Capital Power reports fourth quarter and year-end 2012 results

2013 guidance unchanged 
EDMONTON, March 1, 2013 /CNW/ - Capital Power Corporation (Capital Power, or 
the Company) (TSX: CPX) today released its financial results for the fourth 
quarter and year ended December 31, 2012. Normalized earnings and cash flow in 
the fourth quarter were impacted by two specific events that reduced results 
in 2012, but are not expected to impact 2013 expectations. 
Normalized earnings attributable to common shareholders in the fourth quarter 
of 2012 were $16 million, or $0.23 per share, compared with $20 million, or 
$0.36 per share, in the comparable period of 2011. Funds from operations 
excluding non-controlling interests in CPILP were $83 million in the fourth 
quarter of 2012, a decrease of 6% from $88 million in the fourth quarter of 
2011. Cash flow per share for the quarter was $0.84 compared with $0.90 for 
the same quarter in the previous year. 
For the year ended December 31, 2012, normalized earnings attributable to 
common shareholders were $86 million or $1.29 per share compared with $55 
million or $1.24 per share for 2011. Funds from operations excluding 
non-controlling interests in CPILP totaled $381 million compared with $352 
million for the year ended December 31, 2011. Cash flow per share for both 
years was $3.89. 
"Fourth quarter 2012 results were generally in line with expectations before 
two events," said Brian Vaasjo, President and CEO of Capital Power. "First, 
the North East U.S. plants incurred a net pre-tax loss of $10 million relating 
to a heat rate option on the Bridgeport facility and action taken to mitigate 
the natural gas exposure associated with the option. The heat rate option, 
which was in place when Bridgeport was acquired in 2011, settled at a loss in 
November and December due to a significant shift in the underlying locational 
basis risk associated with the option. This basis risk existed because 
Bridgeport delivers power to and procures gas from locations differing from 
those referenced in the heat rate option. The basis risk has historically been 
minimal because the pricing correlation between the locations has consistently 
been very high for both power and gas. However, in November and December 2012, 
there was a spike in northeast U.S. natural gas demand combined with 
unexpected supply constraints in specific markets. These factors led to an 
anomalous widening of the price spread between the Bridgeport plant's natural 
gas consumption point and the heat rate option location, resulting in the 
loss. Importantly, the gas price differential risk has been fully mitigated 
for 2013 coinciding with the heat rate option expiring at the end of this 
year." 
"Second was significantly lower-than-normal wind for two months at the Quality 
Wind facility, which began commercial operations in early November 2012," 
added Mr. Vaasjo. "Based on historical wind data, the period from November to 
January typically has the strongest wind regime and our forecast assumed an 
average capacity factor of 47% for this three month period. The actual 
capacity factor for November and December averaged 27% and resulted in 
lower-than-forecasted operating margins of approximately $6 million. The 
capacity factor for January and February 2013 was in line with expectations." 
                                                               
Operational and Financial Highlights(  Three months
(1))                                  ended December      Year ended
(unaudited)                                 31            December 31 
(millions of dollars except per share
and operational amounts)                2012    2011     2012     2011 
Electricity generation (excluding
acquired Sundance PPA and CPILP
plants) (GWh)                           4,078   3,780   16,374   13,659 
Generation plant availability
(excluding acquired Sundance PPA and
CPILP plants) (%)                         89%     87%      91%      92% 
Revenues and other income             $   296 $   407 $  1,331 $  1,770 
Adjusted EBITDA((2))                  $    73 $   150 $    441 $    485 
Net income attributable to
shareholders                          $    15 $    84 $     62 $     77 
Basic earnings per share              $  0.19 $  1.47 $   0.84 $   1.60 
Diluted earnings per share            $  0.19 $  1.39 $   0.84 $   1.59 
Dividends declared per common share   $ 0.315 $ 0.315 $   1.26 $   1.26 
Normalized earnings attributable to
common shareholders((2))              $    16 $    20 $     86 $     55 
Normalized earnings per share((2))    $  0.23 $  0.36 $   1.29 $   1.24 
Funds from operations((2))            $    83 $    99 $    381 $    433 
Funds from operations excluding
non-controlling interests in CPILP(
(2))                                  $    83 $    88 $    381 $    352 
Cash flow per share ((2))             $  0.84 $  0.90 $   3.89 $   3.89 
Discretionary cash flow ((2))         $    12 $     8 $    132 $    131 
Capital expenditures                  $   165 $   177 $    598 $    493 


                                                                       

((1))     The operational and financial highlights in this
          press release should be read in conjunction with
          Management's Discussion and Analysis and the
          audited Consolidated Financial Statements for the
          year ended December 31, 2012.

