Q1 2024 Capital Power Corporation Earnings Call

Okay.

Speaker Change: Good day, and thank you for standing by and welcome to the capital Power Q1, 'twenty four analyst conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the session I need to press star one on your telephone you will then hear an automated message advising your hand is raised to Australia. Your question. Please press star one again, please be advised.

Operator: Good day, and thank you for standing by. Welcome to the Capital Power Q124 Analyst Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. You will then hear an automated message device in your hand.

Operator: To withdraw your question, please press star 11 again. Please be advised, today's conference is being held. I would like to turn the call over to your speaker today, Roy Arthur. Please go ahead. Thank you, Kevin.

Today's conference is being recorded I would now like to turn the call over to speaker today right. Arthur Please go ahead.

Roy Arthur: Good morning, and thank you for joining us today to review Capital Power's first quarter 2024 results, which we released earlier. Our first quarter report and presentation for this conference call are posted on our website at CapitalPower.com. Leading today's call, we have Avik Dey, President and CEO, along with Sandra Haskins, our SVP, Finance, and CFO.

Arthur: Thank you Kevin Good morning, and thank you for joining us today.

Arthur: Capital Power's first quarter 2024 results, which were released earlier.

Arthur: Our first quarter report presentation for this conference call are posted on our website at capital power Dot com.

Arthur: Leading today's call, we have <unk>, president and CEO, along with Sandra Haskins, our SVP finance and CFO, Eric will commence with a high level update of our overall business followed by Sandra who will delve into the financial highlights of the quarter.

Speaker Change: After Opex closing remarks, we will welcome questions from the analysts as part of Q&A.

Speaker Change: Before I start I'd like to remind everyone that certain statements about future events made on the call are forward looking in nature and.

Roy Arthur: Avik will commence with a high-level update of our overall business, followed by Sandra, who will delve into the financial highlights. After Avik's closing remarks, we will welcome questions from the analysts as part of, Before I start, I'd like to remind everyone that certain statements about future events made on the call are forward-looking in nature and are based on certain assumptions and 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 of forward-looking information on slide 3 or our regulatory filings available on CDR.

Sandra Haskins: And are based on certain assumptions and analysis made by the company.

Sandra Haskins: Actual results could differ materially from the companys expectations due to various risks and uncertainties associated with our business. Please refer to the cautionary statement on forward looking information on slide three or our regulatory filings available on SEDAR and.

Roy Arthur: In today's discussion, we will be referring to various non-GAAP financial measures and ratios, also known as... The Disclosure. These measures 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 other similar measures used by other entities.

Sandra Haskins: In today's discussion, we will be referring to various non-GAAP financial measures and ratios also noted on the disclosure.

Sandra Haskins: These measures are not defined financial measures. According to GAAP and do not have standardized meanings prescribed by GAAP and therefore are unlikely to be comparable to other similar measures used by other enterprises.

Roy Arthur: The measures are provided to complement the GAAP measures which are included in the analysis of the company's MD&A. Reconciliations of non-GAAP financial measures to their nearest GAAP measure can be found in the 2023. I'd like to acknowledge that Capital Power's head office in Edmonton is located within the traditional and contemporary home of many indigenous peoples of the Treaty 6 region and the Métis Nation of Alberta. Region 4.

Sandra Haskins: The measures are provided to complement the GAAP measures, which are included in the analysis of the company's MD&A.

Sandra Haskins: Reconciliations of non-GAAP financial measures to their nearest GAAP measure can be found in the 2023 integrated annual report.

Sandra Haskins: Like to acknowledge the capital Power's head office in Edmonton is located within the traditional and contemporary helmet. Many indigenous peoples of the Treaty six region the <unk>.

Sandra Haskins: Nation of Alberta.

Roy Arthur: We acknowledge the diverse Indigenous communities that are in these areas and whose presence continues to enrich the community and our lives as we learn more about the indigenous history of the land on which we live and work. With that, I will turn it over to Avik for his remarks. Thanks, Roy. And good morning, everyone.

Sandra Haskins: <unk> four we acknowledge the diverse institutions just communities that are in these areas presence continues to enrich the community and our lives as we learn more about the history of the last one in which we live and work with that I will turn it over to Eric for his remarks.

Avik Dey: During the first quarter of 2024, while we experienced some challenges in our Alberta commercial business, we also achieved some notable wins across our three strategic areas of focus as we continue our journey to power change by changing power. From a delivery of reliable and affordable power standpoint, we generated nine terawatt hours of power across our strategically positioned fleet of assets. We closed two significant and diversifying transactions that reposition us as a leading North American IPP.

Eric: Thanks, Ryan and good morning, everyone. During the first quarter of 2024, while we experienced some challenges in our Alberta commercial business. We also achieved some notable wins across our three strategic areas of focus as we continue our.

Speaker Change: Ernie to power change by changing power.

Eric: From a delivering reliable and affordable power standpoint, we generated nine terawatt hours of power across our strategically positioned fleet of assets. We closed two significant and diversifying transactions that reposition us as a leading north American IPP and.

Avik Dey: And from an operational standpoint, we made a significant amount of investment in our existing assets across our fleet with seven turnarounds for a total of 34 million dollars of capital spend, consistent with our budget for the year. When it comes to building new generation, we have achieved a significant milestone as we are commissioning simple cycle at unit one of the Genesee complex, which takes the unit off coal. In total, we are advancing 560 megawatts of incremental capacity on development projects across our portfolio. Lastly, we continue to pursue the creation of end-to-end solutions for our wholesale customers.

Eric: And from an operational standpoint, we made a significant amount of investment in our existing assets across our fleet with seven turnarounds for a total of $34 million of capital spend.

Sandra Haskins: Insistent with our budget for the year.

Sandra Haskins: When it comes to building new generation, we have achieved a significant milestone as we are commissioning simple cycle unit one of the Genesee complex, which takes the unit off call in.

Sandra Haskins: In total we are advancing 560 megawatts of incremental capacity on development projects across our portfolio.

Sandra Haskins: Lastly, we continue to pursue the creation of end to end solutions for our wholesale customers. For example in January we announced we entered into an agreement to jointly assess the development and deployment of grid scale small modular reactors, otherwise known as FM ours with Ontario power.

Avik Dey: For example, in January, we announced we entered into an agreement to jointly assess the development and deployment of grid-scale small modular reactors, otherwise known as FMRs, with Ontario power generation to provide clean, reliable nuclear energy for Alberta. Moving on, we would like to provide an update with respect to our Genesee repowering project. Page 6 lays out an overview of the three-stage process to implement the repowering.

Sandra Haskins: Our generation to provide clean reliable nuclear energy for Alberta.

Sandra Haskins: Moving on we would like to provide an update with respect to our Genesee Repowering project page six lays out an overview of the three stage process to implement the Repowering as I mentioned for unit. One we are now in the process of commissioning simple cycle during the commissioning phase.

Avik Dey: As I mentioned, for Unit 1, we are now in the process of commissioning the simple cycle. During the commissioning phase, unit dispatch will be driven by project needs rather than economics, meaning that simple cycle output will range between zero and 411 megawatts. For Unit 2, we anticipate commissioning to begin in the second quarter and completion in Q3. Simple cycle commissioning is an important milestone as it marks that we are 100% off coal.

Sandra Haskins: Unit dispatch will be driven by project rules, rather than the economics, meaning that simple cycle output will range between zero and 411 megawatts.

Sandra Haskins: On unit two we anticipate commissioning to begin in the second quarter for completion in Q3.

Sandra Haskins: Simple cycle commissioning is an important milestone as it marks that we are 100% of call.

Avik Dey: In the fourth quarter, we aim to commission the combined cycle on both Unit 1 and 2. Finally, in the first half of next year, we anticipate ramping both units up to 566 megawatts each, bringing us to the end of the Genesee repowering project. As we move through each subsequent stage, our carbon intensity will continue to decline, which at completion will be 0.36 tons of CO2 per megawatt hour, representing a 60% drop from our legacy units, making Genesee the most efficient combined cycle unit in Canada.

Sandra Haskins: In the fourth quarter, we aimed to commission combined cycle on both unit one and two.

Sandra Haskins: Finally in the first half of next year, we anticipate ramping both units up to 566 megawatts, each bringing us to the end of the Genesee Repowering project as.

Sandra Haskins: As we move through each subsequent stage, our carbon intensity will continue to decline, which I completion of all these <unk> three six tons of cotwo per megawatt hour, representing a 60% drop from our legacy units.

Sandra Haskins: Genesee the most efficient combined cycle units in Canada.

Avik Dey: From a cost perspective, we are updating our estimated cost range to $1.55 billion to $1.65 billion, up from $1.35 billion previously indicated. The change in cost is driven by increased costs related to outages required for tie-in, and ongoing productivity challenges, inclusive of cost increases.

Sandra Haskins: From a cost perspective, we are updating our estimated cost range to 155 billion to 165 billion up from 135 billion previously indicated.

Sandra Haskins: The change in cost is driven by increased costs related to outages required for tie in.

Sandra Haskins: And ongoing productivity challenges.

Sandra Haskins: Inclusive of the cost increases.

Avik Dey: The project continues to generate returns that exceed our equity return hurdle. Despite the challenges associated with the project timeline and costs, we remain very proud of our work on the Genesee repowering project. Allow me to provide you three key reasons why.

Sandra Haskins: The project continues to generate returns that exceed our equity return hurdles.

Sandra Haskins: Despite the challenges associated with the project timeline and cost we remain very proud of our work on the Genesee Repowering project allow me to provide you three key reasons why.

Avik Dey: Firstly, from a capital power perspective, this advances us toward our strategic areas of focus, providing reliable, affordable, and clean power. Additionally, the project represents the single largest decrease in emissions among any project we have undertaken, while generating attractive returns. Secondly, from an industry perspective, this project is leading the way in resetting the regional power merit curve, prompting retirement of older generating units and investments in more efficient generation. The result is a larger, more efficient, flexible natural gas supply that supports greater renewable capacity than would otherwise be possible while maintaining grid reliability.

Sandra Haskins: Firstly from a capital power perspective, this advances us toward our strategic areas of focus providing reliable affordable and clean power.

Sandra Haskins: Additionally, the project represents the single largest decrease in emissions among any project we have undertaken.

Sandra Haskins: While generating attractive returns.

Sandra Haskins: Secondly from an industry perspective. This project is leading the way in resetting the regional power Merit curve.

Sandra Haskins: <unk> retirement of older generating units in investments and more efficient generation.

Sandra Haskins: The result is a larger more efficient flexible natural gas supply that supports greater renewable capacity than would otherwise be possible, while maintaining grid reliability.

Avik Dey: Lastly, from a consumer perspective, this represents the largest decarbonization event in Alberta's history and is a testament to this province and the energy-only market's ability to lead with respect to decarbonizing carbon-intensive industries. Ultimately, it cements our position as a leading power producer in a key Canadian growth market and provides the foundation that will fund our future growth, optimization, and diversification efforts across our portfolio. During the first quarter, we closed two acquisitions that we announced in November of last year.

