Q4 2024 Capital Power Corp Earnings Call

February 26, 2025

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Rory Auto: I would now like to turn the conference over to Rory Auto Vice President strategic planning and Investor Relations. Sir you may begin.

Rory Auto: Good morning, everyone. Thank you for joining us to review capital Power's achievements and financial performance for the fourth quarter and year end.

Rory Auto: Our presentation and the accompanying materials are available on our website at www Dot capital power Dot com.

Rory Auto: Today's agenda includes business highlights our financial review closing remarks, and a Q&A session.

Speaker Change: Today, our president and CEO will kick off today's presentation with our business highlights for the year, followed by Sandra Askin's, our SVP finance and CFO, who will present the financial review Apple will then provide some closing remarks and open the door to questions from analysts.

Speaker Change: Before we dive into the details I want to remind everyone that certain information in this presentation contains forward looking statements. These statements are based on assumptions and analysis made by the company and actual results could differ materially due to various risks and uncertainties. Please refer to slide 20.

Speaker Change: Fourth quarter MD&A for more information on those risks and assumptions. Additionally, we will be referring to non-GAAP financial measures and ratios, which are provided to complement GAAP measures in analyzing our results from management's perspective.

Speaker Change: Reconciliations of these non-GAAP measures to their nearest GAAP measures can be found in our 2024 integrated annual report in the spirit of reconciliation, we respectfully acknowledge that capital power operates within the assessed real homelands of Treaty territories of indigenous peoples or head offices are located within the traditional home of many envision.

Speaker Change: Communities and treaties six territory in May <unk> nation of Alberta region for <unk>.

Speaker Change: We acknowledge the diverse indigenous communities that are located in these areas and whose presence continues to enrich the community and our lives.

Alex: With that I'll hand, it over to Alex.

Speaker Change: Good morning, everyone. Today, we will be highlighting our Q4 and year end 2024 results and underscoring how we're creating shareholder value. During this pivotal time when energy demand is expanding and providing significant opportunities for our company as demonstrated throughout the year, we have an exceptional ability.

Speaker Change: To acquire and maintain expand and optimize natural gas generation assets, we are continuing to advance growth in our portfolio with an advantage position in a power market that is undergoing long term expansion driven by multiple sources, including re shoring residential commercial.

Speaker Change: And industrial demand and finally growth in data centers.

Speaker Change: 24 store capital power has strategically positioned itself for future growth and opportunities across our portfolio.

Speaker Change: During the year, we made strides aligned to our three strategic areas of focus.

Speaker Change: Firstly, we delivered approximately 38 terawatt hours across our fleet, marking record annual generation from our growing portfolio to maximize and crystallize the value of our assets in 2024, we executed turnarounds at seven facilities as part of our effort to enhance the reliability and efficient.

Speaker Change: T at our sites for the long term.

Speaker Change: And we sold down to renewable assets for $333 million of pre tax cash proceeds.

Speaker Change: Secondly.

Speaker Change: And the build category, we proudly completed our Genesee Repowering project transitioning the dual fuel facility off coal and two 100% natural gas. This roughly one $6 billion investment increase the overall capacity of the facility by 512 megawatts, while reducing scope.

Speaker Change: On greenhouse gas emissions by $3 4 million tonnes per annum.

Speaker Change: We advanced our Ontario projects, which include upgrades expansions and battery energy storage systems, adding strategic long term contracted capacity to our portfolio in Canada's largest market from a renewables perspective, we anticipate achieving full commercial operations on how Curt two wins in the first half of 2020.

Speaker Change: Five and the North Carolina solar projects are expected to be online between 2006, and 2007 lastly in order to create future optionality and further our ability to grow and respond to the opportunities. We are seeing we made tangible progress on advancing data center opportunities in Alberta, and the U S.

Speaker Change: And qualified for $13 million in funding for a small modular reactor feasibility assessment that we continue to advance with our partner <unk>.

Speaker Change: With that high level overview, I will now provide some incremental detail on specific areas of the portfolio.

Speaker Change: We have talked in the past about the multiple ways. We can create long term shareholder value our record annual generation and how we achieved it over the past five years exemplifies our track record of doing those very things from 2020 to the end of 'twenty four we have grown our portfolio from six five gigawatts.

Speaker Change: <unk> to 10 Gigawatts of capacity this expanded power generation footprint position us to deliver annual generation of 38 Terawatt hours. This portfolio growth was accomplished through adding new assets to the portfolio through development efforts, including a 150 megawatts of wind and 102.

