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Attention Business/Financial Editors
Capital Power reports fourth quarter 2009 results
EDMONTON, March 9 /CNW/ - Capital Power Corporation (Capital Power, or
the Company) (TSX: CPX) released today its financial results for the three and
six month periods ended December 31, 2009. Reported net income for the fourth
quarter 2009 was $7 million or $0.33 per share. For the six months since
completion of the Company's Initial Public Offering, net income was $21
million or $0.97 per share. After adjusting for one-time items and fair value
adjustments, normalized earnings per share in the fourth quarter 2009 was
$0.18 per share and $0.60 per share for the six months ended December 31,
2009.
"Fourth quarter operating performance was in line with our expectations,"
said Brian Vaasjo, President and Chief Executive Officer of Capital Power.
"With the planned outage at our Genesee 1 plant in the quarter, average plant
availability was 92 per cent in the quarter and 94 per cent for the six
months. Alberta power prices were significantly lower in the second half of
2009 compared to the same period in 2008. However, a significant portion of
the company's merchant production in the latter half of 2009 was hedged at an
average price approximately 16 per cent higher than the average spot price for
electricity."
"We continue to experience weak power prices in Alberta that are expected
to remain low in 2010, mainly due to low natural gas prices," continued
Vaasjo. "However, substantially all of the company's merchant production in
2010 has been hedged at an average price above the current forward curve,
thereby minimizing the company's exposure to depressed power prices. The
long-term fundamentals of the Alberta power market remain positive and Alberta
power prices are expected to be amongst the first to recover in North America
based on the favourable supply/demand balance."
"In December 2009, we completed the commissioning of the third and final
natural gas turbine at the Clover Bar Energy Centre, well ahead of schedule
and at a cost approximately $21 million lower than previous estimates, with
the facility now at full capacity to provide 243 megawatts of peaking power to
the Alberta market," added Vaasjo. "In addition, the construction of the
Keephills 3 plant is on track for completion in the second quarter of 2011,
providing us with further significant leverage to recovering Alberta power
prices. Over and above these initiatives and, in line with our long-term
strategy, we continue to evaluate additional opportunities for growth."
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Highlights of Capital Power's operational and financial performance
included:
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Operational and Financial
Highlights(1)
(unaudited)
Three months Six months
(millions of dollars except ended ended
per share and operational amounts) Dec 31, 2009 Dec 31, 2009
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Electricity generation (GWh) 3,481 7,015
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Generation plant availability (%) 92% 94%
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Revenues $497 $1,008
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Gross margin(2) $216 $434
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Operating margin(2) $154 $323
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Net income $7 $21
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Earnings per share $0.33 $0.97
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Earnings per share(2) (normalized) $0.18 $0.60
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Dividends declared per share $0.315 $0.63
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Funds from operations(2) $71 $164
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Funds from operations excluding non-controlling
interests in CPILP(2) $49 $119
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Capital expenditures $127 $235
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(1) The operational and financial highlights in this press release are
derived from and should be read in conjunction with Management's
Discussion and Analysis and the Consolidated Financial Statements for
the six months ended December 31, 2009, which are available on the
Company's website at www.capitalpower.com and on SEDAR at
www.sedar.com.
(2) Gross margin, Operating margin, Earnings per share (normalized),
Funds from operations and Funds from operations excluding non-
controlling interests in CPILP 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" in the Company's annual Management's
Discussion and Analysis for its year ended December 31, 2009, which
are available on the Company's website at www.capitalpower.com and on
SEDAR at www.sedar.com.
Recent corporate developments
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Sale of Battle River Power Syndicate Agreement
On January 15, 2010, the Company sold its remaining 15% interest in the
Battle River Power Syndicate Agreement (PSA) for cash proceeds of $64 million
resulting in a pre-tax gain of $28 million and $2 million of associated income
taxes. At December 31, 2009, the 15% interest was classified for financial
reporting purposes as current assets held for sale.
Two new turbines at Clover Bar Energy Centre
Two new 100 megawatts (MWs) natural gas-fired turbines commenced
operations at the Company's Clover Bar Energy Centre; one in September, 2009
and the other in December, 2009. These two units combined with the first unit,
which commenced operations in the first quarter of 2008, provide a net
capacity of 243 MW for the total facility.
Construction of the final 100-MW unit was completed approximately six
months ahead of schedule as the Company was able to capitalize on lessons
learned during the construction of Unit 2. The cost of all three units will be
approximately $263 million compared to previous estimates of approximately
$284 million. The units will contribute to meeting the expected demand for
additional peaking generation in Alberta. These new high-efficiency units are
also designed to use 85% less water and produce 70% less nitrogen oxides (NOx)
than the four turbines in the old Clover Bar plant which was decommissioned in
2007.
Keephills 3 receives funding for carbon capture and storage
Keephills 3 is a joint development and equal ownership project of Capital
Power and TransAlta Corporation (TransAlta) for the construction of a 495-MW
supercritical coal-fired generation plant at TransAlta's Keephills site. As
part of Keephills 3, Capital Power is partnering with TransAlta and Alstom
Canada (Alstom) to develop one of the world's largest carbon capture and
storage (CCS) projects, Project Pioneer (Pioneer). In October 2009, a letter
of intent was signed with the Province of Alberta under which Pioneer will be
eligible to receive funding from the province's $2 billion CCS fund. The
Government of Canada is also contributing toward the project through its Clean
Energy Fund. The first stage of the project is to conduct front-end
engineering and design (FEED) studies that will confirm the detailed
engineering and economics of the project.
