Q3 2019 Earnings Call
Welcome to capital powers third quarter 2019 results conference call.
At this time all participants are in listen only mode. Following the presentation. The conference call will be open for questions. This call is being recorded today October 28, 2019, I'll now turn the call over to Mr., Randy Moss Director of Investor Relations. Please go ahead.
Good morning, Thank you for joining us today to real capital powers third quarter 2019 results, which were released earlier. This morning, a third quarter financial results in the presentation for this conference call are posted on our web site at capital part Dot Com.
Joining me on the car, Brian Bausch, <unk>, President and CEO and bright didn't need senior Vice President and CFO , we'll start with the opening comments and then open up the let's take your questions.
Before we start I would like to remind everyone that certain statements about future events made on this call are forward looking in nature are based on certain assumptions analysis made by the company actual results could differ materially from the company's expectations due to various risks and uncertainties associated with our business.
Please refer to the cautionary statement or forward looking information slide number two.
In today's discussion that we will be referring to various non-GAAP financial measures as noted on slide number three these measures are not defined financial measures. According to GAAP and do not have standardized meanings prescribed by gap and therefore are unlikely to be comparable to similar measures used by other enterprises. These measures are provided to complement the GAAP measures, which will provide.
But in the analysis of the company's results from management's perspective.
Reconciliations of these non-GAAP financial measures can be found in our third quarter 2019 Mdna.
Now turn the call over to Brian Battle for his remarks, starting on slide four.
Thanks, Randy and good morning, I'll start off with the highlights for the third quarter.
In August we entered into an agreement to acquire the remaining 50% interest in Genesee three from Transalta Corp. In exchange for the divestiture of our 50% chair and Keephills, three and 10 million and cash the transaction closed on October Onest.
We have assumed full control of the Genesee generating station, which allows us the strategic freedom to make decisions that further optimize value. This includes accelerating our dual fuel capability plans to maximize flexibility and using natural gas as fuel the transformation of the units to 100% dual fuel.
It is on track with Genesee to expected to be 100% dual fuel and by mid 2020, followed by Genesee one in the spring of 2021.
In the third quarter, we had excellent operating performance from our generation fleet with 96% availability.
This included a planned outage at the jet dropped brief facility for most of September that reduced its availability to 82%.
As part of our normal course issuer bid program. When we bought back 1.6 million common shares for $50 million in the third quarter 2019 year to date, we bought back approximately 2 million shares for 60 million.
Turning to slide five I'll review, Alberta power prices in the third quarter. The average power price was $47 per megawatt hour compared to $55 in the third quarter 2018, the lower power price was impacted by lower than average summer temperatures and low natural gas prices.
On a year to date basis. The average power price was $58 per megawatt hour that is 18% higher than the $49 power price in 2018.
We see a positive outlook for Alberta power prices based on our on current forward prices were 2019 to 2021 forward prices are averaging $57 per megawatt hour I'll now turn the call over to Brian do you need.
Thanks, Brian .
I'll review the financial highlights starting on slide six the third quarter financial results were in line with our expectations that included a record quarter for AFFO of 225 million.
As Brian mentioned, the average spot power price was $47 per megawatt hour in the third quarter. However, our trading desk captured in average realized price up $59 that was 26% higher than the average spot price.
The $59 average realized price was also higher than the $54 realized price in Q3 2018.
One of the significant items from an accounting perspective was the swap of the Jana C and Keephills three assets.
With the closing date of October Onest.
Transaction spans over two quarters.
And therefore impacts the financial results for both Q3 and Q4 of this year.
The overall expected net impact is a noncash pretax net loss of 227 million driven by three core components.
First the pretax impairment of K three of 401 million, which was recorded during the third quarter immediately prior to Cadthree being classified as an asset held for sale.
This will be partially offset by the accounting for the close of the transaction in the fourth quarter of 2019.
Which will include a 60 million gain on the re measurement of our previously owned share of GE three as well as other income of $114 million for the accelerated recognition of the all coal compensation deferred revenue from the Alberta government.
This accelerated recognition aligns with the net reduction in coal asset carrying amounts driven by the transaction.
