilities; (vii) expectations regarding the expiry or extension of SGER; (viii) the expected closing date, purchase price and financing of the acquisition of the Island Generation Facility; and (ix) expectations regarding BC Hydro’s responsibility for the fuel supply to the Island Generation Facility.

The statements contained in this news release are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements include, but are not limited to: (i) the location of the projects and the sites on which it will be developed; (ii) costs of construction and development; (iii) the Company’s financial position, credit facilities and sources of funding; (iv) the Company’s assessment of commodity and power markets; (v) the Company’s assessment of the markets and regulatory environments in which it operates; (vi) the Company’s assessment of economic conditions; (vii) weather; (viii) availability and cost of labour and management resources; (ix) performance of contractors and suppliers; (x) availability and cost of financing; (xi) foreign exchange rates; (xii) management’s analysis of applicable tax legislation; (xiii) the currently applicable and proposed tax laws will not change and will be implemented; (xiv) currently applicable and proposed environmental regulations will be implemented; (xv) counterparties will perform their obligations; (xvi) ability to successfully integrate and realize benefits of any acquisitions; (xvii) ability to implement strategic initiatives which will yield the expected benefits and results; (xviii) the Company’s assessment of capital markets and ability to complete future share offerings; and (xix) the award of FIT contracts.

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 risks and uncertainties include, but are not limited to risks relating to: (i) operation of the Company’s facilities; (ii) power plant availability and performance; (iii) unanticipated maintenance and other expenditures; (iv) availability and price of energy commodities; (v) electricity load settlement; (vi) regulatory and government decisions including changes to environmental, financial reporting and tax legislation; (vii) weather and economic conditions; (viii) competitive pressures; (ix) construction; (x) availability and cost of financing; (xi) foreign exchange; (xii) availability and cost of labour, equipment and management resources; (xiii) performance of counterparties, partners, contractors and suppliers in fulfilling their obligations to the Company; (xiv) developments in the North American capital markets; (xv) compliance with financial covenants; (xvi) ability to successfully realize the benefits of acquisitions and investments; and (xvii) the tax attributes of and implications of any acquisitions. If any such risks actually occur, they could materially adversely affect the Company’s business, financial condition or results of operations. In that case the trading price of the Company’s common shares could decline, perhaps materially.

Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Forward-looking statements are provided for the purpose of providing information about management’s current expectations, and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. 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.

Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on August 3, 2010 at 1:00 pm (ET) to discuss second quarter results and the acquisition of the Island Generation Facility. The conference call dial-in numbers are:
(403) 532-8075 (Calgary)
(604) 681-0262 (Vancouver)
(647) 837-0597 (Toronto)
(877) 353-9586 (toll-free from Canada and USA)

Participant access code for the call: 95843#
A replay of the conference call will be available following the call at: (877) 353-9587 (toll-free) and entering pass code 370647. The replay will be available until midnight on August 10, 2010.
Interested parties may also access the live webcast on the Company’s website at www.capitalpower.com with an archive of the webcast available following the conference call.

Click here to view the management’s discussion and analysis and consolidated financial statements