Speaker Change: <unk> megawatts of solar projects as well as the acquisition of 2600 megawatts of natural gas capacity, which expanded our U S presence with the additions of MTV La Paloma Frederickson, one and hard to haul law. In addition, we expanded our existing facilities by 590 megawatt.

Speaker Change: By Repowering at Genesee and also operating at Decatur.

These efforts increased our scale diversification contractual underpinning and our overall competitiveness.

Speaker Change: The stage for the future growth that we are so excited about.

Speaker Change: We demonstrated the successes of our expansion and diversification strategy in 2024, as well with approximately 45% of our adjusted EBITDA contribution coming from our U S assets. The addition of the U S assets in 2020 has reduced the volatility of the cash flows in our business.

Speaker Change: And augmented the contractual underpinning of the flexible generation part of our business. Our U S portfolio is highly contracted with a weighted average contract life of five to seven years, which provides near term stability of our cash flows and long term upside upon re contracting.

Speaker Change: We are engaged in negotiations to amend and extend our current contracts given the growing need for reliable and affordable power broad based and strong market fundamentals increase our confidence that we will be able to re contract that superior pricing for longer durations, we see significant upside in our assets with economic plant life.

Speaker Change: Aligning more closely with operating life as discussed during our 25 guidance call. One of our key priorities is to expand our portfolio of flexible generation assets through acquisitions the growth in our U S. EBITA from 'twenty to 'twenty four demonstrates our ability to successfully acquire and integrate.

Speaker Change: Natural gas assets in key markets, we expect this to continue.

Speaker Change: We remain excited about our U S growth achieved to date and what we expect to do in the future at the same time, we have continued to advance shareholder value creation in our Canadian business. For example, in Ontario, we are making significant investments in our assets and are on track to add approximately 355 megawatt.

Speaker Change: So the additional capacity.

Speaker Change: This enhances our position in Canada's largest market and demonstrates our ability to support grid reliability with thermal generation and battery storage. These projects are expected to be in service between 2025 and 2020, but the value of these investments was also enhanced through contract extensions.

Speaker Change: For the existing capacity at our three Ontario flexible generation sites.

Speaker Change: These investments will strengthen our presence in Ontario increase our weighted average contract life and contribute to our long term success.

Speaker Change: Turning to Alberta are Genesee generating station has delivered reliable and affordable power for Alberta economy for over 30 years and is now Canada, most efficient natural gas combined cycle facility.

Speaker Change: <unk> on Repowering has positioned us to succeed by increasing capacity, while reducing operating costs overall emissions and emission intensity, demonstrating our clear ability to transform existing infrastructure to meet the long term needs of the energy expansion.

Speaker Change: It is also better position us to attract co located large load such as a data center.

Speaker Change: Can appreciate that many of you were wondering when we will have a formal announcement on this front navigating the complexity and size of these projects takes time, but we continue to progress to put the scale of our ambition into perspective, our ACO connection queue for load of approximately 1.5 gigawatts is comparable to typical.

Speaker Change: Daily power usage for the city of Calgary, We continue to believe that a project of this scale or larger is achievable, but will occur in phases over time, the specific size and timing of the phases as part of our ongoing work and we look forward to providing more detailed updates when we are in a position to do so because of.

Speaker Change: Our significant investment at the site, resulting in the <unk> of the Repowering project. The Genesee generating station is extremely well positioned for the opportunity we are pursuing the combination of <unk> capacity.

Speaker Change: <unk> growth potential surplus land available in Alberta, given the temporary climate supportive regulatory backdrop and excess power supply continues to give us confidence that we can be competitive.

Speaker Change: We have talked in the past about our intention to recycle capital in order to maximize value in November of 2024, we announced the sell down of two Canadian wind assets. The transaction resulted in approximately $333 million in pre tax cash proceeds and a 49% reduction in ownership of.

Speaker Change: Our quality wind and port Dover, and Nanticoke wind facilities. This aligns with our strategy to optimize our portfolio and represented the crystallization of returns in excess of our targeted thresholds for renewable assets.

Speaker Change: This is an example of our prudent capital allocation strategy better positioning us to pursue future growth, including acquisitions as part of our shareholder value maximization efforts, while maintaining financial stability.