Moving to slide seven I'll review, our financial results in the third quarter compared to the third quarter 2018.
Revenue in other income were 517 million up 31% compared to the third quarter of 2018 due to higher realized power prices increased generation.
Adjusted EBITDA was 284 million up 59% year over year.
The higher adjusted EBITDA was largely driven by the acquisitions of Arlington Valley and go our way in commercial operations of New Frontier wind that were added to the fleet after the third quarter of 2018.
Normalized earnings of 60 cents per share was up compared to 33 cents per share in the third quarter of 2018.
We generated 225 million in a full a record quarter that was up 44% year over year AFFO per share was $2.11.
39% from the third quarter of 2018.
Slide eight shows our financial performance on a year to date basis compete compared to the same period in 2018.
Revenues in other income were 1.28 billion up 19% year over year, adjusted EBITDA was $677 million up 20% compared to 2018.
Due to the additions of Arlington Valley in Norway is stronger performance from the Alberta commercial segment.
Normalized earnings of one dollar five per share were up 30% compared to 81 cents a 2018.
The first nine months of the year, we have generated an AFFO of 427 million that was up 35% year over year AFFO per share was $4.11 up 34% from the same period in 2018.
Overall, our year to date results showed double digit increases in the key financial metrics.
Turning to slide nine I'll provide an update on our commercial portfolio positions.
The second quarter of this year, we've increased our 2020 hedge position from 41% to 53% at an average contract price in the mid $50 per megawatt hour range.
For 2021 were 2% hedged at an average con track price in the high $60 per megawatt hour range and for 2022 were 10% hedged at an average contract price in the low $50 per megawatt hour range.
This compares to current average forward prices of $57 per megawatt hour for 2020, $58 for 2021 and $54 for 2022.
Ill now turn the call back to growth.
Thanks, Brian I'll conclude our comments on our results to date by comparing our nine months performance against our 2019 annual targets as shown on slide 10, our average facility availability was 95% and we're on track to achieve the 95% annual.
Target.
Sustaining capital expenditures were 58 million in the first nine months and we continue to forecast, an 80 million to $90 million range for the full year.
Adjusted EBITDA was $677 million year to date, and we are currently forecasting to be above the midpoint of 870 million to 920 million target.
We have generated $427 million in full year to date and we continue to expect that we will be at the top end of our $485 million, the 535 million target range for the full year.
Slide 11 outlines our development and construction targets for 2019, we currently have to fully contracted wind projects under construction. This includes with law wind in Alberta with commercial operations targeted for the fourth quarter. This year.
The budget for wed like 315 to 325 million and is currently tracking over budget at 340 million largely due to foreign exchange impacts.
We also have our Cardinal wind project under construction in Illinois, the budget is $289 million to $301 million with a target to began commercial operations in March of 2020. Once completed these two wind projects will add 350 megawatts of long term contracted generation to our fleet.
We also exceeded our 500 million or committed contracted growth capital in 2019 with a 1 billion dollar acquisition. Other go our way facility in June .
I'll now turn the call over to Randy.
Thanks, Brian if we do before we start to Q any I would like to announce a deep for our upcoming Investor day event, you'll be held in Toronto on December the fifth and will be a half. The morning event more details on that that will be provided in our press release that would be sent out later this week. Okay. Operator, we're ready to start the company.
Thank you, we'll now begin the question and answer session to join the question Q You May Press Star then one on your telephone keypad, you'll hear a tone acknowledging your request. If you are using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then to once again to join the question.
Thank you. Please press Star then one now.
Our first question comes from Robert help of Scotia capital.
Good morning, everyone. Thanks for taking my questions.
Maybe to start off could you give us an update on how you're looking at the renewable power market in Alberta, we've seen a couple of projects and forward on a pure merchant basis, and just wanted to get a sense of how you're looking at your own development sites in the province, and whether or not we could see a wed love to on the merchant base.
Yes.
You know as Ed.
As you've indicated there are certainly some projects that are.
As you say inching forward on them on a potentially emerge and basis I think we've indicated even since our last investor day that.
We believe wed love to in particular is very close to itself moving forward on on emerge and basis and we do continue to look for contracts as well that could support the construction at that facility.