Sandra Haskins: Lastly from a consumer perspective. This represents the largest de carbonization event in Alberta is history and is a testament to this province in the energy only market the ability to lead with respect to de carbonization of carbon intensive industry.

Sandra Haskins: Ultimately it cements our position as a leading power producer in a key Canadian growth market and provides the foundation that will fund our future growth optimization and diversification efforts across our portfolio.

Sandra Haskins: During the first quarter, we closed two acquisitions that we announced in November of last year as we have indicated in the past we are focused on core markets with strong fundamentals and a commitment to decarbonization calif.

Avik Dey: As we have indicated in the past, we are focused on core markets with strong fundamentals and a commitment to decarbonization. California and Arizona are great examples of this, where the long-term outlook for these assets remains quite strong.

Sandra Haskins: California, and Arizona are great. Examples of this where the long term outlook for these assets remains quite strong in California, we are seeing strong capacity pricing.

Avik Dey: In California, we are seeing strong capacity pricing out towards the end of the decade, which reinforces our thesis for acquiring flexible natural gas generation assets. Our Q1 results already reflect the increased diversification from the newly acquired assets, despite not providing a full quarter contribution. As shown on the pie chart at the bottom left of page 8, our U.S. business represented a third of our EBITDA for Q1 2024, in contrast to approximately 16% in the same period in 2023.

Sandra Haskins: Out towards the end of the decade, which reinforces our thesis for acquiring flexible natural gas generation assets. Our Q1 results already reflect the increased diversification from the newly acquired assets, despite not providing a full quarter contribution as shown on the pie chart at the bottom.

Sandra Haskins: Left of page eight our U S business represented a third of our EBITDA for Q1 2024 in contrast to approximately 16% in the same period in 2023, given our pro forma capacity is now weighted 50, 50 in Canada and U S. We expect to see this contribution.

Avik Dey: Given our pro forma capacity is now weighted 50-50 in Canada and the U.S., we expect to see this contribution increase further during the remainder of the year. As we move forward, we will provide more updates regarding the recontracting of these assets. In addition to Genesee Repowering, we wanted to briefly touch on some of our other major projects. Regarding CCS, after a detailed review of the project, we have concluded that the economics for CCS at the Genesee site do not meet our targeted risk-return thresholds.

Sandra Haskins: <unk> further during the remainder of the year.

Sandra Haskins: As we move forward, we will provide more updates regarding the re contracting of these assets.

Sandra Haskins: In addition to Genesee Repowering, we wanted to briefly touch on some of our other major projects regarding.

Sandra Haskins: Regarding Ccs after a detailed review of the project. We have concluded that the economics for Ccs at the Genesee site do not meet our targeted risk return thresholds as such we are discontinuing pursuit of the $2 4 billion Genesee Ccs project.

Avik Dey: As such, we are discontinuing the pursuit of the $2.4 billion Genesee CCS project. However, we do view CCS technology as being viable. This is a result of our thorough work, including extensive technical review of the post-combustion CCS value chain from capture through sequestration, including types of solvents and components that can optimize the process.

Sandra Haskins: However, we do view Ccs technology as being viable. This is a result of our thorough work, including extensive technical review of the post combustion Ccs value chain from capture through sequestration, including types of solvent and components that can optimize the process.

Avik Dey: A lot of the learnings here are applicable to CCS anywhere, so we will continue to evaluate potential CCS projects. Notably, through a grant awarded by the Michigan Public Service Commission, we are conducting a CCS feasibility study at Midland Co-Generation, the largest natural gas-fired combined electrical energy and steam energy generating plant in the U.S. In Ontario, we announced a meaningful and positive update with respect to the anticipated capital cost of our projects we are pursuing there.

Sandra Haskins: A lot of the learnings here are applicable to Ccs anywhere. So we will continue to evaluate potential ccs projects, notably through a grant awarded by the Michigan Public Service Commission, we are conducting a ccs feasibility study at Midland Cogeneration, the largest natural gas fired combined electrical energy and <unk>.

Sandra Haskins: Steam energy generating plant in the U S.

Avik Dey: Our project capital cost will be about $600 million combined for our East Windsor expansion and battery storage projects at York and Goreway. At this time, we do not anticipate any changes to the timing of completion for these projects. Lastly, on the renewables front, Halcirk 2 Wind and Maple Leaf Solar remain on schedule. With respect to Halcirk 2, we recently announced that we have signed a virtual power purchase agreement with Saputo, Inc., meaning this asset is essentially fully contracted.

Sandra Haskins: In Ontario, we announced a meaningful and positive update with respect to the anticipated capital cost of our projects. We are pursuing there are project capital cost will be about $600 million combined for our east Windsor expansion and battery storage projects at York and Gore way at this time, we do not anticipate.

Sandra Haskins: Any changes to the timing of completion for these projects.

Sandra Haskins: Lastly, on the renewables front, how curt to wind and Maple leaf solar remain on schedule with respect to health care to wind, we recently announced we assigned a virtual power purchase agreement with the Poodle, Inc. Meaning this asset is essentially fully contracted.

Avik Dey: Overall, we are encouraged by the progress we have been able to make across our strategic areas of focus. Since the announcement in March at the IPSA conference, we have received a number of questions regarding the proposed regulatory changes in Alberta, and we would like to address them now. There were two proposed changes announced.

Sandra Haskins: Overall, we are encouraged by the progress we have been we've been able to make across our strategic areas of focus.

Sandra Haskins: Since the announcement in March at the <unk> Conference. We have received a number of questions regarding the proposed regulatory changes in Alberta and we.

Sandra Haskins: We'd like to address them now.

Avik Dey: One, the MSA's interim rules set to take effect July 1st of this year, and two, the ASO's proposed restructured energy market set to take effect after the expiry of the interim rules. Regarding the interim rules, this consists of market power mitigation, meaning an offer cap after a reference unit is deemed to have reached a predefined return threshold, and a supply cushion mechanism which allows the ASO to compel long lead time units to be online and available for dispatch.

Sandra Haskins: Our two proposed changes announced one the msas in term rules set to take effect July one of this year and to the asos proposed restructured energy market set to take effect post the expiry of the interim rules regarding.

Sandra Haskins: Regarding the interim rules. This consists of market power mitigation, meaning an offer cap. After a reference unit is deemed to have reached a predefined return threshold and if supply cushion mechanism, which allows the ACO to compel long lead time units to be online and available for dispatch.

Avik Dey: Broadly speaking, we understand and remain supportive of the interim rules, as we believe these provide a circuit breaker that can provide peace of mind for Albertans with respect to the price and reliability of power. In our view, the interim rules do not represent a significant change to the near to medium-term pricing outlook, given the two gigawatts of incremental supply that is coming online in 2024 in Alberta. Regarding the restructured energy market, as an independent power producer, we're making significant long-term investments in Alberta's energy future, and so the details of the restructured electricity market will be critical. As such, we will be proactively engaging in consultation with a focus on the REM.

Sandra Haskins: Broadly speaking we understand it remains supportive of the interim rules as we believe these provide a circuit breaker that can provide peace of mind for Albertsons with respect to the price and reliability of power in.

Sandra Haskins: In our view the interim rules do not represent a significant change to the near to medium term pricing outlook given the two gigawatts of incremental supply that is coming online in 2024, and Alberta rig.

Sandra Haskins: Guarding the restructured energy market as an independent power producer, we're making significant long term investments in Alberta is energy future and so the details of the restructured electricity market will be critical.

Sandra Haskins: As such we will be proactively engaging in consultation with a focus on the R&D.

Sandra Haskins: However, I would like to point out that we were highly encouraged by Minister Nudorf's remarks at the IFSA conference in March, wherein he expressed a commitment to the energy-only market and the importance of providing investor certainty. I will now hand it over to Sandra to provide a financial update. Thank you, Avik.

Sandra Haskins: However, I would like to point out that we were highly encouraged by minister <unk> remarks at the <unk> conference in March when he expressed a commitment to the energy only market and the importance of providing investors certainty.

Sandra Haskins: I will now hand, it over to Sandra to provide a financial update.

Sandra Haskins: Adjusted EBITDA was 30% lower year over year, mainly due to the lower contributions from Alberta Commercial, which I will speak to in more detail later. The full recognition of the off coal compensation from the province of Alberta in 2023 and one-time fees in the current quarter related to the U.S. acquisitions also reduced 2024 reported results compared to the same period last year. In contrast, Adjusted EBITDA benefited from strong contributions from the recent acquisitions of Fredrickson One, Lap Paloma, and Harkalala.

Sandra Haskins: Thank you and.

Sandra Haskins: Adjusted EBITDA was 30% lower year over year, mainly due to the lower contribution from Alberta, commercial which I will speak to in more detail later.

Sandra Haskins: Full recognition of the off coal compensation from the province of Alberta in 2023.

Sandra Haskins: And one time fees in the current quarter related to the U S. Acquisitions also reduced 2024 reported results compared to the same period last year.

Sandra Haskins: In contrast, adjusted EBITDA benefited from strong contributions from the recent acquisitions at Frederickson, one lap Paloma and heart Koala.

Sandra Haskins: AFFO for Q1 2024 was lower than the corresponding period in 2023 due to lower adjusted EBITDA, net of taxes, and higher sustaining CapEx and maintenance compared to the same period last year. On slide 12, we have provided a breakdown of our quarterly adjusted EBITDA by region. The largest relative and absolute impacts were in Alberta commercial, where lower realized power pricing combined with decreased generation, including unplanned outages at G1 and G2 and longer outages at Clover Bar Energy Centre led to lower adjusted EBITDA in 2024. The Genesee outages, while short in duration, occurred during high price periods.

Sandra Haskins: <unk> for Q1, 2024 was lower than the corresponding period in 2023 due to lower adjusted EBITDA net of taxes and higher sustaining capex and maintenance.

Sandra Haskins: Compared to the same period last year.

Sandra Haskins: On slide 12, we have provided a breakdown of our quarterly adjusted EBITDA by region.

Sandra Haskins: The largest relative and absolute impacts were in Alberta commercial were lower realized power pricing combined with decreased generation, including unplanned outages at <unk> and longer outages at Clover Bar Energy Center led to lower adjusted EBITDA in 2024.

Sandra Haskins: The Genesee outages, while shortened duration occurred during high price periods.

Sandra Haskins: The U.S. facilities had a $39 million increase from the addition of newly acquired assets with the contribution from our legacy assets at $73 million in Q1 2024, being essentially flat year over year. The contracted Ontario and Western Canada assets had the same year-over-year stable results with outages at Quality Wind and Whitlow Wind combined with lower wind resources contributing to the modestly lower adjusted EBITDA for Q1. Essentially, we are seeing benefits to our diversification efforts through the reduced, adjusted EBITDA volatility in our portfolio outside of Alberta Commercial.

Sandra Haskins: The U S facilities had a $39 million increase from the addition of newly acquired assets with the contribution from our legacy assets at $73 million in Q1, 2024, being essentially flat year over year.