Speaker Change: Before I discuss our investment thesis and hand, it over to Sandra I would like to touch on the subject of tariffs our business is largely insulated from the impact of a potential U S tariffs with fuel purchased in power sold to local markets. For example, in Ontario, we procure gas from a local hub and power.

We have talked in the past about our intention to recycle capital in order to maximize value in November of 2024, we announced the sell down of two Canadian wind assets. The transaction resulted in approximately $333 million in pre tax cash proceeds and a 49% reduction in ownership.

Speaker Change: <unk> sold to the Ontario, ISO to support growing local demand.

Speaker Change: Canadian and U S businesses operate independently with separate high quality counterparties in each country are long term contracts and hedges not only stabilize our cash flows, but who we sell our product to over time from a supply chain perspective, we do not foresee a significant impact on our largest.

Our quality wind and port Dover, and Nanticoke wind facilities. This aligns with our strategy to optimize our portfolio and represented the crystallization of returns in excess of our targeted thresholds for renewable assets.

Speaker Change: Next in the near term given domestic content requirements for our U S solar facilities and large components for our Canadian projects already received.

This is an example of our prudent capital allocation strategy better positioning us to pursue future growth, including acquisitions as part of our shareholder value maximization efforts, while maintaining financial stability.

Speaker Change: We will continue to monitor the developments related to tariffs and the potential impact to the economy and indirect impacts to our business. However at this point, we do not believe the direct impacts to capital power are significant.

Before I discuss our investment thesis and hand, it over to Sandra I would like to touch on the subject of tariffs our business is largely insulated from the impact of a potential U S tariffs with fuel purchased in power sold to local markets. For example, in Ontario, we procure gas from a local hub empower.

Speaker Change: While there has been considerable movement in capital markets, resulting from tariffs AI technology and M&A. Our investment thesis has not changed from a market standpoint, we believe that the strong fundamentals. We are seeing indicate that natural gas will play a permanent and meaningful role in meeting the needs of society.

Or is sold to the Ontario, ISO to support growing local demand.

Canadian and U S businesses operate independently with separate high quality counterparties in each country are long term contracts and hedges not only stabilize our cash flows, but who we sell our product to over time from a supply chain perspective, we do not foresee a significant impact on our largest.

Speaker Change: And our customers, we see this dynamic benefiting our large and diversified footprint of strategically positioned assets now and then the future use.

Speaker Change: You should expect to see us prioritize creating shareholder value utilizing our in house operational and commercial expertise at our existing assets. Furthermore, we look to expand our footprint through acquisitions building on our established track record our stable and highly contracted cash flow base.

In the near term given domestic content requirements for our U S solar facilities and large components for our Canadian projects already received.

We will continue to monitor the developments related to tariffs and the potential impact to the economy and indirect impacts to our business. However at this point, we do not believe the direct impacts to capital power are significant.

Speaker Change: Mentored by our access to low cost capital will fund the growth. We continue to be excited about the value proposition of our business presents with that I will now pass it over to Sandra to review, our 2024 financial performance.

While there has been considerable movement in capital markets, resulting from tariffs AI technology and M&A. Our investment thesis has not changed from a market standpoint, we believe that the strong fundamentals. We are seeing indicate that natural gas will play a permanent and meaningful role in meeting the needs of society.

Sandra Askin: Thank you Eric and good morning, everyone I will now review the financial highlights for the fourth quarter and year end 2024.

Sandra Askin: Capital power delivered a strong quarter of financial and operational performance reflective of the growth and diversification efforts that aric described in his remarks.

And our customers, we see this dynamic benefiting our large and diversified footprint of strategically positioned assets now and in the future.

Sandra Askin: In Q4, 2024, we reported an adjusted EBITDA of $330 million, which is modestly higher than the corresponding period in 2023.

You should expect to see us prioritize creating shareholder value utilizing our in house operational and commercial expertise at our existing assets. Furthermore, we look to expand our footprint through acquisitions building on our established track record our stable and highly contracted cash flow base.

Sandra Askin: This was mainly a result of increased contributions from the lab Paloma hard cooler and frederickson, one acquisitions and was offset by lower generation in power prices captured by our Alberta commercial portfolio.

Sandra Askin: In calculating adjusted EBITDA for both Q4 2024 and year end 2024, we have added back nonrecurring items, including restructuring costs and costs related to the end of life of Genesee coal operation Q.

Mentored by our access to low cost capital will fund the growth. We continue to be excited about the value proposition of our business presents with that I will now pass it over to Sandra to review, our 2024 financial performance.