All right. Thank you for that and then when we look at the overall, Alberta power market. We saw on you had some hedges in 2020 less so for 2021.
Just want to get a sense of how you're looking at the market. If you think there'll be any additional changes there or is it just that you saw a good liquidity in 2020 and added some some hedges there.
Yeah, we've seen liquidity improve.
Significantly over the last quarter in the Alberta wholesale market.
We believe you know part of that's driven by the confirmation that the energy only market is going to remain in place so without market certainty.
You see end users more willing to sign.
Forward arrangements.
The other thing is.
Given that the market has.
Regained supply demand balance that also has.
Provided us.
Impetus for customers some customers so to look to hedge their position. So we.
We're hopeful that we'll continue to see that liquidity improvement on a.
Go.
Forward going basis.
All right appreciate the insight.
Our next question comes from Mark Jarvi of CBC capital markets.
Hi, good morning.
Two questions one was around re contracting opportunities, Ontario talks a little bit more incremental disclosure, but potentially having some discussions in late 2019 and 2020, maybe just kind of comment on how you see those playing out I'm wondering you guys would be in a position to discuss.
Re contracting potential.
Yes.
Maybe you can you give us.
A bit more background on that where you see the reference to Ontario, I think our discussions on re contracting currently are focused on Decatur in Alabama, and idle and NBC.
Okay, maybe was on there's I'm just maybe just broadly on what you guys see play over the next year then yeah. So in terms of.
Decatur facility.
We're in active discussions with the Tennessee Valley Authority.
In terms of re contracting not facility.
It's going through their internal processes right now.
We hope that will be completed.
During the balance of this year and we'll have something to speak to at Investor Day on December Fiveth.
With Eilon generation that process is going to take a little longer.
So.
At some point in 2020, we would expect to have something we can publicly announce on on that facility.
Okay. That's helpful and then on Arlington Valley. Given this is sort of first quarter. We've seen it we don't have a year, where comps maybe comment on how that asset performed and how you think revenue and generation was relative to expectations.
Yes so.
Arlington.
Has performed.
And I consistent with our risk business case.
Underlying acquisition of that asset.
We did put in place a heat rate call option.
Which is in place for the non toll months.
On a go forward basis through 2026, we've only had one month experience, which was April of this year, but that was a very positive outcome. So we're optimistic that Arlington will actually outperform on a go forward basis.
Okay, and then maybe I'll squeeze one more in just given where you guys think the balance supply demand balances in Alberta, and with some of these potential renewable projects your corporate PPH or merger moving forward.
Any concerns you think there'll be a bit more supply the needed and power prices could feel better pressure here going forward.
No.
We were watching very closely of course with our we'd love to project and have a really good sense of.
What the economics look like on new wind.
So looking at solar opportunities.
We believe that there's room for.
Certain amount of volume in the Alberta market, but as you add more wind or you add more solar.
That will tend to depress prices, if you add too much supply of either of those types. So we believe there is a natural balance there.
We'll see some incremental growth, but certainly.
Not to the extent of what you would've seen under the procurement program. For example that was in place with the previous government.
Okay I'll leave it there thanks.
Our next question comes from Andrew Kuske Ski of credit Suisse.
Thank you good morning.
Maybe if we just get a bit of background on on what's your baseline assumption on ongoing energy development in the province, obviously, we just had the federal election.
That's maybe provided a bit more clarity on the landscape on future pipeline developments, how to how does that worked and to your views on just energy demand on a go forward basis.
Yes, So you know in terms of.
Energy growth, we expect it will continue in the.
On a go forward basis sorted in one the half to 2% per year range.
And that's a view that is consistent with Trans mountain of course going ahead.
But certainly doesn't anticipate a lot of incremental pipeline capacity beyond that.
What we are seeing is load growth in the Alberta market coming from other sectors in oil and gas, which is generally very positive for example, one driver would be that diversification on the petrochemical side.
That cannabis industry and also.
We're seeing a lot on the the bitcoin mining side. So all of those are strong positive drivers for demand growth in will come together support something in that one now half to 2% per year range.