Sandra Haskins: The contracted Ontario, and Western Canada assets have the same year over year stable results with outages at quality wind and whitlow, when combined with lower wind resource contributing to the modestly lower adjusted EBITDA for Q1.

Sandra Haskins: Essentially we are seeing benefits to our diversification efforts through the reduced ADESA adjust.

Sandra Haskins: Adjusted EBITDA volatility from our portfolio outside of Alberta commercial.

Sandra Haskins: On slide 13, we have provided additional details on the year over year change in adjusted EBITDA from the Alberta Commercial Portfolio for the first quarter. As indicated in our guidance presentation in January, a material decrease in the contribution from the Alberta portfolio was expected throughout 2024 due to the lower forward prices and forecasted lower generation during the Genesee Repowering Project commissioning schedule. The waterfall shows the Q1 decrease assumed in our annual guidance on the first step change.

Sandra Haskins: On slide 13, we've provided additional details on the year over year change in adjusted EBITDA from the Alberta commercial portfolio.

Sandra Haskins: Portfolio for the first quarter.

Sandra Haskins: As indicated in our guidance presentation in January a material decrease in the contribution from the Alberta portfolio was expected throughout 2024 due to the lower forward prices and forecasted lower generation during the Genesee Repowering project commissioning schedule.

Sandra Haskins: The waterfall shows the Q1 decrease assumed in our annual guidance on the first step change.

Sandra Haskins: Mild weather and strong renewable generation further decreased Alberta power prices, which had an estimated incremental negative impact as shown on the next step in the graph. The first fire of Simple Cycle Commissioning for Unit 1 began on April 7th, which was later than forecast and resulted in lower generation in Q1 as shown in the next step, while the last step reflects the impact of the outages at CBEC 3 and the more frequent intermittent forced outages that were experienced on the existing aging Genesee units as they approached their end of life. These latter impacts are a function of repowering and extended outage intervals at Genesee that are not consistent with our standard operating performance.

Sandra Haskins: Mild weather and strong renewable generation further decreased Alberta power prices, which had an estimated incremental negative impacts shown on the next step in Nebraska.

Sandra Haskins: The first fire central cycle commissioning for unit one began on April 7th which was later than forecast and resulted in lower generation in Q1 as shown on the next step while the last step reflects the impact of the outages at <unk> and the more frequent intermittent forced outages that were experienced on the existing <unk>.

Sandra Haskins: <unk> Genesee units as they approach their end of life.

Sandra Haskins: These latter impacts are a function of repowering, an extended outage intervals at Genesee that are not consistent with our standard operating performance.

Sandra Haskins: With the completion of repowering, we anticipate the return to our historically high standard of reliability and predictability of cash flow. I'll now touch on our Alberta Power and Natural Gas hedge positions for 2025 through 2027, which are shown as of March 31st, 2024. For 2025, we have 9500 gigawatt hours hedged, while in 2026 and 2027, we have 8500 and 5000 gigawatt hours hedged, respectively. The weighted average hedge prices are in the high $70 per megawatt hour for 2025 and 2026, while 2027 is in the low $80 per megawatt hour.

Sandra Haskins: With the completion of Repowering, we anticipate a return to our historically high standards of reliability and predictability of cash flows.

Sandra Haskins: I'll now touch on our Alberta power and natural gas hedge positions for 2025 through 2027, which are shown as of March 31 2024.

Sandra Haskins: For 2025, we have 9500 gigawatt hours hedged while in 2026 and 2027, we have 80 505000 gigawatt hours hedged respectively.

Sandra Haskins: The weighted average hedge prices are in the high $70 per megawatt hour for 2025 and 2026.

Sandra Haskins: 2027 is in the low $80 per megawatt hour.

Sandra Haskins: This compares favorably to the forward prices of $56 per megawatt hour in 2025 and 2026 and $60 per megawatt hour in 2027. The hedge positions include long-duration origination contracts, as shown on the graph in the left. Our natural gas hedge volumes remain significant for 2025 and 2026 at 60,000 TJs and 35,000 TJs in 2027. Our prudent hedging strategy over the past few years while in a backward dated market provides downside price protection and stability of cash flows as we move into a fully committed supply. Andrew, your line is muted.

Sandra Haskins: This compares favorably to the forward prices of $56 per megawatt hour in 2025, and 2026 and $60 per megawatt hour in 2027.

Sandra Haskins: The hedge positions include long range duration long duration origination contract as shown on the graph in the left.

Sandra Haskins: Our natural gas hedge volumes remain significant for 2025 and 2026 at 60000 T J's and 35000 <unk> in 2027.

Sandra Haskins: Our prudent hedging strategy over the past few years, while in a backward dated market provides downside price protection and stability of cash flows as we move into a fully supplier.

Sandra Haskins: Andrew Your line is muted.

Sandra Haskins: Hi.

Sandra Haskins: The Q1 results and the outlook for the balance of 2024 have adjusted EBITDA trending to be less than 5% below the lower end of the guidance range of $1.450 to $1.505 billion. AFFO is expected to come in below the midpoint of the guidance range due to the tax-affected adjusted EBITDA variance and incremental favorable current income tax from the accelerated depreciation treatment on the Genesee repowering project. While the Alberta commercial performance is disproportionately exposed to Q1, there remains an element of uncertainty on price and volume variances which are influenced by commissioning activity. As a result, we are not providing revised guidance ranges for this quarter.

Andrew: The Q1 results and the outlook for the balance of 2024 has adjusted EBITDA trending to be less than 5% below the lower end of the guidance range of $1 45 zero.

Andrew: 215 5 billion.

Andrew: <unk> is expected to come in below the midpoint of the guidance range due to the tax effected adjusted EBITDA variance and incremental favorable current income tax from the accelerated depreciation treatment on the Genesee Repowering project.

Andrew: While the Alberta commercial performance is disproportionately exposed to Q1, there remains an element of uncertainty on price and volume variances, which are influenced by commissioning activity.

Andrew: As a result.

Andrew: We are not providing revised guidance ranges for this quarter as we move through Q2 and Genesee commissioning, we expect to have a better line of sight to provide guidance for the balance of 2024, which is a transitional year for capital power.

Avik Dey: As we move through Q2 and Genesee commissioning, we expect to have a better line of sight to provide guidance for the balance of 2024, which is a transitional year for Capital Power. With that, I will now hand it back over to Avik. Thank you, Sandra.

Speaker Change: With that I will now hand, it back over to <unk>.

Avik Dey: We remain steadfast in our focus to deliver reliable and affordable power today while building clean power systems for tomorrow and creating balanced energy solutions for our wholesale customers. To that end, we are excited about our upcoming Investor Day in Edmonton on May 7th and 8th, where we will talk about this journey in more detail. This two-day experience for institutional investors and research analysts will involve a tour of the Genesee Generating Station site and our massive repowering project, in addition to a formal presentation on the morning of the second day. We look forward to welcoming you to Edmonton. With that, I'll now turn the call back over to Roy.

Speaker Change: Thank you Sandra we remain steadfast in our focus to deliver reliable and affordable power today, while building clean power systems for tomorrow, and creating balanced energy solutions to our wholesale customers to that end. We are excited about our upcoming investor day in Edmonton on May 7th.

Andrew: Where we will talk about this journey in more detail. This two day experience for institutional investors and research analysts will involve a tour of the Genesee generating station site and our massive Repowering project. In addition to a formal presentation in the morning of the second day, we look forward to welcome you welcoming you to Edmonton.

Andrew: With that I'll now turn the call back over to Roy.

Roy: Thanks, Alex.

Roy Arthur: Thanks, Avik. Operator, at the conclusion of the opening comments... We are now ready to take questions. Thank you. Ladies and gentlemen, if you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered, or you wish to move yourself from the queue, please press star 11 again.

Roy: Operator, with the conclusion of the opening comments.

Roy: We are now ready to take questions.

Operator: We'll pause for a moment while we compile our Q&A roster. Our first question comes from David Quezada with Redmond James. Your line is open. Thanks. Good morning, everyone.

Speaker Change: Ladies and gentlemen, if you have a question or a comment at this time. Please press star one on your telephone. If your question has been answered or you wish to move yourself from the queue. Please press star one again, we will pause for a moment, while we compile the Q&A roster.

Speaker Change: Our first question comes from David <unk> with Raymond James Your line is open.

David Quezada: Maybe I'll just start, Avik, with your comments just around the Alberta market design restructuring happening there. I'm just curious if you've had any initial talks with the government, just, you know, in terms of engaging with them on that topic, or what kind of timing you would expect for that. And maybe, maybe you could just... quickly outline, you know, what do you think the initial priorities would be in your terms? Thanks for the question, David. And in terms of priorities, are you referring to priorities in the restructured electricity market? Yes, correct. Okay, so the first part of your question: yes, we've been actively engaged.

David: Thanks, Good morning, everyone, maybe I'll just start.

David: Eric with your comments just around the Alberta market design restructuring happening there.

David: I'm just curious if you've had any initial talks with the government.

David: In terms of engaging with them on that topic or what kind of timing you would expect for that.

David: And maybe.

David: Maybe you could just.

David: Quickly outline.

David: What do you think the <unk>.

Speaker Change: Initial priorities would be near term.

Avik Dey: Frankly, we've been engaged throughout the course of the last year leading up to the announcement and continue to do so post-IPSA. In terms of the restructured electricity market proposals, as we said in the comments, we're highly supportive of Minister Nudorf's comments in terms of preserving the energy-only market and providing the necessary tweaks to ensure reliability, affordability, and increase further investment in generation. I think as it relates to the ASO and MSA reports, we think structurally there are some inconsistencies in those reports related to preserving an energy-only market, but we take a lot of confidence in the consultation period that's commenced.

Speaker Change: Thanks for the question, David and in terms of priorities, you're referring to priorities on the restructured electricity market.

Speaker Change: Yes, correct. Okay. So the first part of your question, Yes, we have been actively engaged.

Speaker Change: Frankly, we've been engaged throughout the course of the last year, leading up to the announcement and continue to do so post its.

Speaker Change: In terms of the restructured electricity market proposals.

Speaker Change: As we said in the comments, we're highly supportive of administering <unk> comments.

Speaker Change: In terms of preserving the energy only market and providing the necessary tweaks to ensure reliability affordability and the actual end.

Speaker Change: Increased a further investment in generation I think as it relates to the ASO and MSA.

Speaker Change: Reports, we think they're structurally there is some inconsistency then those reports related to preserving an energy only market.

Speaker Change: But we take a lot of confidence in the consultation period that commenced we've already had a few meetings within that consultation phase with industry participants.

Avik Dey: We've already had a few meetings within that consultation phase with industry participants and the ASO, and we look forward to engaging. In terms of timeline, as the minister noted on March 11th, we have a period between now and the interim measures rolling off by 2027 to determine what the ultimate structure changes are, but we remain focused on the minister's comments of preserving an energy-only market and expect that to be the case. Excellent. Thank you. I appreciate the color.

