EDMONTON, Alberta, Aug. 04, 2020 (GLOBE NEWSWIRE) — Capital Power Corporation (“Capital Power” or the “Company”) (TSX: CPX) announced today the execution of a 10-year tolling agreement extension through December 2032 for Decatur Energy Center (Decatur Energy) with the current counterparty. Decatur Energy is a natural gas-fired combined cycle facility located in Decatur, Alabama that began commercial operations in 2002. Decatur Energy sells capacity and energy to a regional entity with an A-rated credit rating under a tolling agreement with an original term of 10 years that was to expire in December 2022.
“When we acquired Decatur Energy in 2017, we believed there was a high probability of re-contracting based on its history of re-contracting and the need for capacity in the region due to supply retirements and load growth,” said Brian Vaasjo, President and CEO of Capital Power. “This 10-year extension validates our acquisition strategy of acquiring mid-life contracted natural gas assets that have a positive outlook for re-contracting and have value beyond the current contract term.”Since the acquisition in June 2017, Capital Power has been upgrading Decatur Energy’s combustion turbines to increase capacity, improve the facility’s heat rate and fuel efficiency and maintain reliability. To date, two of three combustion turbines have been upgraded adding approximately 60 megawatts (MW) of additional capacity. The third combustion turbine is expected to be upgraded in 2021 adding approximately 30 MW. Under the terms of the extension, Decatur Energy will receive payments for 34 MW of additional capacity immediately and will receive capacity payments on up to an additional 79 MW upon execution of an updated interconnection agreement that is expected to be finalized in 2021. As a result, adjusted EBITDA is expected to increase by $11 million (US$8 million) in 2021 and $27 million (US$20 million) in 2022. In 2023, the first year of the additional 10-year term, adjusted EBITDA is expected to be $73 million (US$54 million) per year and then decline by approximately 4% on average per annum over the term.Capital Power provided a forecasted average adjusted EBITDA of $60 million in the first full year of operations when the Company announced the acquisition in 2017.Non-GAAP measures
Capital Power uses earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from joint venture interests, gains or losses on disposals and unrealized changes in fair value of commodity derivatives and emission credits (adjusted EBITDA) to measure the operating performance of facilities and categories of facilities from period to period. Management believes that a measure of facility operating performance is more meaningful if results not related to facility operations such as impairments, foreign exchange gains or losses and gains or losses on disposals are excluded from the adjusted EBITDA measure. Commencing with the Company’s March 31, 2019 quarter-end, adjusted EBITDA excludes unrealized changes in fair value of commodity derivatives and emission credits which were previously included in adjusted EBITDA. This change was made to better align the Company’s measure of adjusted EBITDA with its other non-GAAP measures, as both the adjusted funds from operations and the normalized earnings per share measures exclude the impacts of unrealized changes in fair value of commodity derivatives and emission credits. This change also results in improved period over period comparability of adjusted EBITDA.Adjusted EBITDA is not a defined financial measure according to GAAP and does not have a standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures used by other enterprises. Adjusted EBITDA should not be considered an alternative to net income, calculated in accordance with GAAP. Rather, this measure is provided to complement the nearest GAAP measure in the analysis of the Company’s results of operations from management’s perspective.See Non-GAAP measures in the Company’s Management’s Discussion and Analysis for the six months ended June 30, 2020 for further discussion of this metric and a reconciliation of adjusted EBITDA to net income.Forward-looking information
Certain information in this news release is forward-looking information within the meaning of Canadian securities laws as it relates to anticipated financial or operating performance, events or strategies. When used in this context, words such as “anticipate”, “believe”, “continue”, “estimate”, “plan”, “intend”, “expect”, “target” and “will” or similar words suggest future outcomes. By their nature, such statements are subject to significant risks, assumptions and uncertainties, which could cause the Company’s actual results and experience to be materially different than the anticipated results. Forward-looking information or statements included in this news release are provided to inform the Company’s shareholders and potential investors about management’s assessment of the Company’s future plans and operations. This information may not be appropriate for other purposes.Material forward-looking information in this press release includes expectations pertaining to Decatur Energy regarding: (i) timing of completion and magnitude of the remaining expected combustion turbine upgrade, and (ii) the expected impacts to adjusted EBITDA.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) performance; and (ii) the status of and impact of policy, legislation and regulations.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) facility availability and performance including maintenance expenditures; (ii) regulatory and political environments including changes to environmental legislation; and (iii) changes in general economic and competitive conditions. See Risk Factors in the Company’s 2019 Management’s Discussion and Analysis, as well as the Management’s Discussion and Analysis for the six months ended June 30, 2020, 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, owns, and operates power generation facilities using a variety of energy sources. Capital Power owns approximately 6,400 megawatts (MW) of power generation capacity at 28 facilities across North America. Approximately 190 MW of owned generation capacity is in advanced development in Alberta.

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