Okay. That's helpful. And then maybe just a follow up.
With the sale from Canadian utilities to energy capital partners, and that's yet to close but do you anticipate any changes in bidding behavior and just.
Power market behavior with new player into the market.
Yeah, we think there will be certainly be up a positive impact on on the market.
We would expect energy capital partners is going to be more aggressive with the assets in terms of optimizing their commercial value.
I think at times Achal took a more.
A more.
Risk adverse approach to managing their assets in the Alberta markets. So certainly this will be a positive development as we see.
Those assets managed on a go forward basis.
And maybe just one follow up to that follow does that result in your view and maybe a bit more power market volatility, which bodes well for some of the equipment that you have in the market.
Absolutely.
Okay, great. Thank you.
Our next question comes from Ben Pham of BMO capital markets.
Hi, Thanks, Good morning, I missed here are some of your comments on a on the question on what.
Early in early that.
Did you did you say that.
Well in about a.
When merchant.
Bretaa as or what you you said earlier.
I think we've always said that.
Given the right economic circumstances, we would.
I would consider building when merchant in Alberta, but again always.
Continually pursuing.
Contracted opportunities however.
There are in Alberta today.
Actually a couple of long term contracts associated with with renewables, but a lot of the market activity tends to be much much shorter term in terms of.
Contracting renewables.
Okay, and you apply as still outside Oh, Burton renewables and lots of slowing a bit here, but that does the finest though.
Contracts are required outside of Alberta, renewable solar yes, Oh, yes, it could be only plays that we would consider any sort of merchant activity would be in the province of Alberta, Okay.
Second question on a BARDA contract and I'm, just I'm thinking more as you head towards chosen 21 you have.
A good sense of four afford sarin and arranged to think about and got you have to salary to program to reduce carbon taxes and whatnot.
I'm curious, what what Alberta power price do you need.
To maintain this this kind of 200 now and are.
EBITDA run rate in Alberta contracted.
A lot of that depends on the exact details of the tier program that is ultimately implemented by the provincial government.
Which we expect we'll see.
Sometime over the balance of this year.
You know if.
If they do stay with the current.
Expectations that are consistent with what's in place right now.
We will probably going to need prices.
Slightly north of.
The mid Fiftys.
In order to maintain that EBITDA run rate.
But certainly if theres some elements that are changed in the tier program relative to what is currently in place under the CCR.
That could lower that number.
So part of its just going to depend on.
How many offsets were allowed to use what the ultimate price per ton. They lend on is and what the intensity target is that they ultimately land on.
Okay. So so to the current plan you see right now is that.
It is what slated to that's what we hired $5.
It would to maintain that the current EBITDA run rate on the contracted assets yes.
Okay, alright, okay, alright, thanks, a lot.
Our next question comes from Patrick Kenny of National Bank financial.
Hi, Good morning, guys just on some of these smaller cogen projects moving forward in Alberta.
Wondering if you're also looking at teaming up with any midstream owners or no pet Chem companies with the diversification program to develop new Cogen and maybe your thoughts on how these cogen opportunities might stack up against.
Potentially expanding your capacity at sea bass.
And as well just a general update on timing of Q4 and five.
Right of Suncor is cogen moving forward.
So we continue to look at opportunities around cogeneration.
We've had on and off discussions with a number of players who are looking for a potential.
Partners in terms of Cogen operations.
Degree to which a particular opportunity impacts on our view on potentially expanding Clover bar is largely based on the degree to which.
The power.
Side of a facility is matched to the needs of.
The.
Of the Cogen opportunity or whether there's it's driven substantially by natural gas.
Requirement and steam so for example in the Suncor case, it's driven entirely by steam requirement, resulting in a lot of.
Additional power going to the grid other opportunities have very closely match power and steam requirements. So again, the degree to which a particular opportunity impacts on our view of our own peaking capability would would depends specifically on that opportunity.
As it relates to.
Genesee four and five.
Certainly with increasing generation being announced in the market.
That does given projections of 2% to 3% or 1% to 2% growth in the market.
And in terms of you know assuming that the coal fleet.
And converted to natural gas fleet continues to be healthy.
