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EDMONTON, Alberta – Capital Power Corporation (Capital Power, or the Company) (TSX: CPX) today released its results for the quarter ended June 30, 2011. Normalized earnings attributable to common shareholders, after adjusting for one-time items and fair value adjustments was $3 million, or $0.07 per share, in the second quarter of 2011, compared with $1 million, or $0.05 per share, in the comparable period in 2010. Funds from operations, excluding non-controlling interests in Capital Power Income L.P. (CPILP), totaled $65 million in the second quarter of 2011, up 76% from $37 million in the second quarter of 2010. For the six-month period ending June 30, 2011, normalized earnings attributable to common shareholders was $14 million, or $0.38 per share. Funds from operations excluding non-controlling interests in CPILP totaled $147 million compared with $112 million in the six-month period ending June 30, 2010.

“Normalized net income in the second quarter of 2011 was below management’s expectation, primarily attributable to a loss on the settlement of forward bond contracts used to economically hedge the U.S. private placement and a larger than expected adjustment to our pension obligation,” said Capital Power’s President and CEO, Brian Vaasjo. “In addition, the performance of the Alberta Commercial Plants and Portfolio Optimization segment were impacted by lower realized margins due to a lower than expected average Alberta power spot price in the second quarter. This was amplified by outages during a period of high pricing at units of a third-party owned facility where we are the PPA counterparty.”

“Our plants performed well in the quarter with average availability, excluding CPILP facilities, of 91%”, added Mr. Vaasjo. “Generation volume increased 37% due to the 2010 acquisition of Island Generation and two months inclusion of three recently acquired facilities in the New England area, which also contributed to increased funds from operations in the second quarter of 2011. In addition to the New England acquisitions, the quarter was also highlighted by a number of other important strategic developments including: the first 50 gigawatt hours of power generation from Keephills 3; the acquisition of 100% of the Halkirk I Wind Project in Alberta; and the completion of CPILP’s strategic review, under which Capital Power will divest of its approximate 29.2% ownership interest in CPILP and acquire 100% ownership of CPILP’s Roxboro and Southport, North Carolina plants. The transaction will result in the termination of the management and operations agreements which are accounted for in the second quarter as an impairment pre-tax loss of $43 million. This will be more than offset in the fourth quarter when the transaction closes with the recognition of $54 million of net income attributable to common shareholders for the gain on sale.”

Operational and Financial Highlights(1)(unaudited)	Three months ended June 30		Six months ended June 30
(millions of dollars except per share and operational amounts)	2011	2010	2011	2010
Electricity generation (GWh)	4,362	3,187	7,952	6,717
Generation plant availability (excluding CPILP plants) (%)	91%	83%	92%	88%
Revenues and other income	472	313	930	814
Gross income	217	117	384	334
Earnings before interest, taxes, depreciation and amortization (EBITDA)(2)	65	37	147	206
Normalized earnings attributable to common shareholders(2)	3	1	14	12
Normalized earnings per share(2)	$0.07	$0.05	$0.38	$0.56
Net income (loss) attributable to shareholders	(25)	(8)	(22)	4
Earnings (loss) per share	$(0.67)	$(0.37)	$(0.69)	$0.18
Dividends declared per share	$0.315	$0.315	$0.63	$0.63
Funds from operations(2)	87	61	190	164
Funds from operations excluding non-controlling interests in CPILP(2)	65	37	147	112
Capital expenditures	120	121	209	183

(1) The operational and financial highlights in this press release should be read in conjunction with Management’s Discussion and Analysis and the unaudited Condensed Interim Consolidated Financial Statements for the six months ended June 30, 2011.

(2) Earnings before interest, taxes, depreciation and amortization (EBITDA), Normalized earnings attributable to common shareholders, Normalized earnings per share, Funds from operations, and Funds from operations excluding non-controlling interests in CPILP are non-IFRS financial measures and do not have standardized meanings under IFRS, and therefore, may not be comparable to similar measures used by other enterprises. See Non-IFRS Financial Measures. Reconciliations of these non-IFRS financial measures to Net income attributable to shareholders, Earnings per share and Cash provided by operating activities are included in the Company’s Management’s Discussion and Analysis dated July 27, 2011, which is available under the Company’s profile on SEDAR at www.SEDAR.com.

Significant Events
CPILP strategic review and acquisition of CPILP’s Roxboro and Southport facilities

On June 20, 2011, the Company announced that CPILP had entered into an agreement with Atlantic Power Corporation (Atlantic) pursuant to which Atlantic will acquire, directly and indirectly, all of the outstanding limited partnership units of CPILP, including Capital Power’s approximate 29.2% ownership interest in CPILP. In connection with the agreement, Capital Power will acquire CPILP’s Roxboro and Southport plants in North Carolina for $121 million in cash. Atlantic will acquire CPILP and its remaining eighteen facilities outside North Carolina. The announcement follows the completion of the strategic review process announced by CPILP and Capital Power Corporation in October 2010.