((2))     Earnings before finance expense, income tax
          expense, depreciation and amortization,
          impairments, foreign exchange losses, and gains on
          disposals (adjusted EBITDA), Funds from operations,
          Funds from operations excluding non-controlling
          interests in CPILP, Cash flow per share,
          Discretionary cash flow, Normalized earnings
          attributable to common shareholders, and Normalized
          earnings per share are non-GAAP financial measures
          and do not have standardized meanings under GAAP
          and, therefore, may not be comparable to similar
          measures used by other enterprises. See Non-GAAP
          Financial Measures. Reconciliations of these
          non-GAAP financial measures to Net income
          attributable to shareholders, Earnings per share
          and Net cash flows from operating activities are
          included in the Company's Management's Discussion
          and Analysis dated March 1, 2013, which is
          available under the Company's profile on SEDAR at
          www.SEDAR.com.
           

Significant Events

$150 million offering of 4.60% Cumulative Rate Reset Preference Shares

On December 18, 2012, Capital Power Corporation issued 6 million Cumulative 
Rate Reset Preference Shares, Series 3 at $25 per share for aggregate gross 
proceeds of $150 million on a bought deal basis with a syndicate of 
underwriters.

The Series 3 Shares will pay fixed cumulative preferential dividends of $1.15 
per share per annum, yielding 4.60% per annum, payable on the last business 
day of March, June, September and December each year, as and when declared by 
the Board of Directors of Capital Power Corporation, for the initial period 
ending December 31, 2018. The Series 3 Shares are subject to specified 
redemption, conversion and reset rights.

Standard & Poor's (a division of the McGraw Hill Companies, Inc.) (S&P) has 
assigned a rating of P-3 and DBRS Limited (DBRS) has assigned a rating of 
Pfd-3 (low) for these Series 3 Shares.

Announcement of major expansion plans

In December 2012, Capital Power announced expansion plans including its joint 
venture agreement with ENMAX Corporation for the construction, ownership and 
operations of the Shepard Energy Centre with scheduled completion in early 
2015 and its intention to develop the Capital Power Energy Centre, a large 
natural gas facility that is scheduled for completion in the 2017 to 2020 
timeframe when additional generation in Alberta is required to meet growing 
demand and replace generation from the retirement of coal-fired units.

Completion and commercial operations commencement of wind projects

Capital Power completed construction of its 150 MW Halkirk facility located in 
central Alberta. The Alberta Electric System Operator declared Halkirk's 
commercially operational date on December 1, 2012. The facility was completed 
slightly ahead of scheduled timing and approximately 8% under budgeted cost of 
$357 million. Capital Power also completed construction of its 142 MW Quality 
Wind facility located in British Columbia with its commercial operation date 
being November 6, 2012. Construction was completed on time and approximately 
10% below its $455 million budget.

Impairment of North East U.S. assets

During the second quarter of 2012, Capital Power recognized a pre-tax 
impairment charge of $74 million with respect to its North East U.S. plants 
which reduced the carrying amount of the related property, plant and equipment 
and goodwill. This impairment was based on reduced expected operating margins 
for the Bridgeport, Rumford and Tiverton plants largely as a result of weaker 
spark spreads in the North East U.S power markets. The reduction in spark 
spreads is attributable to market and other changes since the April 2011 
acquisition of the North East U.S. assets; the fair value paid was consistent 
with other transactional values in the market at the time of acquisition. If 
expected operating margins strengthen, a portion of the impairment loss could 
be reversed. The impairment charge, after income taxes and non-controlling 
interests, was excluded from net income attributable to shareholders in 
determining normalized earnings per share. The impairment charge had no cash 
flow impact.

Sale of hydro facilities

On October 12, 2012, Capital Power completed the sale of its two British 
Columbia hydro facilities, Brown Lake and Miller Creek. The two facilities, 
which generate 40 MW into the British Columbia power grid, were sold to 
Innergex Renewable Energy Inc. for approximately $69 million and a pre-tax 
gain of $15 million was recorded in the Company's consolidated statement of 
income. The gain on disposal, after income taxes and non-controlling 
interests, was excluded from net income attributable to shareholders in 
determining normalized earnings per share. The gain on disposal had no cash 
flow impact.

Debt and equity base shelf prospectuses

On June 12, 2012, CPLP filed a Canadian base shelf prospectus, which expires 
in July 2014, under which it may offer and issue medium-term notes, due not 
less than one year from the date of issue, to the public in an aggregate 
principal amount not to exceed $1 billion.

On February 16, 2012, Capital Power filed a Canadian base shelf prospectus, 
which expires in March 2014, under which it may raise up to $2 billion 
collectively in common shares of the Company, preferred shares of the Company 
and subscription receipts exchangeable for common shares and/or other 
securities of the Company.