We would see that that opportunity is slowly being pushed into.
Ill pass certainly the Suncor announcement.
Data of.
Operation.
Got it and then I.
I guess carbon tax being a moving target as well these days, but just with the federal election behind us.
Curious your thoughts as to where you where you think the carbon tax might end up here in a couple of years.
I guess.
Theoretically if the finance gifts to come to us was to move towards the $50 per tonne federal policy.
Versus Albert as 20 or $30 policy today, what what sort of financial impact that would have on you guys.
So it's it's interesting.
So if the provincial program was to move ahead with $30 per ton and and intensity target similar to a natural gas facility equivalent.
That actually is more onerous for us than the federal program.
But again.
As you said, Pat we got to see what that provincial program ultimately turns out to be.
If it does turn out that its $20 per ton or theirs.
A more lenient intensity target.
Then would probably allow the fit you know it would start to converge with the federal program.
If you look further out with that increased to 40 or $50.
Again with the federal program with a more lenient intensity targets, we're actually more or less in different I think between the provincial and federal programs. When you look three to four five years out so it's a.
A lot of it just really depends on the details we see at the end of the day on the on the provincial program and then what happens with the discussions around equivalency between the province in the Feds as things unfold, so definitely more to be revealed.
Got it.
And then lastly from me guys I'm sure we'll be building more into.
The details here around C CNT at Investor day, but just curious at a high level what milestones.
We should be watching out for perhaps through 2020 and.
Where you have your sites in terms of potentially reaching commercial production.
So Pat we expect that at Investor day to have a fairly extensive discussion around C. CMT and in fact, our planning on having professor linked there to give a bit of a presentation on the technology.
He said that.
We are developing now our plans on moving forward with C CMT and and the.
First commercial operations here in Alberta.
Again more to be revealed a at Investor day. When you when you look at the milestones right now.
Carbon nano tubes are being produced in Calgary.
And.
No the of the testing and Lee highs facilities will be starting very shortly.
There is continued to be some and testing for example.
Taking place at George Washington University developing them.
Very specific no tubes that would be ideal for for cement so that part of its moving along very very well as I say that productions already there.
To a limited degree in Calgary so.
We're saying meeting some very significant milestones have already happened, where we'll be looking for is the scaling up taking place and as I say it is in progress and we're very pleased with with that progress also looking for successful tests by Lehigh.
Hi around the.
The characteristics of.
Adding carbon nanotubes to two concrete so again like a lot more will be revealed on investor day, but.
We continue to be very bullish on the investment.
And its potential.
That's great. Thanks, Brian will look forward to December 15, thanks, guys.
Our next question comes from Robert Kwan of RBC capital markets.
Good morning.
Maybe I can just come back and start on your comments on GE Fourg five just wondering as you talk about pushing that out past suncor is that really kind of that statement on.
The cost competitiveness of fast start CGT or is it more about just how you're seeing supply demand balance when you think about what's coming into the market what youre thinking around.
Recent wins.
And and kind of from that perspective, this demand surprises to the downside how much downside you've seen price.
So.
We weren't surprised by Suncor.
Moving ahead with the Cogen.
Makes a lot of sense for them in terms of.
They are boilers had reached ended their lives.
They really came down to a decision of do you do standalone gas fired boilers or do you do go the Cogen route.
Certainly our cogeneration is the most efficient form of natural gas fired generation. So.
We never saw GE Fourg five is competing against it. It was just a matter of what's the right timing in the event that they decide to move forward with their cogen, which they have done. So now that just means the timing of GE fourg five gets delayed until.
There is sufficient demand growth or retirement of older assets that create the next need for new generation beyond Suncor addition.
In terms of renewables.
As as we discussed earlier on the call. There are there is a window of opportunity here for renewables were.
It there probably economic on both a merchant or on a merchant base is both for solar and wind.
But as I as I mentioned earlier as you add more renewables it starts to cannibalize because that generation comes on at the same time in particular solar we know when it's going to come on at the same time, but also for when there's high correlation between when sites, particularly in southern Alberta, So we see a limited them.
Loan of renewables that makes sense on a merchant basis, but that'll that's kept at a certain amount at the end of the day.