Sandra Askin: Q4, 2024, <unk> with $182 million up $20 million from the same period in 2023.

Thank you Eric and good morning, everyone I will now review the financial highlights for the fourth quarter and year end 2024.

Sandra Askin: <unk> was higher than the corresponding period, primarily due to the higher adjusted EBITDA and lower current income tax due to lower overall consolidated net income before tax and higher tax deductions for various capital projects with Genesee Repower being the largest component.

Capital power delivered a strong quarter of financial and operational performance reflective of the growth and diversification efforts that aric described in his remarks.

In Q4, 2024, we reported an adjusted EBITDA of $330 million, which is modestly higher than the corresponding period in 2023.

Sandra Askin: This was partially offset by higher overall sustaining capital expenditures.

This was mainly a result of increased contributions from the lab Paloma hard cooler and fragrances than one acquisitions and was offset by lower generation in power prices captured by our Alberta commercial portfolio.

Sandra Askin: For the year ended 2024, adjusted EBITDA was $1 billion 333 million.

Sandra Askin: Down $122 million year over year, largely due to lower generation in power prices captured by our Alberta portfolio and full recognition of the off coal compensation at the end of 2023.

In calculating adjusted EBITDA for both Q4 2024 and year end 2024, we have added back nonrecurring items, including restructuring costs and costs related to the end of life of Genesee coal operations.

Sandra Askin: This was partly offset by the factors mentioned above for the Q4 adjusted EBITDA variance.

Sandra Askin: Year end <unk> was $817 million, a slight decrease of $2 million year over year, primarily due to the issuance in the second half of 2023, and 2024 and higher sustaining capital expenditures because of larger outage scope in recent acquisitions.

Q4, 2024, <unk> was $182 million up $20 million from the same period in 2023.

<unk> was higher than the corresponding period, primarily due to the higher adjusted EBITDA and lower current income tax due to lower overall consolidated net income before tax and higher tax deductions for various capital projects with Genesee Repower being the largest component.

Sandra Askin: This was partly offset by the factors discussed in the Q4 and that's all variants.

Sandra Askin: Overall, our Q4 and year end performance demonstrates our ability to deliver consistent value through the various market cycles, given the increasingly diversified and highly contracted nature of our portfolio.

This was partially offset by higher overall sustaining capital expenditures.

For the year ended 2024, adjusted EBITDA was $1 billion 333 million.

Sandra Askin: In addition to long term contracting and hedging the diversification of our business has reduced adjusted EBITDA volatility our U S portfolio now contributes significantly to our overall financial performance with a notable increase in adjusted EBITDA from $369 million in 2023.

Down $122 million year over year, largely due to lower generation in power prices captured by our Alberta portfolio and full recognition of the off coal compensation at the end of 2023. This was partly offset by the factors mentioned above for the Q4 adjusted EBITDA variance.

Sandra Askin: $3 million to $656 million in 2024.

Year end <unk> was $817 million.

Sandra Askin: This diversification strategy has enhanced our stability and growth prospects, providing a solid foundation for future success and it has done so when the Alberta market is at the bottom of the commodity cycle.

Slight decrease of $2 million year over year, primarily due to the issuance in the second half of 2023, and 2024 and higher sustaining capital expenditures because of larger outage scope in recent acquisitions.

Sandra Askin: We expect the long term fundamentals of power demand growth and retirements of aging and less efficient units to drive an increase in this segment of our business over time, even in the absence of data center growth.

This was partly offset by the factors discussed in the Q4 <unk> variance.

Overall, our Q4 and year end performance demonstrates our ability to deliver consistent value through the various market cycles, given the increasingly diversified and highly contracted nature of our portfolio.

Sandra Askin: We would also like to highlight the stability provided by our assets in BC and Ontario. These assets are highly contracted and have no adjusted EBITDA volatility.

Sandra Askin: In summary, the U S assets have proven to be a valuable addition to our portfolio contributing to the overall financial strength.

In addition to long term contracting and hedging the diversification of our business has reduced suggested EBITDA volatility our U S portfolio now contribute significantly to our overall financial performance with a notable increase in adjusted EBITDA from $369 million in 2023.

Looking ahead to 2025, our guidance ranges remain unchanged as our near term cash flows are highly hedged or under long term contracts.