Speaker Change: And the ACO.

Speaker Change: Look forward to engaging in terms of timeline.

Speaker Change: The Minister noted on March 11th.

Speaker Change: We have a period between now and the interim measures rolling off by 2027 to determine what the ultimate structure changes are but we remain focused on the minister's comments of preserving an energy only market.

Speaker Change: That to be the case.

David Quezada: Maybe just one more for me, just on the theme of, you know, sort of feels like a lot of momentum around growing demand for electricity, particularly in the US. And obviously, you guys are increasingly well positioned there. I'm curious.

Speaker Change: Excellent. Thank you I appreciate the color maybe just one more for me just on the theme of.

Speaker Change: Sort of.

Speaker Change: It feels like a lot of momentum around growing demand for electricity, particularly in the U S.

Speaker Change: Obviously, you guys are increasingly well positioned there I'm curious.

Avik Dey: You know, do you see any opportunities? Given the PCPAs you have in place across your current footprint in the U.S., and could you look to turn your sights to additional M&A and maybe any thoughts you might have on the M&A market for natural gas power plants today? Thanks for the question.

Speaker Change: Do you see any.

Speaker Change: Opportunities.

Speaker Change: Given the Ppas you have in place across your current footprint in the U S and could you.

Speaker Change: Look to turn your junior sites to additional M&A and maybe any thoughts you might have on the M&A market for for natural gas power plants today.

David Quezada: With regard to growth opportunities in the U.S., in particular, stemming from multiple sources of load growth demand, we are seeing opportunities across our existing generation fleet and outside to, whether it's expand, contract, or, you know, joint venture with others to participate in that growing load growth. Nothing is imminent as we sit here today, but a number of positive conversations. And I think our generation fleet, particularly in the Northwest, California, and Arizona, is particularly well positioned to participate in any potential growth.

Speaker Change: Yeah. Thanks for the question with regard to growth opportunities in the U S. In particular stemming from multiple sources of of load growth demand.

Speaker Change: Are seeing opportunities.

Speaker Change: Across our existing generation fleet and outside to whether it's expand contract or.

Speaker Change: Joining venture with others to participate in that growing load growth nothing is imminent as we sit there today, but a number of positive conversations and I think our generation fleet, particularly.

Speaker Change: Between the northwest, California, and Arizona is particularly well positioned to participate in any potential growth.

David Quezada: So, yeah, we're excited about the opportunity there. We'll be talking a lot more about this next week at our investor day, so I don't want to steal all of the thunder from that conversation, but we see significant opportunities there aligned with what many of the U.S. IPPs are seeing. On the strategic side, we're not seeing as many strategic players come to the table, but we're optimistic about the outlook there. In terms of our own activity in M&A, to date, we've been focused on integrating our existing assets, and so I would expect that in the second half of this year, we'll continue to look at opportunities that fit with our strategy. Very helpful. Thanks, Avik. I'll turn it over to you.

Speaker Change: So yeah, we're excited about the opportunity there we'll be talking a lot more about this next week at our Investor day. So I don't want to steal all of the Thunder from that conversation, but we see significant opportunity. They are aligned with what many of the U S. Ipp's are seeing and we think our positioning is relatively.

Speaker Change: Strong compared to those companies given the fact that we've been in a traditional natural gas generation for the past 15 years, and really focus on optimizing asset decarbonising them and enhancing them, while still having the capability to trade and originate which is unique amongst the U S IPP space.

Speaker Change: With regard to M&A.

Speaker Change: As we've seen over the past year, we continue to see significant M&A activity, we're seeing more and more financial players come to the table.

Speaker Change: Participating in these processes and auctions.

Speaker Change: Which I think is a leading indicator to where the market is going and its expectation of of load growth in.

Speaker Change: Merchant plants or.

Speaker Change: Or just generation overall participation in the supply stack.

Speaker Change: On the strategic side, we're not seeing.

Speaker Change: As many strategic players come to the table, but where.

Speaker Change: We're optimistic about the outlook there.

Speaker Change: In terms of our own activity on M&A to date, we've been focused on integrating our existing assets.

Speaker Change: So I would expect second half of this year, we'll continue to look at opportunities that fit with our strategy.

Speaker Change: Very helpful. Thanks, Arctic alternate over.

Speaker Change: One moment for our next question.

Operator: One moment for our next question. Our next question comes from Robert Hope at Scotiabank. Your line is open. Good morning, everyone.

Speaker Change: Our next question comes from Robert Hope with Scotiabank. Your line is open.

Robert Hope: Two questions on Alberta. So the first one is, how are you thinking about allocating capital moving forward? Just given the uncertainty of what the rules will look like in 2027, how do you think about incremental investments in Alberta beyond the repowering? You know, could they be more focused on renewables that are backed by contracts to, you know, mitigate some of the merchant power risk? Thanks for the question, Rob.

Robert Hope: Good morning, everyone two questions Oliver on Alberta. So the first one is how are you thinking about allocating capital.

Robert Hope: Moving forward just given the uncertainty of what the rules will look like in 2027, how do you think about incremental investments in Alberta beyond the repowering.

Robert Hope: Be more focused on renewables that are backed by.

Speaker Change: Contracts too.

Speaker Change: Mitigate some of the merchant power risk.

Avik Dey: With regard to capital allocation, you know, as noted with our activity last year, we've been pretty heavily focused on expanding our footprint in the U.S. We were a preeminent producer of power in Alberta. We've got core assets in the province. And with the announcement that we are evaluating SMRs in Alberta with OPG, you know, we think we've got our line of sight towards long-term generation capacity. We don't see a need for new firm dispatchable capacity in Alberta for the next 10 years.

Oliver: Thanks for the question Rob.

Oliver: With regard to capital allocation.

Oliver: <unk> with our activity last year, we've been pretty heavily focused on expanding our footprint in the U S.

Oliver: We were a preeminent producer of power in Alberta, We've got core assets in the province.

Oliver: And with the announcement of us evaluating <unk> in Ontario, and Alberta with Op Gee, We think we've got a line of sight towards long term generation capacity, we don't see a need for new firm dispatch will capacity in Alberta for the next 10 years, so from a capital allocation person.

Robert Hope: So, from a capital allocation perspective, you could expect our capital to be directed towards U.S. opportunities more than Alberta. In terms of Alberta, to answer your question very specifically, we do not intend, in the short term, to allocate more capital towards new renewable projects or new mid-merit natural gas assets in Alberta. Thanks for that.

Oliver: <unk> you could expect.

Oliver: Our capital to be directed towards U S opportunities more than Alberta in terms of Alberta to answer your question.

Oliver: Very specifically, we do not intend to in the short term to allocate more capital towards new renewable projects or new.

Oliver: Uh huh.

Oliver: Mid mid Merit natural gas assets in Alberta.

Sandra Haskins: And then another question on Alberta, and maybe diving into the nitty gritty of it a little bit. With the interim rules in place with the potential that they mitigate upward volatility and pricing, does that alter your trading strategies in the province? Or could it lead you to, you know, if pricing was, you know, what you wanted it to be, to, you know, more fully contract your merchant exposure there? Thanks, Rob. It's Sandra.

Speaker Change: Thanks for that and then another question on Alberta, and maybe diving into the Nitty gritty of it a little bit.

Speaker Change: The interim rules in place with the potential that it mitigates upward volatility in pricing does that alter your trading strategies in the province or could it lead you to.

Speaker Change: If pricing was what you wanted it to be to more fully contract your merchant exposure there.

Speaker Change: Thanks, Rob It's Sandra Yes, I would say that what were expecting in the Alberta market rate.

Sandra Haskins: Yeah, I would say that what we're expecting in the Alberta market right now for the balance of the year is a reversion back to what we would have seen before the volatile market over the last couple of years. And during that period of time, we had a hedging strategy that we would look to put hedges in place as we saw opportunities to hedge above our expectation of price, and I don't see that changing. We just sort of see just a reversion back more to the norm.

Sandra Haskins: Now for the balance of the year as a reversion back to what we would have seen.

Sandra Haskins: Pre the volatile market over the last couple of years and during that period of time, we had a hedging strategy that we would look.

Sandra Haskins: Hedges in place as we saw opportunities to.

Sandra Haskins: Hedge above our expectation of price and don't see that changing we sort of see just a reversion back more to the norm and as you know we we do have a number of longer dated hedges that have reduced the amount of open exposure. We have in any given year. So from our perspective, we'll continue to layer in hedges as.

Sandra Haskins: And as you know, we do have a number of longer-dated hedges that have reduced the amount of open exposure we have in any given year. So from our perspective, we'll continue to layer in hedges as we see the opportunity to do so. So no real change from a hedging strategy perspective, but do expect that we're going to see a more stable, less volatile price environment going forward for the next number of years, given mostly the impact of the supply additions that are coming online, more so than real changes. Thank you.

Sandra Haskins: We see the opportunity to do so so no no real change from from a hedging strategy perspective, but do you expect that we're going to see a more stable less volatile.

Sandra Haskins: Price environment going forward for the next number of years, given given mostly the attributed to the supply additions that are that are coming online more so than real changes.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Operator: One moment for our next question. Our next question comes from Ben Pham with BMO. Your line is open. Hi, thanks for morning them.

Speaker Change: Our next question comes from Ben Pham with BMO. Your line is open.

Benjamin Pham: Hi, Thanks, good morning.

Benjamin Pham: Continue, I know you mentioned in your last capital allocation, not interested in Alberta on a go-forward basis, is this thinking, then next, that you're comfortable with your current portfolio in Alberta, or would you be more proactive with perhaps looking at JVs or..., at hotels in the province, just to become maybe more of a U.S. IPP. Thanks for the question, Ben. I wouldn't say we're not interested in Alberta, but I think given our significant position where it constitutes 30% of our EBITDA currently, we like the concentration that we have in Alberta.

Benjamin Pham: Please continue I know you mentioned in your last.

Benjamin Pham: Remarks that.

Benjamin Pham: Rob around.

Benjamin Pham: Capital allocation no not interested in Alberta on a go forward basis.

Benjamin Pham: Is there thinking than next.

Benjamin Pham: Youre comfortable with your current portfolio in Alberta, or would you be more proactive perhaps looking at JV either.

Benjamin Pham: Our asset sales and the provinces just to become maybe more of a U S. IPP.

Speaker Change: Thanks for the question then I wouldn't say, we're not interested in Alberta, but I think given our significant position.

Speaker Change: Constitutes 30% of.

Benjamin Pham: Our EBITDA currently we like the concentration that we have in Alberta, we want to maintain and optimize our existing position. We've got what will be the largest and most efficient gas plants in.

Benjamin Pham: We want to maintain and optimize our existing position. We have what will be the largest and most efficient gas plant in the country and an important provider of baseload generation in the province. I think what you will see from us going forward is a very refined focus on how we optimize return on capital employed and optimize return to shareholders through equity returns. So I would characterize our position in Alberta as optimizing, and it also recognizes the fact that we are two gigawatts oversupplied in the market. So I think that's the most important point, which is that over the course of the next 10 years, we do not see the need for incremental dispatchable firm capacity in the province.