Alberta is going to need gas fired generation for liability and that's going to be what's going to set the long run price in the province, not renewables being added to the system.
So you know as we look at a one to half to 2% demand growth as we look at some of those very old assets in Alberta.
Coming in hitting their retirement dates in the latter part of the next decade, we still see new thermal generation is going to be needed.
In the back half after the Suncor addition.
Got it okay.
I guess turning to the consolidation of.
Gee, three and specifically actually around Clover bar historically, you've touted cover bars insurance against a unit single unit forced outage.
I guess technically that's not the case anymore. So I'm just wondering does that cause you to want to add more peaking is just kind of the closure of our expansion would you reduce hedging.
To kind of stay away from the potential liability or third was just as you talk about reinsurance aspect more of a nice to have versus something that was particularly strategic.
Yeah, it's it Theres no doubt as we move into 2021, we're looking at.
Larger single contingency impacts from from the Genesee plant with GE, one GE to no longer being under PA and with GE three 100% ownership.
At the end of the day Clover bar made sense from a business perspective on a standalone basis. When we made that investment decision and Thats curves continues to be the case, but it also had this until we benefit of be in insurance against availability of our our base sold assets. So that continues and.
Our decision whether to add more peaking generation would follow the same line of assessment and thinking so.
Really again it comes down to.
Adding new peaking generation, Alberta will be a function of the overall market supply demand balance and need as opposed to.
Hedging our own specific portfolio.
I don't think you'll see any change in how we're managing the portfolio in Alberta will continue to.
Look for those opportunities when liquidity allows us to sell forward at appropriate prices in the market.
But with our additional length certainly.
I would expect it'll be less periods of time, that'll where we'll be potentially in the in the taken a short position the Alberta market compared to what we've done historically.
Okay, and maybe if I can just finish with the IB with the uptick we saw here in the quarter.
Is that potentially signal that youre seeing as top end.
In terms of guidance is being conservative or is it a function of maybe more subdued.
M&A outlook or is there another factor at play here.
No. It's it's.
Primarily driven by the fact that we've been generating excess cash flow this year.
As are our guidance would suggest.
So when we look at taking that additional cash flow and putting it to work.
We look at capital power share price, where the dividend yield currently is and we feel were materially undervalued in and found that share repurchases were was a good way forward too.
Great value with that that excess cash flow.
We're continuing to see.
Quite a material pipeline of opportunities on both the acquisition development side. So.
It is in the in response to.
That side slowing down in any fashion.
All right. So it's just really getting an extra quarter, you're back pocket to confirm the.
No more positive outlook, you had coming out of the first half that's right.
Great. Thank you.
Once again, if you have a question. Please press Star then one.
Our next question comes from John Malt TD Securities.
Good morning, maybe just starting with U.S. renewables could you update us on your U.S. wind development progress beyond the current construction pipeline, how you're prioritizing your U.S. versus Alberta.
Renewable development opportunities and maybe how those relative returns or potential returns I should say currently stack up.
So we continue to pursue a opportunities in the US we've got sites that again, we're actively pursuing development and hopefully, we'll we'll come to fruition in terms of contracted wind opportunities.
In the us.
You know when when you ask about our priorities between Canada and the us.
Yes.
Our sweet spot is building renewable wind farms.
I don't think that we would be in a position.
Where we would have to be choosing if we had concurrent opportunities come forward with execute on them, both assuming that they hit our target rates of return.
When we look at Canada in the US we don't differentiate in terms of what would be a hurdle rate and what would be earnings expectations or return expectations.
However, we do adjust the projects on an individual basis.
Collecting.
Fundamentals around risk length of contract et cetera, et cetera. So they are differentiated on a project specific basis, but not on a canada versus us basis.
Okay. Thanks, and then just moving on to U.S. gas I recognize you've had a busy 14 months for M&A, but I'm. Just wondering if you could provide a bit of color on what the gas fired M&A market looks like right now and what kind of opportunities you're seeing.
So the market continues to be pretty robust as Brian had contemplated we are at any point in time, we tend to be looking at somewhere between one and three opportunities for natural gas generation.