Completion of the transactions is subject to customary closing conditions, including Canadian court approvals, a favourable vote by CPILP unitholders, a favourable vote by the Atlantic shareholders, and the receipt of all necessary regulatory approvals. If the closing conditions are met, the transactions are expected to close in the fourth quarter of 2011, at which time Capital Power will cease to manage CPILP.

Upon closing, Capital Power will receive approximately $320 million in combined consideration for its approximate 29.2% ownership interest in CPILP. The consideration will include cash or stock in Atlantic at Capital Power’s election subject to proration, and the cash will be used to fund the acquisition of the North Carolina plants. In addition, the Company’s management and operations contracts with CPILP will be terminated or assigned in consideration of payment of an aggregate of $10 million to Capital Power.

The calculation of the gain on disposal of the assets held for sale that will be recognized in income in the fourth quarter of 2011 are based on estimates and carrying amounts as of June 30, 2011 that could change materially by the time the transaction closes.

Acquisition of Halkirk wind project

On May 25, 2011, Capital Power LP (CPLP) acquired 100% of Halkirk I Wind Project LP and Halkirk I Wind Project Ltd from Greengate Power Corporation for $33 million. The assets of the acquired entities were comprised of intangible assets including various permits and land lease rights required to construct the Halkirk Wind Project (Halkirk), and a 20-year power purchase arrangement (PPA) for the sale of renewable energy credits to a third party. Halkirk is a 150-MW wind farm located in east central Alberta, which Capital Power will build, own and operate. All approvals and permits from the Alberta Utilities Commission and Alberta Environment are in place for the facility.

Commercial operation is expected in the last half of 2012 and the total cost of the project, including the $33 million cost of the intangible assets is expected to be approximately $357 million. The project is expected to be, on average, neutral to the Company’s annual earnings per share over the first five years of operations. Halkirk will earn revenues from the sale of energy into the Alberta spot market, and from the sale of renewable energy credits under the 20-year fixed-price PPA. Approximately 40% to 45% of Halkirk’s revenue is expected to come from the sale of renewable energy credits and the project has a favourable after-tax rate of return over the projected life of its assets.

Halkirk will incorporate 83 turbines to be supplied by Vestas Canadian Wind Technology Inc., the same technology to be used at Capital Power’s Quality Wind project in British Columbia and Port Dover & Nanticoke project in Ontario.

Acquisition of three New England power plants

On April 28, 2011, CPLP acquired 100% of the equity interests in Bridgeport Energy, LLC, which owns the Bridgeport Energy facility (Bridgeport), for $344 million (US$362 million) including a working capital adjustment of $6 million (US$7 million). Bridgeport is a natural gas-fired combined cycle power generation plant located in Bridgeport, Connecticut, with a nominal capacity of 520 MW.

On April 29, 2011, CPLP acquired 100% of the equity interests in Tiverton Power Inc. and Rumford Power Inc. (Tiverton and Rumford) which own generating facilities located in Tiverton, Rhode Island and Rumford, Maine respectively. Both plants are natural gas-fired combined cycle power generation facilities serving the New England region in the U.S. Northeast, and have a maximum combined capacity of 549 MW. The purchase price was $299 million (US$315 million).

All three plants are merchant facilities and sell their output into the New England Power Pool (NEPOOL). Their revenues are expected to include payments for capacity, energy, and ancillary services at market-based rates.

$300 million debt offering

On April 18, 2011, CPLP completed a public offering of $300 million unsecured medium-term notes. The notes have a coupon rate of 4.6%, are payable semiannually commencing on June 1, 2011, and mature on December 1, 2015. The net proceeds of the offering were used for general corporate purposes including repayment of amounts owing under credit facilities, short-term investment, financing of ongoing capital projects and working capital requirements.

US$295 million private placement of senior notes

On June 15, 2011, Capital Power U.S. Financing LP, an indirect subsidiary of CPLP, closed a US$295 million private placement of senior notes. The net proceeds from the transaction were primarily used to fund the acquisition of the three New England facilities and for general corporate purposes.

The senior notes consist of two notes with 10-year and 15-year terms. The 10-year senior note has a principal amount of US$230 million that matures in May 2021 with a coupon rate of 5.21%. The 15-year senior note has a US$65 million principal amount and matures in May 2026 with a coupon rate of 5.61%.