Benjamin Pham: In the country and an important provider of base load.

Benjamin Pham: Baseload generation in the province, but with regard to the second part of your question I think we're always looking at ways to optimize the portfolio and we'll continue to do so as Sandra stated in previous quarters, we are looking at asset recycling.

Benjamin Pham: Our opportunity is.

Benjamin Pham: Across our portfolio and I think.

Benjamin Pham: What you will see from US going forward is a very refined focus on how do we optimize return on capital employed and optimize return to shareholders through equity returns. So I would characterize our position in Alberta as optimizing.

Benjamin Pham: And it also recognizes the fact that we are two gigawatts oversupply in the market. So I think that's the most important point, which is over the course of the next 10 years, we do not see the need for incremental dispatch able firm capacity in the products. So that's not tied to.

Avik Dey: So that's not tied to the March 11th statements on market structure. That's in line with our view coming into 2024 where we were adding this incremental supply. But so just to summarize, because I do think this is a really important point. We wanna optimize Alberta.

Benjamin Pham: The March 11th statements on market structure, that's in line with our view coming into 2024, where we were adding this incremental supply, but so just to summarize because I do think this is a really important point, we want to optimize Alberta will continue to look at asset recycling we're not.

Benjamin Pham: We'll continue to look at asset recycling. We're not looking to deploy new capital into the province currently but remain focused and steadfast in the medium to long-term outlook, subject to maintaining the energy only market. Okay, sounds good. Thanks for clarifying that. And maybe on slide 13, maybe Sandra you've highlighted the walk on.

Sandra Haskins: Uber & Commercial, year-over-year, these four buckets you've highlighted. Can you clarify? What was actually in your guidance, because this is a walk year-over-year versus..., a change versus your January guidance. Thanks, Ben. Yeah, you're correct.

Benjamin Pham: Looking to deploy new capital into the province currently.

Benjamin Pham: But remain remained focused and steadfast in the medium to long term outlook subject to maintaining the energy only market.

Speaker Change: Okay sounds good thanks for clarifying that.

Speaker Change: And maybe on that.

Speaker Change: Slide 13, maybe just could you Sandra you've highlighted the walk on.

Sandra Haskins: Hi, Brian commercial.

Sandra Haskins: Year over year.

Sandra Haskins: These four buckets.

Speaker Change: Highlighted.

Sandra Haskins: Can you clarify.

Sandra Haskins: What was actually in your guidance.

Sandra Haskins: Guidance, because it is the walk year over year versus <unk>.

Sandra Haskins: The change versus our January guidance.

Sandra Haskins: It's a bit of a mix between the guidance as well as year over year. And what the slide is intended to portray is the amount of year over year decrease that was the normal course or expected coming into the year. And that's the first bucket where we had anticipated lower prices in Alberta compared to what we captured in Q1 last year, as well as less generation overall as we go through the repowering project.

Speaker Change: Thanks, Ben Yeah, you're correct, it's a bit of a mix between.

Benjamin Pham: Between the guidance as well as year over year and what this slide is intended to portray as the amount of year over year decrease that was normal course, our expected coming into the year and that's the first bucket, where we had anticipated lower prices in Alberta.

Benjamin Pham: Compared to what we captured Q1 last year as well as less generation overall as we go through the Repowering project. So.

Sandra Haskins: So having set that element aside, we then focused in on where the quarter went post that expectation, just to sort of bake the current quarter performance from the year over year normal course reduction. And so when you look at the lower prices, primarily driven by lower volatility in Q1. And as you know, we typically see winter peaking in Q1 of the year with a lot of volatility, driving higher prices.

Benjamin Pham: Having said that element aside we then focused in on where the quarter went post post that expert to expectations just to sort of baked in the current quarter performance from from the year over year.

Speaker Change: Normal course reduction and so when you look at the lower prices, primarily driven by lower volatility in in Q1 and as you as you know, we typically see winter, peaking in Q1 of the year with a lot of volatility driving higher prices Nso's price.

Sandra Haskins: And it's those price escalations where you're able to capture value above our baseload hedging. As we were quite highly hedged, even with the flattening of prices, the incremental impact of that was only about $14 million, which is less of an impact on prices relative to the overall step down that we saw are expected coming into the year based on forward. We also have the delay in Simple Cycle 1 commissioning.

Speaker Change: Relations, where youre able to capture value above our baseload hedging.

Speaker Change: As we were quite highly hedged even with the flattening of prices the incremental impact of that was only up about $14 million, which is.

Speaker Change: It's less of an impact on prices relative to the overall step down that we saw or expected coming into the year based on forwards.

Speaker Change: We also have the delay on <unk>.

Speaker Change: Simple cycle, one commissioning so as we've been stating all along that the predictability of the exact timing of first fire.

Sandra Haskins: So, as we have been stating all along, the predictability of the exact timing of the first fire and the closing of commissioning on a Simple Cycle unit, as well as what hours the unit will actually run during that period of time, is driven by the project and not economically driven. So, coming into the year, we had expected that the first fire could occur in Q1, and during that period of time, we would have had generation off of the commissioning unit, as well as the base unit. Given that repowering did not hit that first fire until outside of the quarter, we did see reduced generation from the commissioning units than we had anticipated.

Speaker Change: Close enough.

Speaker Change: Commissioning on our simple cycle unit as well as ours.

Speaker Change: Hours the unit will actually run during that period of time is driven by the project and not economically driven so coming into the year. We had expected that first fire could occur in Q1 and during that period of time, we would've had generation off of the commissioning unit as well as the base unit given that Repowering did not.

Speaker Change: Hit that first fire until outside of the quarter, we did see reduced generation from from the commissioning units that we had anticipated. So that's been pushed into Q4.

Sandra Haskins: So, that's been pushed into Q2, as opposed to realized in the quarter. The other part is the outages that we saw at Clover Bar 3, which is currently in an outage that was expected to end in Q1. It's now expected to come back online in Q3, and therefore, when we did see periods of higher prices or outages at Genesee 1 and 2, that unit was not there as it typically would be for backup. We also saw a number of forced outage hours at Genesee 1 and 2.

Speaker Change: Sorry, Q2 as opposed to realized in the quarter.

Speaker Change: The other part is is the outages that we saw at Clover bar III, which is currently in an outage that was expected to end in Q1 is now expected to come back online in Q3, and therefore, when we did see periods of higher prices or outages at Genesee, one and two that that unit was not there as it is.

Speaker Change: Typically would be for backstop. We also saw a number of forced outage hours at Genesee one and two so as you recall in our guidance, we had talked about the amount of maintenance outage catch up that we had to do it at units one and two given that during repowering, we haven't been able to take those units offline to do routine.

Sandra Haskins: So, as you recall in our guidance, we talked about the amount of maintenance outage catch-up that we had to do at units 1 and 2, given that during repowering, we weren't able to take those units offline to do routine maintenance. The effect of that was starting to show as we came through Q1 this year, and both units had to be offline, sometimes at the same time, and coincidentally aligned with periods of very high pricing.

Speaker Change: <unk> B.

Speaker Change: The effect of that was starting to show as we came through Q1 this year and both units had to be offline, sometimes at the same time and coincidentally aligned with periods of very high pricing and as a result of that we had almost a $20 million.

Sandra Haskins: And as a result of that, we had almost a $20 million hit in the quarter resulting in these sort of ill-timed outages. So when you think about repowering and the outages because of maintenance catch-up that needed to be done, those are all non-normal course items that are not consistent with our reliability and operating practices. So we felt it was important to indicate that we are seeing some degradation in the quarter that is unique to the circumstances of repowering.

Speaker Change: It hit in the quarter, resulting in those sort of ill timed out agents. So when you think about repowering and the outages because of.

Speaker Change: Yes.

Speaker Change: Maintenance catch up that needed to be done those are all non normal course items that are not consistent with our reliability and operating practices. So felt.

Speaker Change: <unk> felt it was important to indicate that we are seeing some degradation in the quarter that is unique to the circumstances.

Speaker Change: Powering, but as those units come online.

Sandra Haskins: But as those units come online and we see increased capacity and reliability, we'll start to see more stabilization in our cash flows and quarterly results. Okay, thanks for the detailed explanation. Maybe just so I can understand that more. Thank you.

Speaker Change: And we see the increased capacity and reliability, we'll start to see more stabilization in our cash flows and quarterly results.

Speaker Change: Okay, great. Thanks for the detailed explanation maybe okay. So I can understand that more thank you and maybe just lastly.

Benjamin Pham: And maybe just lastly, on your guidance in general, last year, I think you were using more of a forward curve to set your guidance. Is that different this year, or are you more using your internal expectations supplemented by the forward curve? No, no; we use the forward curve when we're looking at the guidance for the current year.

Speaker Change: On your guidance in general.

Speaker Change: Last year I think you were using more of a forward curve, because how you or your guidance.

Speaker Change: Is that different this year that you are more using your internal expectation supplemented by the forward curve.

Speaker Change: No no we use the forward curves when we're looking at the current year guidance I think my comment was with respect to hedging activity. So when we're looking at hedging we have an internal view of where prices are.

Sandra Haskins: I think my comment was with respect to hedging activities. So when we're looking at hedging, we have an internal view of where prices are in a given period of time, and that is what guides us in terms of the hedge prices we would be looking for over and above risk mitigation. But the forecast and the guidance for the current year are always based on forward prices.

Speaker Change: In a given period of time and that that is what guides us in terms of the the hedge prices we would be looking for.

Speaker Change: Over and above risk risk mitigation, but the.

Speaker Change: The forecast and the guidance for the current year is always based on forwards.

Speaker Change: No change there okay. Thank you very much.

Speaker Change: One moment for our next question.

Benjamin Pham: Okay, I'll change that. All right, thank you very much. One moment for our next question. Our next question comes from Mark Jarvi with CIBC. Your line is open. Yeah, hi everyone. Maybe you guys can just outline, between the January update and now, just sort of the cost increases at Genesee, how that played out, and I guess your conviction or confidence level that there won't be further increases to the CapEx at this point. Hi Mark. It's Avik.

Speaker Change: Our next question comes from Mark Jarvi with CIBC. Your line is open.

Mark Thomas Jarvi: Yes, hi, everyone. Maybe you guys can just outline between the January update and now just sort of the cost increases at Genesee how that played out.

Mark Thomas Jarvi: I guess your conviction or confidence level that there will be further increases to the capex at this point.

Mark Thomas Jarvi: Okay.

Mark Thomas Jarvi: Look, I think from a milestone perspective, so bridging from January until now, the key milestone is hitting simple cycle on Unit 1 and 2, which in January, we had guided towards completion in Q2 for Unit 1, Q3 for Unit 3. And as Sandra indicated, you know, our ramp up and first fire commissioning is where we've endured some uncertainty, but we're on plan for simple cycle. So our confidence interval in the revised guidance is, we feel good about the guidance because what's remaining is really the combined cycle construction, in particular on the HRSAGS on both units that complete the combined cycle.

