Company delivering on growth in contracted cash flows and risk reduction
EDMONTON, Alberta – At its annual Investor Day event in Toronto today, Capital Power Corporation (TSX: CPX) (“Capital Power” or “the Company”) will review various topics including its plans and progress on decarbonization, growth strategy and the Company’s business outlook, and will also provide operational and financial targets for 2018.
North America is on a path towards a greener energy future and Capital Power is advancing lower carbon energy through investments in new, cleaner energy sources with the integration of natural gas, renewables and coal to natural gas conversion. Capital Power has expertise in the transition to lower carbon and is a leader in the carbon offset markets.
Among the Company’s business partners in addressing a cleaner energy future is GE Canada. “GE has been pleased to collaborate with Capital Power over the past two years by developing and providing digital and hardware solutions that are assisting Capital Power to be a world leader in carbon reduction from coal plants,” said Elyse Allan, President & CEO, GE Canada.
“We’re pleased to be recognized by a global company such as GE for our decarbonization plans and the actions we have taken towards reducing greenhouse gas (GHG) emissions at our Genesee coal facilities,” said Brian Vaasjo, President and CEO of Capital Power. “We are executing on strategies that sustain operational excellence while reducing our GHG emissions, cost and risk. The conversion of our coal facilities to natural gas is largely dependent on carbon taxes and natural gas prices. In the interim, we are implementing our world-leading Genesee Performance Standard program that reduces fuel and carbon compliance costs to deliver significant cost savings on coal or natural gas generation.”
“The acquisitions and wind farm development activities in 2017 have positioned us very well for the future. In addition to the recently announced New Frontier wind project, we expect to secure two to four additional wind farms projects by the end of 2018,” continued Mr. Vaasjo.
In 2017, Capital Power continued to grow its contracted cash flows through acquisitions and development of assets in North America by adding nearly 1,300 megawatts of generation to its fleet.
Financial results remain on track for 2017 with adjusted funds from operations (AFFO) expected near the mid-point of the Company’s revised annual target range of $340 million to $385 million. For 2018, the Company is targeting an approximate 5% increase in AFFO based on the mid-point of its $360 million to $400 million target range. Demonstrating Capital Power’s confidence in this forecast AFFO growth, the Company reaffirms its 7% annual dividend growth guidance to 2020.
Outlook for 2018
The Company will discuss its corporate priorities and financial targets for 2018 including:
- Completion of the New Frontier Wind project on-budget and on-time for commercial operations in December 2018,
- commit capital of $500 million for contracted growth,
- secure an additional 2-4 contracted wind developments by the end of 2018,
- a capacity-weighted average plant availability of 95%, reflecting planned outages at Genesee 2 and Genesee 3,
- plant maintenance capital and sustaining capital expenditures of up to $85 million, and plant operating and maintenance expenses of $230 million to $250 million,
- adjusted funds from operations (AFFO) of $360 million to $400 million, based on 81% of the Alberta commercial baseload generation portfolio sold forward at an average contracted price in the high-$40 per megawatt hour range, and
- a dividend increase of 7%, in-line with its annual dividend growth expectations.
Investor Day event and webcast information
Capital Power’s Investor Day event is being held today at the Vantage Venues (formerly St. Andrew’s Club and Conference Centre) located at 150 King Street West, 16th floor in Toronto. Registration begins at 8:30 am (ET) with presentations starting at 9:00 am. A live audio webcast of the event is available on the Company’s website at www.capitalpower.com. The webcast will be archived and accessible for replay.
Non-GAAP Financial Measures
The Company uses (i) adjusted EBITDA and (ii) adjusted funds from operations 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.
Forward-looking information or statements 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 disclosures regarding: (i) adjusted funds from operations, maintenance capital and sustaining capital expenditures, and operating and maintenance expenses, (ii) dividend growth, (iii) development of new projects, (iv) plant availability.
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) anticipated facility performance, (iii) business prospects and opportunities including expected growth and capital projects, (iv) status of and impact of policy, legislation and regulations, 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, market structure and tax legislation, (iv) facility 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 for the year ended December 31, 2016, prepared as of February 17, 2017, for further discussion of these and other risks.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the specified approval date. 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.
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 approximately 4,500 megawatts of power generation capacity at 24 facilities and is pursuing contracted generation capacity throughout North America.