Subsequent Event
$231 million common share offering

In July 2011, the Company closed an offering to sell 9,200,000 common shares at a price of $25.10 per share to a syndicate of underwriters for gross proceeds of approximately $231 million, less underwriters’ fees of approximately $9 million. The net proceeds from the common share offering were used to purchase an additional 9,200,000 common limited partnership units of CPLP. CPLP used the funds received from the Company to repay a portion of the outstanding indebtedness under its credit facilities, which was drawn to fund the acquisitions of the New England facilities, and for general corporate purposes including financing development projects and working capital requirements. This transaction reduced EPCOR’s ownership interest in CPLP to approximately 48.9% effective for the third quarter from 54.1% at June 30, 2011.

Analyst Conference Call and Webcast
Capital Power will be hosting a conference call and live webcast with analysts on July 28, 2011 at 1:00 pm (ET) to discuss second quarter results. 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:  21543#

A replay of the conference call will be available following the call at: (877) 353-9587 (toll-free) and entering conference reference number 549495# followed by participant code 21543#. The replay will be available until midnight on August 29, 2011.

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.

Non-IFRS Financial Measures
The Company uses (i) EBITDA, (ii) funds from operations, (iii) funds from operations excluding non-controlling interests in CPILP, (iv) normalized earnings attributable to common shareholders and (v) normalized earnings per share as financial performance measures. These terms are not defined financial measures according to IFRS and do not have standardized meanings prescribed by IFRS, and therefore may not be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of the Company’s results of operations from management’s perspective. Reconciliations of EBITDA to net income, funds from operations and funds from operations excluding non-controlling interests in CPILP to cash flows from operating activities, normalized earnings attributable to common shareholders to net income attributable to common shareholders, and normalized earnings per share to earnings per share are contained in the Company’s Management’s Discussion and Analysis dated July 27, 2011 for the six months ended June 30, 2011 which is available under the Company’s profile on SEDAR at www.SEDAR.com.

Forward-looking Information
Certain information in this press 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 press release includes, among other things, information relating to: (i) expectations regarding the outcome of the CPILP strategic review and the agreement with Atlantic Power pursuant to which Atlantic will acquire all of the outstanding limited partnership units of CPILP, Capital Power will acquire CPILP’s Roxboro and Southport plants, and Capital Power will cease to manage CPILP; (ii) expectations regarding the timing of closing of the CPILP strategic review transactions, total consideration to be received and use of the consideration, and the gain on sale to be recognized in connection with the CPILP strategic review transaction in the fourth quarter; (iii) expectations regarding the commercial operation date of the Halkirk wind project, the total cost of the project, the impact on annual earnings per share for the first five years of operations, the after-tax internal rate of return over the life of the assets, and the total number of turbines the project will incorporate; (iv) expectations regarding the source of Halkirk’s revenues and that 40% to 45% is expected to come from the sale of renewable energy credits; and (v) expectations that revenues from New England power plants will include payments for capacity, energy, and ancillary services at market-based rates.

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 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 operation of the Company’s facilities; (ii) power plant availability and dispatch, including Sundance which is subject to an acquired PPA; (iii) the Company’s financial position and credit facilities and sources of funding; (iv) the Company’s assessment of commodity and power markets, including power prices for 2011; (v) the Company’s assessment of the markets and regulatory environments in which it operates; (vi) weather; (vii) availability and cost of labour and management resources; (viii) performance of contractors and suppliers; (ix) availability and cost of financing; (x) foreign exchange rates; (xi) management’s analysis of applicable tax legislation; (xii) currently applicable and proposed tax laws will not change and will be implemented; (xiii) currently applicable and proposed environmental regulations will be implemented; (xiv) counterparties will perform their obligations; (xv) renewal and terms of PPAs; (xvi) ability to successfully integrate and realize benefits of its acquisitions; (xvii) ability to implement strategic initiatives which will yield the expected benefits; (xviii) ability to obtain necessary regulatory approvals for development projects; (xix) the Company’s assessment of capital markets, common share ownership distribution, and ability to complete future share and debt offerings; (xx) locations of projects and the areas of which they will be developed, including the availability and use of certain optioned lands; (xxi) costs of construction and development; (xxii) current risk management strategies including hedges will be in place; (xxiii) ability to obtain court and regulatory approvals, and unitholders and shareholders favourable votes in relation to the CPILP strategic review transaction; and (xxiv) carrying amounts of assets held for sale.

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, including unplanned plant outages at facilities of other market participants; (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, investments and divestitures; (xvii) the tax attributes and implications of any acquisitions; (xviii) the completion of the CPILP strategic review transactions; and (xix) ability to secure new contracts and terms of such contracts. 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.

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. Capital Power’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 34 facilities in Canada and the U.S. totaling nearly 4,900 megawatts of generation capacity. Capital Power and its subsidiaries develop, acquire and optimize power generation from a wide range of energy sources.