Avi: Hi, Mark its Avi.

Mark: Look I think from a milestone perspective, so bridging from January until now.

Avi: The key the key milestone is hitting simple cycle on unit, one and two.

Avi: In January we had guided towards.

Avi: Completion in Q2 for unit one Q3 for unit three and then Sandra indicated.

Avi: Ramp up and first fire to commissioning of where we've endured.

Avi: Some uncertainty, but we're we're on plan for simple cycle, so our confidence interval in the revised guidance is.

Avi: We feel good about the guidance because what's remaining is really the combined cycle construction.

Avi: In particular on on the her saves on both units that.

Avi: Please.

Avi: Buying cycle, so where we have construction remaining is in with regard to the combined cycle piece of it but on completion of simple cycle, one and two will have effectively retire the older units and commenced.

Mark Thomas Jarvi: So where we have construction remaining is with regard to the combined cycle piece of it. But on completion of simple cycle one and two, we'll have effectively retired the older units and begun capacity on units one and two.

Avi: Capacity on one and two.

Avik Dey: So in terms of the revised guidance, the increase accommodates for really two things, costs associated with the outage itself to bring these two units on and then lower productivity, which is reflected in what's left on the combined cycle construction. So, I think what's important is we're nearing the finish line. We've made it through major construction and got the first, and we're in the process of having the first two units up and running.

Speaker Change: So in terms of the revised guidance.

Mark: Increase accommodates for really two things.

Mark: Costs associated with the outage itself.

Mark: To bring these two units on.

Mark: And then lower productivity, which is reflected in what's left on the combined cycle construction.

Mark: So I think what's important is where we're nearing the finish line we've made it through major construction and got the first well.

Mark: In the process of having the first two units up and running we're not out of the woods completely and that we have major construction remaining on combined cycle, but all the equipment is on stage and it's really about.

Avik Dey: We're not out of the woods completely in that we have major construction remaining in the mine cycle, but all the equipment is on stage, and it's really about maintaining productivity, and the cost increase reflects the increased costs around labor productivity to get to completion on the project. So if you think about the new range, how would we think about, is there a buffer even at the low end of that number now?

Mark: Maintaining productivity and the cost increase reflects the increased costs around labor productivity to get.

Mark: To completion on the project.

Mark: So if you think about the new range.

Mark: How do we think about is there a buffer even at the low end.

Mark: Of that number now.

Mark Thomas Jarvi: I don't know that I would say buffering at the low end, but it's why we provided the range is to accommodate, you know, accommodate contingency within, you know, within that. So, you know, the closer we get to completion of the project, the less variability there will be. And, but we still felt given what our track record is here and how costs and schedules have changed over the last few years, you know, we wanted to maintain the range in the guidance. But, you know, as we get closer, the variability will decrease.

Speaker Change: I don't know that I would say buffering at the low end, but it's why we provided the range is to accommodate.

Mark: Accommodate contingency within.

Mark: Within that so.

Mark: Closer we get to completion of the project the less variability is and but we still felt given what our track record is here and how cost and schedules have changed over the last few years, we wanted to maintain.

Mark: The range in the guidance.

Mark: As we as we get closer to the <unk>.

Mark: The ability will decrease.

Avik Dey: Okay, and then how do you think about funding the incremental capex? I assume it can't be supported by incremental debt funding because there's no real offsetting cash flow to this. So does this constrain, you know, how much you would have had for M&A later this year or organic development? How do you think about that? And then, I guess, as you go through commissioning, is there any risk in your hedge position that you're caught offside? So, Mark.

Speaker Change: Okay and then how do you think we are funding the incremental capex I assume that can't be supported by incremental debt funding because there's no real offsetting cash flow to this so does this constrained.

Speaker Change: How much you would have had for M&A later this year organic development. How are you looking for that and then I guess as you go through commissioning is there any risk on your hedge position that you are caught offside.

Mark Thomas Jarvi: So a couple things there. In terms of the funding of it, we do have plans to issue debt, as we've indicated this year as we come through Q2, and so we have the opportunity to raise funding there. We are seeing a decrease in the spend on our Ontario projects that is somewhat offsetting to this, and we'll look at permanent financing once we get closer to the end of the year. As far as incremental M&A activity, to the extent that there is an accretive opportunity, we would look at financing at that point in time.

Speaker Change: Thanks Mark.

Mark: Couple of things there in terms of.

Mark: The funding of it we do have.

Mark: Plans to issue debt has as we've indicated this year as we come through.

Mark: Q2 is and still have the opportunity to do funding. There we are seeing a decrease in the spend on our Ontario projects that are somewhat offsetting to this and we'll look at.

Mark: Permanent financing once we get closer to the end of the year as far as incremental M&A activity to the extent that there is an accretive opportunity. We would look at financing at that point in time any commitments to the development would have spending further out so it would be part of the longer term term.

Mark Thomas Jarvi: Any commitments to a development would have spending further out, so it would be part of the longer-term financing plan. So as a result of the overruns, we're not looking at doing anything incremental immediately or in the very near term with respect to financing. It'll be funded through the credit facilities, and we'll address that in the normal course. And then on the hedge positions, is there any risk there? And when you think about what happened in Q1, were there any losses associated with settling hedges that you might have been along, assumed on your power production?

Mark: Ensign plan. So as a result of the overruns were not looking at doing anything incremental immediately.

Mark: In the very near term with respect to.

Mark: Financing that it'll be funded through the credit facilities.

Mark: And we'll address that in normal course.

Mark: And then on the hedge position is there any risk there and when you think about what happened in Q1 was there any losses associated with settling hedges that Mickey may have been launched souvenir population that is the risk that if you if and that risk.

Mark Thomas Jarvi: That is the risk that if you, and that risk occurs at any time, as you know, if you have a hedge position and are unable to cover it, then you do have to cover those exposed positions otherwise.

Mark: Occurs at any any time as you know that if you have a hedged position and are unable to cover. It then you do have to.

Mark: Cover those those exposed positions otherwise so that is the risk. However, we do expect <unk> to be back online, which gives us more ability to to backstop those hedges, which is traditionally how we've managed any outages. We also expect higher reliability as we.

Sandra Haskins: So that is a risk. However, we do expect CBEX III to be back online, which gives us more ability to backstop those hedges, which is traditionally how we've managed any outages. We also expect higher reliability as we get off of simple cycle one and less volatility and prices that would mitigate the sizing of those losses. But it does continue to be a potential risk. Okay, and then last one for me, just something like I'm stopping the work on carbon capture.

Mark: Get off of <unk>.

Mark: Simple cycle, one and and less volatility in prices that would mitigate the sizing of those.

Mark: Losses, but it does continue to be a potential risk.

Speaker Change: Okay, and then last one from me just on the starting the work on the carbon capture or is that just not getting the contract for differences in the pricing in carbon.

Sandra Haskins: Was that just not getting the contract for difference, you know, the pricing on carbon, was it tax credits, was it all of the above? Is there anything you can kind of point to that kind of made you guys put your pens down and stop any work on that right now? Thanks, Mark.

Speaker Change: Was this tax credits was that all of the above is there any kind of point to it kind of made you guys put pens down and stop any work on that right now.

Avik Dey: I would say all of the above, as we indicated in the release in the comments, it's fundamentally the economics just don't work where we are on the project. So that can be attributed to, you know, capital costs, outlook for dispatch, you know, the contract for differences. But, you know, on all fronts, I think we had collaborative and constructive conversations. I do feel strongly that carbon capture and sequestration works post-combustion for a gas-fired power plant, but the math just doesn't add up in terms of economics and our own equity hurdle rates.

Speaker Change: Thanks, Mark I would say all of the above as we indicated in the release in the comments, it's fundamentally the economics just don't work.

Speaker Change: We are on the project.

Speaker Change: That can be attributed to the.

Speaker Change: Capital costs outlook for dispatch.

Speaker Change: The contract for differences, but.

Speaker Change: On all fronts, I think we had collaborative and constructive conversations I do feel strongly that carbon capture and sequestration works post combustion for gas fired power plants.

Speaker Change: But the math just doesn't add up.

Mark Thomas Jarvi: So hopefully, the technology will improve, and you know, we can revisit this at some point when the economics improve, but it was fundamentally just a decision around the economy at this point. Understandable. Okay. Thank you both.

Speaker Change: In terms of economics in our own equity hurdle rates, so hopefully that the technology will improve and we can revisit this at some point when the economics improve but it was fundamentally just a decision around the economics at this point.

Speaker Change: Understood. Okay. Thank you both.

Operator: One moment for our next question. Our next question comes from John Mould with TD Securities. Your line is open. Hi, good morning.

Speaker Change: One moment for our next question.

Speaker Change: Our next question comes from John Mould with TD Securities. Your line is open.

John Mould: Maybe just, you know, turning first to California, you know, April, which is, you know, admittedly, a real shoulder season for Power Markets. There have been a lot of renewable resources online and relatively low gas output. I appreciate that La Paloma is driven by resource adequacy, and it doesn't need volatility, particularly at this time of year. In that context, I just appreciate your initial impressions on that asset since you acquired it in February and how you see it sitting in as the narrowboat industry is evolving there, and we're seeing more storage and solar coming online in that way. Thanks, John.

John Mould: Hi, Good morning, Thank you maybe just turning.

John Mould: Turning first to California April which is admittedly a real shoulder season for.

John Mould: For power markets Theres been a lot of renewable resources online and relatively low gas output and I. Appreciate the lawful and was driven by a resource adequacy and doesn't need volatility, particularly in that.

Speaker Change: This time of year, but.

Speaker Change: I was just in that context I. Just appreciate your initial impressions on on that asset since you acquired it in February and how you see it fitting in as.

Speaker Change: The Merit order is evolving there and we're seeing more storage and solar are coming online in that market.

Avik Dey: I think from a resource adequacy perspective, we're actually feeling really good about the outlook for California. In particular, what we've got, and we talked about this when we underwrote the asset and announced the acquisition, reliable dispatchable generation is critical for reliability, and having those resource adequacy contracts is what facilitates reliability on the grid. And we're seeing that uplift and outlook favorably on the RA contracts currently, really all the way out to 27, 28.

Speaker Change: Thanks, John I think from a resource adequacy perspective, we're actually feeling really good about the outlook for California in particular, what we've and we've talked about this when we underwrote the asset and announced the acquisition.

Speaker Change: The reliable dispatch of old generation is critical for reliability and having those resource adequacy contracts is what facilitates reliability on the grid.

Avik Dey: So, continue to see positive momentum there, notwithstanding the current market environment and what we've seen on gas. The other point I would make on La Ploma is it's a critical asset because it has its own gas supply coming off an alternative system, and it's on one end of a north-south transmission line in California.

Speaker Change: With <unk>.

Speaker Change: And we're seeing that uplift in outlook favorably on the RA contracts currently really all the way out to 2000 and 728. So continue to see positive momentum there notwithstanding the current market environment and what we've seen oil and gas. The other point I would make on La Paloma is.