Using Alstom's chilled ammonia process, Pioneer will be designed to
capture one million tonnes of greenhouse gas emissions annually. Keephills 3
was designed to reduce greenhouse gas emissions by 18% compared with vintage
facilities and Pioneer will deliver a further 31% reduction in Keephills 3's
carbon dioxide (CO(2)) emissions. The second phase of FEED work for Pioneer is
scheduled to be completed by early 2011 (previously June 2010), and will
include detailed engineering and procurement planning. The development of
Pioneer is not expected to affect the construction schedule for Keephills 3.
In addition to the Pioneer project, Capital Power will complete the FEED
work on its pre-combustion CCS project (the Genesee Integrated Gasification
Combined Cycle (IGCC) power plant). The FEED project is being conducted in
conjunction with the Canadian Clean Power Coalition, in partnership with the
Alberta Energy Research Institute and Natural Resources Canada. However,
Capital Power does not intend to develop an IGCC facility at this time,
primarily because the technology is not economic in today's power price
environment.
Update on Keephills 3 project
In October 2009, the Board of Directors of Capital Power and TransAlta
approved additional funding and a revised schedule for the Keephills 3
project. The total project cost was revised from approximately $1.8 billion to
approximately $1.9 billion and Capital Power's share was correspondingly
revised from approximately $903 million to approximately $955 million. The
increase primarily relates to additional labour required for the construction
of the power island which is the portion of the plant that includes the
turbine, boiler, air quality control system, water-treatment plant and control
room. The station service transformer began receiving power in November 2009
which signified achievement of the project's first commissioning milestone.
Commencement of the plant's commercial operations was rescheduled from the
first quarter of 2011 to the second quarter of 2011.
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Analyst Conference Call and Webcast
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Capital Power will be hosting a conference call and live webcast with
analysts on March 10, 2010 at 1:00 pm (ET) to discuss fourth quarter results.
The conference call dial-in numbers are: (416) 340-8018 or (866) 223-7781
(toll-free). Interested parties may access the webcast on the Company's
website at www.capitalpower.com. An archive of the webcast will be available
on the website.
A replay of the conference call will be available following the call at:
(416) 695-5800 or (800) 408-3053 (toll-free) and entering pass code 7386730.
The replay will be available until 11:59 p.m. (ET) on March 17, 2010.
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Forward-looking Information
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Certain information in this news release is forward-looking within the
meaning of Canadian securities laws as it relates to anticipated financial
performance, events or strategies. When used in this context, words such as
will, anticipate, believe, plan, intend, target, and expect or similar words
suggest future outcomes.
Forward-looking information in this news release includes, among other
things, information relating to: (i) expected timing of commercial operation
and project cost of Keephills 3; (ii) the expected improvement in and
reduction of current and future plants' environment emission levels and
ability to capture future emissions; (iii) expectations for Alberta spot power
prices in 2010; (iv) expectation that the Alberta commercial portfolio
position in 2010 will reduce exposure to changes in power prices; and (v) the
expected total costs for all three units of the Clover Bar Energy Centre.
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 include, but are not limited to: (i) the
operation of the Company's facilities; (ii) power plant availability,
including those subject to acquired PPAs; (iii) the Company's financial
position and credit facilities; (iv) the Company's assessment of commodity and
power markets; (v) the Company's assessment of the markets and regulatory
environments in which it operates; (vi) weather; (vii) availability and cost
of labour and management resources; (viii) performance of contractors and
suppliers; (ix) availability and cost of financing; * foreign exchange rates;
(xi) management's analysis of applicable tax legislation; (xii) the currently
applicable and proposed tax laws will not change and will be implemented;
(xiii) currently applicable and proposed environmental regulations will be
implemented; (xiv) counterparties will perform their obligations; (xv) renewal
and terms of PPAs; (xvi) ability to successfully integrate and realize
benefits of its acquisitions; (xvii) ability to implement strategic
initiatives which will yield the expected benefits; and (xviii) the Company's
assessment of capital markets and ability to complete future share offerings.
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 risks
and uncertainties include, but are not limited to risks relating to: (i)
operation of the Company's facilities; (ii) power plant availability and
performance; (iii) unanticipated maintenance and other expenditures; (iv)
availability and price of energy commodities; (v) electricity load settlement;
(vi) regulatory and government decisions including changes to environmental,
financial reporting and tax legislation; (vii) weather and economic
conditions; (viii) competitive pressures; (ix) construction; * availability
and cost of financing; (xi) foreign exchange; (xii) availability and cost of
labour, equipment and management resources; (xiii) performance of
counterparties, partners, contractors and suppliers in fulfilling their
obligations to the Company; (xiv) developments in the North American capital
markets; (xv) compliance with financial covenants; (xvi) ability to
successfully realize the benefits of acquisitions and investments; and (xvii)
the tax attributes of and implications of any acquisitions. If any such risks
actually occur, they could materially adversely affect the Company's business,
financial condition or results of operations. In that case the trading price
of the Company's common shares could decline, perhaps materially.
Readers are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
Forward-looking statements are provided for the purpose of providing
information about management's current expectations, and plans relating to the
future. Readers are cautioned that such information may not be appropriate for
other purposes. 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.
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About Capital Power
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Capital Power is a growth-oriented North American independent power
producer, building on more than a century of innovation and reliable
performance. The Company's vision is to be recognized as one of North
America's most respected, reliable and competitive power generators.
Headquartered in Edmonton, Alberta, Capital Power has interests in 31
facilities in Canada and the U.S. totaling approximately 3,500 megawatts of
generation capacity. Capital Power and its subsidiaries develop, acquire and
optimize power generation from a wide range of energy sources.
-30-
/For further information: Media Relations: Mike Long, (780) 392-5207,
mlong@capitalpower.com; Investor Relations: Randy Mah, (780) 392-5305 or (866)
896-4636 (toll-free), investor@capitalpower.com/
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