Contracted assets in the U.S., So again continues to be robust.
There really hasn't been much change.
In that market over the last over the last year, so continue to be.
Positive.
And certainly continue to see opportunities that fit our strategy.
Okay, and then maybe just one clarification on the tier from Brian to moves through earlier comments when you referenced where the intensity is going to settle was I think just to comment on the on the relative potential differences between the provincial and federal programs or is your thinking that the view that tier could apart from the.
0.37 tons per CEO to you per megawatt hour.
That has been booted, thus far in the process.
Yeah until until we see the final structure for the provincial program.
We're assuming that the 0.37 is something that that's still could potentially change.
You know, it's it's interesting when you look at the Federal program provincial as I mentioned earlier.
The 0.37 is much more stringent than what the federal program had lot, which which was ramping down overtime.
So when you look at equivalency between the two there is room for the provincial program I think too.
The more lenient than than what the previous government had in place and still be equivalent to the federal program. So we have to see how that how that plays out.
Got it okay. Thanks for the clarification those my questions. Thanks.
Our next question comes from Jeremy Rosenfield of industrial and Securities.
Yeah. Thanks.
Just a little bit of a cleanup with regard to the outlook for Q4.
And sort of the stickiness of the guidance relative to sort of your.
Call it above expectation the results on a year to date basis.
My words, not yours, but if you look at Q4.
What could really throw ranch and in terms of getting you above that guidance range because it looks like you may be tracking not only to the top at above that range.
Are there remaining large contentious outages.
Are there other factors that.
In terms of.
Hedges in terms of pricing for certain hours or things that are uneven in Q4 relative to previous quarters.
You provide us with any any additional detail.
Yeah the only.
There is only two factors that could really swing the results in Q4 at this point in time.
The first one would be wind.
Significantly underperforming.
For those who you who were in Alberta over this weekend that certainly isn't an issue. So we've had very strong when hit in Western Canada recently, but.
That would be one factor if if we see.
Negative variances on wind production over the last.
Couple of months of of the year. The other one would be if we have operational upset with our thermal facilities.
That creates significant downtime over the balance of the year.
Certainly on no indications that we're going to have those types of issues, but that would be the other other item that could throw a branch and things.
Okay, so barring that.
More or less there's some I think good amount of certainty so you're saying yes.
Okay.
The only other question that I have just from a high level coming back to your view of where the shares are trading.
And the valuation for the stock and and.
Whether you feel like potentially there there are more strategic things at the company needs to do in order to really get investors focused on the value.
Perhaps a conversation for Investor day, but Oh can you talk to us about strategic review process or or.
No not specifically selling the company, but thinking about how the portfolio is position today and you know maybe what assets.
To be added to get investors really more interested in and capital power as a company just high level.
So I think there's a number of things that they continue to impact on.
You know investors perceptions of of capital power. One of course is a continuation of a bit of uncertainty in Alberta and as this call illustrates are still discussions around.
What's going to happen in terms of carbon tax and as well.
I'm not so sure that the market has gotten comfortable again with the Alberta market, which again, which has.
Continuing.
Adjustments in discussions as as.
As we go forward so that that continues to be something that's on a track.
Of.
Or should be on attract of increasing investor confidence in the in the Alberta market. When you look at the our overall strategy of continuing with merchant interest in Alberta and contracted interest.
Throughout North America.
Think as you've seen a this strategy is playing out we are adding and successfully adding.
Long term contracted assets in the us.
And in Canada.
I think one other things that the market is looking for is.
On a significant part of that thesis is re contracting and I think as those.
Come to pass.
I believe there will be a significant increase in confidence in both our contracting approach and our contract that asset approach as well as.
As I said earlier.
What we're doing in Alberta from our merchant perspective so.
I would expect those two to be converging.
Over the next little while which we would should result in increasing investor confidence in our thesis and.
And certainly expected to result in appreciation in share price.
Okay I'll leave it there thank you.
This concludes the question and answer session I would like to turn the conference back over to Mr. My for any closing remarks.
Okay. Thanks, again for joining us today, and we hope to see you at our Investor Day on December the fifth have good day everyone.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.
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