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EDMONTON, Alberta – Capital Power Corporation (Capital Power, or the company) (TSX: CPX) today announced that it is giving notice of its intent to terminate its role as Buyer of the Sundance C Power Purchase Arrangement (Sundance PPA, the Arrangement), effective March 24, 2016.

Capital Power is exercising its right to terminate the Sundance PPA under the Change in Law provisions of the Arrangement, following changes to the Specified Gas Emitters Regulation that took effect at the start of 2016.

“The decision to terminate our role in the Sundance PPA has no impact on Capital Power’s other generation interests in Alberta, or our views of and long-term commitment to the Alberta market,” said Capital Power President & CEO Brian Vaasjo. “Capital Power continues to own more than 1,500-megawatts (MW) of commercial power generation capacity in the Alberta market, and operates 860 MW of owned capacity at the Genesee 1 and 2 units that is subject to a legislated PPA under which the Balancing Pool acts as the PPA Buyer.”

“Capital Power has been the leading developer of new generation in Alberta and is well-positioned to develop the next wave of renewable and gas-fired generation in the province,” Mr. Vaasjo continued. “We remain confident that implementing Alberta’s Climate Leadership Plan within the existing electricity market design is the best way to continue to attract investments that deliver reliable electricity, with a lower carbon footprint, at a reasonable price for Alberta consumers and businesses.”

Mr. Vaasjo joined Alberta’s Environment Minister at her announcement of the SGER program changes in June 2015, saying “We are proud to stand in support of this new SGER policy, and in support of additional action to reduce Alberta’s greenhouse gas emissions. Not only is it the right thing to do, it’s the right time to do it.” Capital Power continues to support action to reduce Alberta’s greenhouse gas emissions, including the SGER changes, and is also working with the Government of Alberta to support effective implementation of the Climate Leadership Plan.

“While changes to SGER have made certain PPAs uneconomic from a Buyer’s perspective, having the Balancing Pool take over as PPA Buyer will have no impact on the reliability and availability of electricity for Albertans,” said Mr. Vaasjo. “The overall electricity market will continue to function efficiently and serve the public interest, and Capital Power will continue to own more than 1,350 MW of commercial generation that is subject to SGER.”

Between now and 2020 the termination is expected to have a positive impact on the company’s EBITDA, will reduce Capital Power’s contractual obligations, and will increase the hedged portion of Capital Power’s Alberta commercial portfolio. At December 31, 2015 the net book value of the Sundance PPA was $56 million. Following the termination of the Sundance PPA, Capital Power expects to record a non-cash charge of approximately $53 million on a pre-tax basis, or about $46 million after tax.

Power Purchase Arrangements (PPAs or the Arrangements) were created by the Government of Alberta in 2000 as part of the transition from a regulated to a competitive generation market. PPAs are statutory instruments, established under the Power Purchase Arrangements Determination Regulation and continued through the Electric Utilities Act. The PPAs impose legal rights and obligations for Buyers, Owners, and the Balancing Pool in respect of the costs, revenues, and right to dispatch, among other things, of the electrical output and capacity associated with the power plants built under the regulated era. The proceeds from the initial PPA auctions and later sales were paid to the Balancing Pool and are being returned to Alberta electricity customers. The Balancing Pool’s mandate is to hold and administer any unsold PPAs, and to hold and administer any Buyer-terminated PPAs in accordance with the Arrangements and with applicable legislation.

Non-GAAP Financial Measures

The Company uses (i) adjusted EBITDA, (ii) funds from operations, (iii) normalized earnings attributable to common shareholders, and (iv) normalized earnings per share as financial performance measures. These terms are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP, and, therefore, are unlikely to be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, net income attributable to shareholders of the Company, net cash flows from operating activities or other measures of financial performance calculated in accordance with GAAP. Rather, these measures are provided to complement GAAP measures in the analysis of the Company’s results of operations from management’s perspective. Reconciliations of adjusted EBITDA to net income, funds from operations to net cash flows from operating activities and normalized earnings attributable to common shareholders to net income attributable to shareholders of the Company are contained in the Company’s Management’s Discussion and Analysis, prepared as of February 18, 2016, for the year ended December 31, 2015 which is available under the Company’s profile on SEDAR at www.SEDAR.com.

Forward-looking Information

Forward-looking information or statements included in this press release are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.

Material forward-looking information in this press release includes expectations regarding: (i) impacts to EBITDA, contractual obligations and hedge positions as a result of the termination of Capital Power’s role as Buyer of the Sundance PPA (the termination); (ii) the non-cash charge that will be recorded following the termination; (iii) the impact of the termination on the reliability and availability of electricity for Albertans and the operation of Alberta’s electricity market; and (iv) the impact of the termination on Capital Power’s other generation interests in Alberta and the company’s views of and commitment to the Alberta market.

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, expected future developments and other factors it believes are appropriate. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy prices, (ii) performance, (iii) business prospects and opportunities including expected growth and capital projects, (iv) status and impact of policy, legislation and regulation, and (v) effective tax rates.

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 material risks and uncertainties are: (i) changes in electricity prices in markets in which the Company operates, (ii) changes in energy commodity market prices and use of derivatives, (iii) regulatory and political environments including changes to environmental, financial reporting and tax legislation, (iv) power plant availability and performance including maintenance of equipment, (v) ability to fund current and future capital and working capital needs, (vi) acquisitions and developments including timing and costs of regulatory approvals and construction, (vii) changes in market prices and availability of fuel, and (viii) changes in general economic and competitive conditions. See Risks and Risk Management in the Company’s Management’s Discussion and Analysis, prepared as of February 18, 2016, for further discussion of these and other risks.

About Capital Power

Capital Power (TSX: CPX) is a growth-oriented North American power producer headquartered in Edmonton, Alberta. The company develops, acquires, operates and optimizes power generation from a variety of energy sources. Capital Power owns more than 3,200 megawatts of power generation capacity at 18 facilities across North America. An additional 530 megawatts of owned generation capacity is in advanced development in Alberta.