Speaker Change: It's a critical asset because it has a it's all.

Speaker Change: Oil and gas supply coming off an alternative system and it's on the one end of a north South transmission line in California that is critical to maintaining reliability in the in the state.

John Mould: That's critical to maintaining reliability in the state. So, we see the asset well positioned. It's largely in line with what we underwrote, and the medium-term outlook continues to be favorable from a RA perspective. Okay, that's great. Thank you.

Speaker Change: So we see the asset well positioned.

Speaker Change: It's largely in line with what we under wrote.

Speaker Change: In the medium term outlook continues to be favorable from our perspective.

Avik Dey: And, you know, maybe just to circle back on the CCS a little bit. You know, I'm just wondering what would cause you. You said at the end that your last question there, you know, hopefully you can revisit as, you know, technology improves and maybe the economics improve. Is that really?

Speaker Change: Okay. That's great. Thank you and maybe just to circle back on the Ccs a little bit.

Speaker Change: I'm just wondering what would cause you said if youre. The last questionnaire hopefully you can revisit as technology improves and maybe the economics improve as that really.

John Mould: I'm just trying to get a sense of, You know, does that require sort of like a fundamental step change in, in, you know, the post combustion capture technology that's out there? You know, could you see a, you know, a combination of, of, you know, changes on the contracting side and, and, you know, the merchant exposure evolves such that You know maybe it, takes, you know, makes sense to take another look at it?

Speaker Change: I'm, just trying to get a sense of.

Speaker Change: Does that require sort of like a fundamental step change in <unk>.

Speaker Change: The post combustion capture technology that's out there.

Speaker Change: Could you see a combination of Av.

Speaker Change: Changes on the contracting side and the merchant exposure evolve such that.

Speaker Change: Maybe it's.

John Mould: Or, you know, is it really necessary for you to see a technological leap for that plant to, you know, that investment to make sense for your company, given, you know, the other returns you can earn elsewhere? You know, John, I made the point around the technology improving, and what it really is is the technology improving, so the cost comes, you know, how do you actually build the kit so that you have higher efficacy and higher capture rates while bringing down capital costs? So, you know, when you step back and look at CCS, there are two components to it.

Speaker Change: It takes it makes sense to take another look at it or is.

Speaker Change: Or is it really.

Speaker Change: You need to see a technological leap for that plant to that investment to make sense for your company given the other returns you can earn elsewhere.

Speaker Change: John.

Speaker Change: I mean, the I mean, the point around the technology, improving and what it really is is it the technology improving so the cost comes down.

Speaker Change: How do you actually build the kit so that you have higher efficacy.

Speaker Change: And and higher capture rates.

Speaker Change: While bringing down the capital cost so when you step back and looked at Ccs Theres two components to it.

Avik Dey: From a revenue side, it's, you know, what we would have received in terms of a contract for differences, but it's also cost avoidance on the carbon tax itself. So those are the two contributing factors to establishing, you know, the numerator on the NPV calculation. And then, you know, on the denominator, it's really a function of volume, i.e.

Speaker Change: From a revenue side, it's what we would have received in terms of the contract for differences, but it's also cost avoidance on carbon tax itself. So those are the two contributing factors to establishing.

Speaker Change: The the numerator on the NPV calculation and then on the denominator, it's really a function of volume I E emissions captured.

Avik Dey: emissions captured and capex per ton captured or capex per megawatt exposed. And so at the end of the day, it's the combination of all three. It's, you know, volume, cost, and capex. And so I really wouldn't say it's any one thing.

Speaker Change: And Capex.

Speaker Change: Our per ton per tonne captured or capex per megawatt expose and so at the end of the day, it's the combination of all three.

Speaker Change: Volume cost and Capex and so I really wouldn't say if any one thing I think we need all of it to work to be able to underwrite something.

Speaker Change: That meets our equity hurdle rates, but I would if I had to pinpoint one thing today I think will unlock Ccs post combustion for natural gas fired power plants is the capex per unit coming down.

Avik Dey: I think we need all of it to work to be able to underwrite something that meets our equity hurdle rates. But if I had to pinpoint one thing today, I think what will unlock CCS post combustion for natural gas fired power plants is the capex per unit coming down such that we can work within whatever regulatory framework exists, whether it's the state of Michigan, the province of Alberta, and work within whatever federal framework exists, whether it's the CER or working within the IRA. So I do feel positive about CCS for the medium to long term. We're just early.

Speaker Change: Such that we can work within whatever regulatory framework exists whether it's the state of Michigan, The province of Alberta and work within whatever federal.

Speaker Change: Whatever federal framework exists whether it's the CER are working within the IRR. So I do feel positive about Ccs for medium to long term. We're just early.

John Mould: Okay, I appreciate all that color. That's great. Um, and maybe just one last one for Sandra just on the Ontario one. Costs coming down and, you know, maybe just how you're thinking about what the capital structure could look like for those projects. It looks like we could get, you know, Royal Assent on the ITC maybe in the next month. Just wondering how you're thinking about the funding split, between project equity and project debt. I'm not going to say project debt because I know you won't do, or you typically don't do project level financing, and maybe the ITC for the renewables and storage portion. How are you thinking about the funding split there? Thanks, John.

Speaker Change: Okay I appreciate all that color Thats, great and maybe just one last one for Sundar just on the on the Ontario.

Sundar: Costs coming down and maybe just how youre thinking about what the capital structure could look like for those projects. It looks like we could get royal assent on it.

Speaker Change: See you in the next months, just wondering how youre thinking about the funding split.

Sundar: Between project equity.

Sundar: That I'm not going to see project out because I know you won't do you typically don't do project level financing and maybe the ITC for the renewables and storage portion how are you thinking about the funding split there.

Sandra Haskins: Yeah, as you mentioned, we are expecting Royal Assent on ITCs that would be applicable to the batteries at the Ontario projects. When we implemented the DRIP, it was an indication that that was the funding that we would be applying to the development projects that were in flight, including the Ontario projects, and the rest would be coming through cash flow as we see sort of a backward curve to the spending profile for those assets. So,

Speaker Change: Thanks, John Yes, as you mentioned, we are expecting Royal assent on ITC that would be applicable to the battery.

Speaker Change: Batteries that adds to the Ontario projects.

Speaker Change: When we implemented.

Speaker Change: Implemented the drip it was an indication that that was the funding that we would be.

John Mould: Find to the development projects that were in flight, including the Ontario projects and.

Speaker Change: And the rest will be coming through cash flow and three it's a.

Speaker Change: Sort of a back backward.

Speaker Change: Curve too to the spending profile for those assets so.

John Mould: No, no other announcement in terms of specific funding. But as I said, as we build out those projects, we have the liquidity on the credit facilities, and and our ultimate decision on how we term out that financing will be pushed into 2025 at earliest. Okay, that's great. Thanks for that context.

Speaker Change: No no other announcement in terms of specific funding, but as I said as we as we build out those projects we have the liquidity on the credit facilities and our ultimate decision on on how we term out that that financing will be pushed into 2025.

Speaker Change: Elliot.

Sandra Haskins: Those are all my questions. One moment for our next... Our next question comes from Maurice Choy with RBC Capital Markets. Your line is open. Thanks, and good morning everyone.

Elliot: Okay. That's great. Thanks for that context, those are all my questions.

Speaker Change: One of them for our next question.

Elliot: Our next question comes from Rich Troy with RBC capital markets. Your line is open.

Maurice Choy: I just want to come back to the repowering project and the cost that you've announced there. We're three quarters of the way to go before you complete this project at the end of this year. Can you elaborate as to how much of the $1.55 billion to $1.65 billion is spent to date or where we are on the project itself? That's the date.

Rich Troy: Thanks, and good morning, everyone.

Rich Troy: Come back to be Repowering project and the cost increase.

Rich Troy: You've announced here with.

Rich Troy: With three quarters left to go before you complete this project at the end of this year can.

Rich Troy: Can you elaborate as to how much of the $1 505 to $1 $65 billion six hour suspense.

Speaker Change: At $1 billion.

Speaker Change: So are you spent to date or where we are on the project itself.

Speaker Change: Spent to date.

Avik Dey: We're just over, just under a billion dollars spent to date, and the remainder of the equivalent to your new revised cost estimate, how much of that is, I guess, fixed? I would say it's mostly variable, because, as I said in the earlier comments, it's related to labor and productivity, and so the fixed cost element of it, which was all largely equipment. All the equipment is on site.

Speaker Change: Where we're just over.

Speaker Change: Just under 1 billion won to date.

Rich Troy: And the remainder of the building.

Rich Troy: <unk> revised cost estimate how much of that is fixed.

Rich Troy: Bruce.

Bruce: I would say, it's mostly variable because as I said in the earlier comments, it's related to labor.

Bruce: In productivity and so the fixed cost element of it which was all largely equipment.

Rich Troy: All the equipment is on site.

Maurice Choy: So, what's remaining is, you know, really construction, commissioning, and labor on the combined cycle units and what's remaining on Simple Cycle 2. But if you, and that's not an exact answer because you have components of that, like the outage, that, you know, are there fixed components to it, but in the construct of an overall project FID, what's, you know, it's time and labor that's really what' So, if you were kind of piecing it between capital equipment and what is variable in nature, based on your question, I would say it's more variable in nature. Fantastic.

Rich Troy: So what's remaining is.

Rich Troy: Really construction commissioning.

Rich Troy: Labor on the combined cycle units and what's remaining on simple cycle too.

Rich Troy: But if you and that's not an exact answer because you have components of that like the outage that.

Rich Troy: Of the fixed components to it within the construct of an overall project I E.

Rich Troy: It is time and labor that's really what's remaining so if you were kind of piecing it between capital equipment and what the variable in nature based on your question I would say, it's more variable in nature.

Avik Dey: And maybe a quick follow-up. Obviously, you've got, let's call it, $400 million to $500 million left to spend here. How would you characterize your contingency?

Speaker Change: Understood and maybe just a quick follow up obviously, you've got let's call it $4 million to $500 million left to spend here how would you characterize your <unk>.

Speaker Change: Tendency.

Maurice Choy: for the remaining spend. Recognizing too that this is not the first cost increase for this project and, I'm trying to figure out how you guys approach this, particularly for this project, not in general. Yeah, I think that's why we put the range in place that we did to accommodate that. I don't think I can specify what specific contingency is. But I would say it reflects two things: normal course contingency in a project for the full 100% of the project.

Speaker Change: For the remaining spend.

Speaker Change: Recognizing too that this is not the first cost increase for this project.

Speaker Change: And I'm trying to figure out how you guys approach, particularly for this project.

Speaker Change: In general.

Avik Dey: And then, you know, we put a range in recognizing where we are today and specific contingencies, which is why we've given the range. I know it's not a precise answer to your question, but, you know, I think that's why we have, you know, the wider range, given where we are and how close we are to completion of the project. That helps. And maybe just separately to that.