Secondary offering of Capital Power common shares by EPCOR

Effective April 5, 2012, EPCOR exchanged 9,775,000 of its exchangeable common 
limited partnership units in CPLP for common shares of Capital Power on a 
one-for-one basis and sold 9,775,000 common shares of Capital Power to the 
public pursuant to a secondary offering at $23.55 per common share. Capital 
Power did not receive any of the approximate $230 million of proceeds from 
EPCOR's sale of common shares. This transaction reduced EPCOR's ownership 
interest in CPLP to approximately 29% from its interest of approximately 39% 
at December 31, 2011. EPCOR has advised that it intends to sell all or a 
portion of its remaining interest in CPLP as its demands for capital require 
and market conditions permit.

$250 million debt issue

On February 21, 2012, CPLP completed a public offering of $250 million 
unsecured medium-term notes. The notes have a coupon rate of 4.85%, with 
interest payable semi-annually commencing on August 21, 2012 and mature on 
February 21, 2019. The net proceeds of the offering were used for repayment of 
amounts owing under credit facilities, financing on ongoing capital projects, 
working capital requirements, and general corporate purposes.

Sale of Atlantic Power shares

On February 10, 2012, the Company completed the sale of its shares in Atlantic 
Power, which were acquired in November 2011 as part of the Atlantic Power 
acquisition of CPILP, for proceeds of $52 million on a bought deal basis. 
These shares were initially recorded at $48 million and subsequently adjusted 
to their fair value of $53 million as of December 31, 2011 resulting in an 
unrealized gain of $5 million recognized in 2011. In the first quarter of 
2012, the Company recognized a realized pre-tax gain of $4 million with income 
taxes estimated to be $1 million offset by the reversal of the unrealized gain 
of $5 million recognized in the previous year.

Subsequent Event

On February 28, 2013, the purchase of the first tranche of the Company's 
interest in Shepard closed. Upon close of this transaction, the Company paid 
$237 million and acquired a 25% interest in Shepard. The total amount incurred 
by the Company to the date of close was $287 million compared with the total 
anticipated capital cost of $860 million. The second tranche, expected to 
close in the first quarter of 2014, will result in the Company's acquisition 
of an additional 25% interest in Shepard bringing its total ownership interest 
to 50%. Subsequent to the close of the first tranche, and prior to the close 
of the second tranche, all decisions related to Shepard will require unanimous 
approval by the Company and the third party. As a result, the Company jointly 
controls Shepard with the third party upon close of the first tranche. Based 
on the terms of the Shepard agreements, the Company will account for the 
Shepard joint arrangement, under the new accounting standard for joint 
arrangements, as a joint operation.

Analyst Conference Call and Webcast

Capital Power will be hosting a conference call and live webcast with analysts 
on March 4, 2013 at 11:00 AM (ET) to discuss the fourth quarter results. The 
conference call dial-in numbers are:
          (604) 681-8564 (Vancouver)
          (403) 532-5601 (Calgary)
          (416) 623-0333 (Toronto)
          (514) 687-4017 (Montreal)
          (855) 353-9183 (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: (855) 
201-2300 (toll-free) and entering conference reference number 952238# followed 
by participant code 21543#. The replay will be available until midnight on 
April 1, 2013.

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-GAAP Financial Measures

The Company uses (i)adjusted EBITDA, (ii)funds from operations, 
(iii)funds from operations excluding non-controlling interests in CPILP, 
(iv) cash flow per share, (v) discretionary cash flow, (vi) normalized 
earnings attributable to common shareholders, and (vii) 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 are therefore unlikely to be comparable to similar 
measures used by other enterprises. These measures should not be considered 
alternatives to gross income, net income, net income attributable of 
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 gross income, operating income and net income, funds 
from operations and funds from operations excluding non-controlling interests 
in CPILP 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 dated March 1, 2013 for the year ended December 31, 2012 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 
information with respect to expectations regarding the non-recurrence of 
losses related to the Bridgeport heat rate option and the Quality Wind 
capacity factor 2013 performance being closer to historical performance.

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 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) power plant availability and performance 
including maintenance expenditures, (ii) changes in commodity prices in 
markets in which the Company operates and use of derivatives, (iii) regulatory 
and political environments including changes to environmental, financial 
reporting and tax legislation, (iv) acquisitions and developments including 
timing and costs of regulatory approvals and construction; (v) ability to fund 
current and future capital and working capital needs, (vi) changes in energy 
commodity market prices and use of derivatives, and (vii) changes in general 
economic and competitive conditions. See Risks and Risk Management in the 
Company's Management's Discussion and Analysis dated March 1, 2013 for further 
discussion of these and other risks.



Media Relations: Michael Sheehan (780) 392-5222 msheehan@capitalpower.com

Investor Relations: Randy Mah (780) 392-5305 or (866) 896-4636 (toll-free) 
investor@capitalpower.com

SOURCE: Capital Power Corporation

To view this news release in HTML formatting, please use the following URL: 
http://www.newswire.ca/en/releases/archive/March2013/01/c9768.html

CO: Capital Power Corporation
ST: Alberta
NI: UTI ERN CONF 

-0- Mar/01/2013 21:15 GMT