Capital Power Announces Third Quarter 2023 Results
Press Release
November 01, 2023
EDMONTON, Alberta – Capital Power Corporation (TSX: CPX) (“Capital Power” or the “Company”), a growth-oriented North American power producer with a strategic focus on reliable, affordable and decarbonized power, today released their financial and operational results for the third quarter ended September 30, 2023.
“During the quarter, we once again saw strong fleetwide performance. Solid contributions from our U.S. and Ontario contracted assets – including the Midland Cogeneration Venture in Michigan that we acquired just over a year ago – partially offset the impact of lower realized power prices in the Alberta commercial portfolio and underscore the benefit of a diversified fleet,” said Sandra Haskins, SVP Finance and CFO of Capital Power. Ms. Haskins added that “based on year-to-date results and our outlook for the fourth quarter, 2023 full year results are currently trending below the midpoint of the guidance range for AFFO and adjusted EBITDA.”
“As we work towards achieving net zero in our power supply by 2045, we continue to capitalize on opportunities to diversify our footprint and deliver reliable, affordable and decarbonized power for communities across North America,” said Avik Dey, President and CEO of Capital Power. “Consistent with our mid-life natural gas strategy, we’ve entered into an agreement to acquire the high-quality Frederickson 1 Generating Station that will diversify our presence into the Pacific Northwest. This fully contracted, flexible power generation asset is well-positioned to provide reliable, long-term energy security in the region,” stated Mr. Dey.
Capital Power has expanded its Executive Team and optimized their portfolios to lead the Company to net zero by 2045. “With decades of industry experience, this dynamic group is the propelling force behind the development of critical solutions that will meet the growing long-term demand for power across North America. I am happy to extend a warm welcome to Pauline McLean, May Wong, Jason Comandante and Steve Wollin to our leadership team,” said Mr. Dey. “Lastly, Capital Power will host our Investor Day in Edmonton, Alberta on May 7 and 8, 2024. Further details and our 2024 full-year guidance will be announced in Q4 2023.”
Operational and Financial Highlights1
Bryan DeNeve, Senior Vice President, Chief Commercial Officer
Moving into a new portfolio, Bryan now oversees commercial business initiatives across North America, including the physical and financial optimization and decarbonization of Capital Power’s fleet. With 27 years of service with the Company, Bryan has previously served as Senior Vice President, Operations, where he was responsible for the safe operation of approximately 7,500 megawatts of power generation capacity across North America, as well as Senior Vice President, Business Development and Commercial Services and Senior Vice President, Finance and Chief Financial Officer.
Sandra Haskins, Jacquie Pylypiuk and Steve Owens continue to serve in their current roles as Senior Vice President, Finance and Chief Financial Officer; Senior Vice President, Technology and Chief People and Culture Officer; and Senior Vice President, Construction and Engineering, respectively. Chris Kopecky, former Senior Vice President and Chief Legal, Development & Commercial Officer remained in an advisor role with the Company until September 15, 2023.
Board of Director changes
On August 1, 2023, the Company announced the appointment of Carolyn Graham to Capital Power’s Board of Directors (the Board) effective August 2, 2023. The appointment follows the retirement of Katharine Stevenson from the Board. With this appointment and retirement, the Board consists of 10 directors, with 44% of the independent directors being women; and 33% of the independent directors representing diverse groups beyond gender.
Reinstatement of Dividend Reinvestment Plan
On August 1, 2023, the Company reinstated its Dividend Reinvestment Plan (the Plan), which was previously suspended during the fourth quarter of 2021. Eligible shareholders may elect to participate in the Plan commencing with the Company’s third quarter 2023 cash dividend. The reinstated Plan will provide eligible shareholders with an alternative to receiving their quarterly cash dividends. Under the Plan, eligible shareholders may elect to efficiently and cost-effectively accumulate additional shares in the Company by reinvesting their quarterly cash dividends on the applicable dividend payment date in new shares issued from treasury. The new shares will be issued at a discount of 1% to the average closing price on the Toronto Stock Exchange for the ten trading days immediately preceding the applicable Dividend Payment Date. Participation in the Plan is optional. Those shareholders who do not enroll in the Plan will still be entitled to receive their quarterly cash dividends. Shareholders that were enrolled in the Plan upon suspension, and remain enrolled with the Plan administrator, will automatically resume participation in the Plan.
Dividend increase
On August 1, 2023, the Company’s Board of Directors approved an increase of 6% in the annual dividend for holders of its common shares, from $2.32 per common share to $2.46 per common share. This increased common share dividend will commence with the third quarter 2023 quarterly dividend payment on October 31, 2023 to shareholders of record at the close of business on September 29, 2023.
Secured 1 GW supply of responsibly produced, ultra-low carbon First Solar modules
On July 5, 2023, the Company announced it has secured its first order of responsibly produced, ultra-low carbon thin film solar modules for approximately 1 gigawatt direct current (GWdc) from First Solar, Inc. The solar modules, which will be delivered between 2026 and 2028, will support Capital Power’s growing development portfolio and qualify our projects for domestic content under the Inflation Reduction Act (IRA).
Updates to Genesee Repowering project schedule and costs and Battery Energy Storage System project no longer required
On June 29, 2023, the Company announced modifications to the commissioning timelines for the repowered units as a result of construction delays on the Repowering Project. Simple cycle commissioning of Unit 1 is expected to commence in December 2023, approximately 60 days later than initially anticipated. Simple cycle commissioning for Unit 2 is expected to be further delayed and will begin in March 2024. Combined cycle commissioning is expected to begin in April 2024 (Unit 1) and June 2024 (Unit 2). The total capital costs for the Repowering Project have increased to $1.35 billion as a result of cost escalations and increased labour costs.
Subsequently, the AESO completed its review process and provided conditional approval to Capital Power’s alternate solution to utilize unique operational characteristics of the repowered units to meet the Most Severe Single Contingency (MSSC) limit of 466 MW. The 210 MW Genesee BESS which was added to the repowering project to meet the MSSC limit will not be needed. As a result, the Company is cancelling that portion of the project.
Maple Leaf Solar project awarded 25-year contract
On June 29, 2023, the Company announced it executed a 25-year, fixed price renewable power purchase agreement (PPA) for 100% of the output from its Maple Leaf Solar project (Maple Leaf) with Duke Energy Progress (DEP) as part of the 2022 Duke Energy Solar Procurement Program. Maple Leaf is a 73 MWac (92 MWdc) solar development project in Selma, North Carolina. The construction of Maple Leaf is planned to begin in 2025 at a total cost of approximately US$165 million with an expected commercial operations date in the fourth quarter of 2026, pending completion of the Duke interconnection upgrades. Local zoning approvals were obtained in May 2023 and detailed design and permitting are underway.
Contracts executed for Natural Gas and Batteries from Ontario IESO’s bids
Capital Power’s active participation in the Ontario Independent Electric System Operator’s (IESO) expedited call for new power generation and capacity in high priority areas to help address the IESO’s forecasted shortfall, resulted in five successful bids.
On June 29, 2023, the Company announced that it has:
- Executed two long-term contracts for the East Windsor Expansion (81 MW summer and 100 MW winter contracted capacities) and the York BESS project as part of the IESO’s Expedited Long-Term request for proposals (RFP) process. Both projects are expected to begin commercial operations in 2025. Capital Power holds 100% interest in the York Energy BESS project.
- Been selected as a successful proponent for the Goreway BESS project as part of Category 2 of the Ontario IESO’s Expedited Long-Term request for proposals. The contract was subsequently executed in July 2023 and the project is expected to enter service in 2025.
IBF4