Speaker Change: Yes, I think that's why we put the range in place that we did is to accommodate that I don't think I can specify what specific contingency is but I would say contingency reflects two things normal course contingency in our project for the full 100% of the project and then.

Speaker Change: We've put a range in recognizing.

Speaker Change: Where we are today and specific contingency, which is why we've given the range.

Speaker Change: No it's not a precise answer to your question, but.

Speaker Change: I think thats why why we have.

Speaker Change: The wide the wider range, given where we are and how close we are to completion of the project.

Speaker Change: That helps.

Speaker Change: And maybe just separately to that.

Maurice Choy: When the cost was increased to $1.35 billion about mid last year. I remember you mentioned that the lever return was more than 30%. What is your latest estimate of the return on the leave-retain for this project right now, given this cost increase, given the uncertainty on REM, not to mention that the carbon tax trajectory may change if we have a change in the federal government? So, Maurice, we haven't rerun the returns at this level, but it certainly would exceed our levered equity hurdles as the project was, as you mentioned, very deep in the money last year at 1.35, and certainly that would not have changed with this escalation.

Speaker Change: And when the costs was increased to $1 35 billion above mid last year I remember you mentioned that the Levered return.

Speaker Change: With more than 30% what is your latest estimate.

Speaker Change: Leave it return for this project right now.

Speaker Change: Given this cost increase given the uncertainty on rem not to mention that the carbon tax trajectory.

Speaker Change: It may change if we haven't changed in federal government next year.

Speaker Change: Summary, we haven't rerun the returns are at this level, but it certainly will.

Speaker Change: Exceed R R.

Speaker Change: Levered equity.

Speaker Change: <unk> as the project was as you mentioned very deep in the in the money last year at one three.

Speaker Change: And certainly that would would not have changed with dose escalation. So if we were to make this investment decision today, we would still be proceeding with this project without without hesitation, but.

Maurice Choy: So if we were to make this investment decision today, we would still be proceeding with this project without hesitation, but I can't give you an exact update to that number, but it would certainly be highly accretive and remains a very highly accretive project. That's great.

Speaker Change: Can't give you an exact update to that number.

Speaker Change: But it would be certainly highly accretive remains a very highly accretive project.

Speaker Change: That's great. Thanks for the color.

Operator: Thanks for the call. One moment for our next question. Our next question comes from Patrick Kenny with NBF. Your line is open. Yeah, good morning.

Speaker Change: One moment for our next question.

Patrick Kenny: Just to come back to the U.S. footprint here, and again, don't want to steal too much thunder from next week, but... Specifically on the momentum around data-centered power demand growth, just wondering if you could provide a bit of a preview into how we should be thinking about your positioning, your ability to capitalize on this opportunity, which assets within your portfolio might be best situated for near-term expansion or contract extension. And also, you know, which regional markets you might view as being most attractive in terms of participating in the need for more, you know, immediate gas fire generation. Thanks, Patrick. That will be the thunder from our conversation next week.

Robert Hope: Our next question comes from Patrick Kenny with MBS. Your line is open.

Patrick Kenny: Yes, good morning.

Patrick Kenny: Just to come back to U S footprint here and again don't want to steal too much Thunder from next week, but.

Patrick Kenny: Specifically on the momentum around data center power demand growth.

Patrick Kenny: Just wondering if you could provide a bit of a preview into how we should be thinking about your positioning.

Patrick Kenny: Ability to capitalize on this opportunity.

Patrick Kenny: Which assets within your portfolio might be best situated for near term expansion or contract extension.

Patrick Kenny: So.

Patrick Kenny: Which regional markets you might view as being most attractive in terms of participating in the need for more immediate gas fired generation.

Avik Dey: But just to preview, you know, as we think about increasing load demand coming from data centers, so, you know, a hyper data center would be a minimum thousand megawatts, a million square feet of footprint. And so, as we've been saying for the last year, you can't have renewables without having dispatchable generation, which is what we provide with natural gas. When you look at the data center game, you know, the conversations that all of the, you know, hyper data center builders and large technology companies are faced with right now are, how do you access firm capacity physically? So 65% of PPAs in North America have historically been held by large tech companies. And many of those PPAs are held in places where they're not physically procuring the power.

Speaker Change: Thanks, Patrick that will be stealing the thunder from from our conversation next week, but.

Patrick Kenny: Just to preview you know as we as we think about.

Patrick Kenny: Increasing load demand coming from data center, so hyper data center.

Patrick Kenny: Would be a minimum 1000 megawatts million square feet.

Patrick Kenny: Footprint.

Patrick Kenny: The key challenge for data centers is you cannot rely on intermittent supply we need firm supply.

Patrick Kenny: And what most of your utility Commission system operators load serving entities are dealing with is reliability concerns because we're hitting that threshold in which reliability is being compromised because we have too much renewables and not enough firm capacity.

Patrick Kenny: And so as we've been saying for the last year, you can't have renewables without having dispatch of coal generation, which is what we provide on natural gas when you look at the data Center play.

Patrick Kenny: The conversations that all of the hyper data center builders and large technology companies are faced with right. Now is how do you access firm capacity physically.

Avik Dey: 65% of Ppas in North America has been historically held by large tech companies and many of those Ppas are held in places, they're not physically procuring the power while all of those costs are actually being burden to ratepayers through rate base in those local markets and so where are we.

Avik Dey: Well, all of those costs are actually being burdened to rate payers through rate base in those local markets. And so where we see the opportunity with data centers is really working with offtakers to provide, you know, balanced energy solutions, which is what we've been in the business of 15 years doing, which is, how do you provide behind the fence generation? How do you provide contracts? How do you provide medium to long-term solutions, you know, for those hyper-data centers to get from capacity? The markets that are interesting, if you look at the US, three of the highest growth markets for data center demand are the Northwest, California, and Arizona.

Avik Dey: See the opportunity with data centers is really working with our off takers to provide.

Avik Dey: Balanced energy solutions, which is what we've been in the business of 15 years doing which is how do you provide.

Roy Arthur: And the first generation how do you provide contracts how do you provide medium to long term solutions.

Patrick Kenny: Those hyper data centers to get firm capacity the market that are interesting. If you look at the U S.

Patrick Kenny: Three of the highest growth markets for data center demand are the northwest, California.

Avik Dey: And Arizona.

Avik Dey: So, you know, we're positioned in each of those. In terms of specific assets, I think I'll defer that to investor day, where we'll talk about that in some detail. Yeah, I appreciate that overview, and I look forward to diving more into the weeds next week.

Patrick Kenny: No.

Speaker Change: We're positioned in each of those in terms of specific assets I think I will defer that.

Speaker Change: So the Investor day.

Speaker Change: We'll talk about that in some detail.

Speaker Change: Yes, I appreciate that overview and I look forward to diving more into the weeds next week.

Patrick Kenny: Maybe Sandra touched on it, but based on the lower financial performance expected for the year, combined with the incremental capital needs here at Genesee, can you just confirm how you're thinking about your need for potentially boosting liquidity or your desire to improve leverage ratios over the near term? Do you see any need to bring in any additional equity under the balance sheet or not? Perhaps additional partners over and above in Ontario will fund your capital budget over the next 12 to 24 months.

Speaker Change: Maybe for Sandra just you touched on it but based on the lower financial performance expected for the year.

Patrick Kenny: Combined with the incremental capital needs you're at Genesee.

Sandra Haskins: Can you just confirm how youre thinking about your need for potentially.

Patrick Kenny: Boosting liquidity or your desire to improve leverage ratios over the near term do you see any need to bring in any additional equity onto the balance sheet or.

Speaker Change: Perhaps additional partners over and above in Ontario, just to.

Patrick Kenny: To fund your capital budget over the next 12 months to 24 months.

Patrick Kenny: Thanks, Pat. As you know, we normally have a lot of different avenues we can approach with respect to financing and certainly partnerships. We do have a partner at one of the sites that we already have in Ontario where we are doing some, some incremental projects there.

Speaker Change: Thanks, Matt So as you know we normally have a lot of different avenues, we can approach with respect to financing and certainly.

Speaker Change: Partnerships with.

Patrick Kenny: We do have a partner at one of the sites that we already have in Ontario, where we are doing some some incremental projects there.

Sandra Haskins: That is an opportunity, you know, capital recycling remains an opportunity as well as bringing in partners elsewhere. So there's a number of different things that we can do, but nothing that we feel needs to be done immediately in order to support the balance sheet. So we still remain strong on leveraging credit metric criteria.

Speaker Change: That is an opportunity capital recycling remains an opportunity as well as.

Sandra Haskins: Look bringing in partners elsewhere. So there's a number of different things that we can do but nothing that.

Speaker Change: That we feel needs to be done immediately in order to support the balance sheet. So still remain strong on on leveraging credit metric.

Patrick Kenny: So nothing, nothing forthcoming immediately and in terms of incremental financing plans beyond what we've already announced. And then just in light of the potentially, you know, higher for longer interest rate environment, any update on the timing for refinancing the MTNs due in September? Yeah, so we do plan to refinance those. We have hedged the underlying that is deeply in the money, which will bring down the overall effective cost of that debt. As you may recall, we had hedges on our previous refinancings and most of our financings out to about 2026. So don't expect any changes with respect to timing as a result of interest rates.

Patrick Kenny: Criteria, so nothing nothing forthcoming immediately in terms of incremental financing plans beyond what we've already announced.

Patrick Kenny: And then just in light of the.

Patrick Kenny: Potentially higher for longer interest rate environment any update on the.

Patrick Kenny: The timing for refinancing the MTN due in September.

Speaker Change: Yes, so we do plan to refinance those we have hedged the underlying that is deeply in the money, which youll bring down the overall effective cost of that gap.

Speaker Change: As you May recall, we had hedges on our previous refinancings in most of our financing team about 2026. So don't expect any any changes with respect to timing as a result of interest rates. However, we will look for opportunities windows, where where we have a constructive market to go in and do.

Patrick Kenny: D var or transactions.

Sandra Haskins: However, we will look for opportune windows where we have a constructive market to go in and do our transaction. Okay, that's great. Thanks, Sandra. Thanks, Avik. I'll leave it there, and I'm not asking any further questions at this time. I'd like to turn the call back over to Roy for any closing remarks. Thank you. If there are no further questions, with that, we will conclude our conference call. Thank you once again for joining us and for your interest in capital power.

Speaker Change: Okay. That's great. Thanks, Andrew Thanks, Alex I'll leave it there.

Speaker Change: Okay.

Avik Dey: And im not showing any further questions at this time I'd like to turn the call back over to Roy for any closing remarks.

Sandra Haskins: Thank you if there are no further questions with that we will conclude our conference call.

Speaker Change: Thank you once again for joining us and your interest in capital power.

Sandra Haskins: Today's presentation webcast will be made available on capitalpower.com. Have a great day. Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day. Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music Music, ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?

Roy Arthur: Today's presentation and webcast will be made available on capital power Dot com have a great day.

Speaker Change: Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Sandra Haskins: [music].

Sandra Haskins: [music].

Sandra Haskins: [music].