Speaker Change: $3 million to $656 million in 2024. This diversification strategy has enhanced our stability and growth prospects, providing a solid foundation for future success and it has done so when the Alberta market is at the bottom of the commodity cycle.

Sandra Askin: Our adjusted EBIT guidance range is 1300 $40 million.

Sandra Askin: <unk> 1400 $40 million.

Sandra Askin: <unk> target is 850 million to $950 million and sustaining capex is projected to be 195 million to $225 million.

Speaker Change: We expect the long term fundamentals of power demand growth and retirements of aging and less efficient units to drive an increase in this segment of our business over time, even in the absence of data center growth.

Sandra Askin: These targets reflect our commitment to maintaining strong financial performance and supporting our growth initiatives we.

Speaker Change: We would also like to highlight the stability provided by our assets in BC and Ontario. These assets are highly contracted and have no adjusted EBITDA volatility.

Sandra Askin: We are confident in our ability to achieve these targets and continue delivering value to our shareholders.

Speaker Change: I will now hand, it back over to ASIC.

Speaker Change: Thank you Sandra to recap on our 2024, we executed on stated strategic priorities and are extremely well positioned for 2025 taken together our achievements during 'twenty four reflect our commitment to delivering value and driving growth across our business by creating balanced solutions for our customer.

Speaker Change: In summary, the U S assets have proven to be a valuable addition to our portfolio contributing to the overall financial strength.

Speaker Change: Looking ahead to 2025 archived and screen just remain unchanged as our near term cash flows are highly hedged or under long term contracts are adjusted EBIT guidance range is 1300 $40 million to.

We would not be able to have achieved any of this we're not for our incredible team of dedicated people they've done a fantastic job of continuing to deliver excellent results amid changes internally and externally before we wrap up 2024, I would also like to take a moment to <unk>.

Speaker Change: <unk> 1400 $40 million.

Speaker Change: Our <unk> target is $850 million to $950 million and sustaining capex is projected to be 195 million to $225 million. These.

Speaker Change: Recognize the passing of Brian <unk>, Senior Vice President and Chief Commercial Officer, who is an integral part of our company and one of the senior leaders at capital power since our inception, leading us with unwavering commitment intelligence passion and determination. It was a privilege as an organization to have Brian.

Speaker Change: These targets reflect our commitment to maintaining strong financial performance and supporting our growth initiatives.

Speaker Change: We're confident in our ability to achieve these targets and continue delivering value to our shareholders.

Speaker Change: As part of our leadership team and he will be missed yearly by his many friends and colleagues at capital power.

Speaker Change: I will now hand, it back over to ASIC.

ASIC: Thank you Sandra to recap on our 2024, we executed on stated strategic priorities and are extremely well positioned for 2025 taken together our achievements during 'twenty four reflect our commitment to delivering value and driving growth across our business by creating balanced solutions for our <unk>.

Speaker Change: Looking forward to 2025, the strategic priorities, we discussed in our guidance call are unchanged and we are just as excited about these today as we were then in.

Speaker Change: In terms of re contracting we continue to believe the strong long term fundamentals, we spoke about on backhaul. Furthermore, we believe these fundamentals can drive higher pricing for longer duration relative to our current contracting profile. We will also selectively look for opportunities to contract our assets with data.

ASIC: Customers, we would not be able to have achieved any of this we're not for our incredible team of dedicated people they've done a fantastic job of continuing to deliver excellent results amid changes internally and externally before we wrap up 2024, I would also like to take a moment to recognize the passing of Brian Denise.

Speaker Change: And our customers with a focus on Genesee. We will also continue to advance long term opportunities at our other assets for data Center co location. We continue to believe the optimization of existing generation to be a compelling use of capital and we'll look for more opportunities to do so in the future as we are doing.

ASIC: Senior Vice President and Chief Commercial Officer, who is an integral part of our company and one of the senior leaders at capital power since our inception, leaving us with unwavering commitment intelligence passion and determination. It was a privilege as an organization, Brian as part of our leadership team and.

Speaker Change: In Ontario now.

Speaker Change: In terms of M&A, our ability to create value through this has not been diminished we were relatively quiet on the front. During 2024. This should be viewed as us being disciplined not being unable to compete for acquisitions or investment grade platform in house operational expertise and access to low cost.

ASIC: He will be missed dearly by his many friends and colleagues at capital power.

ASIC: Yeah.

ASIC: Looking forward to 2025, the strategic priorities, we discussed in our guidance call are unchanged and we are just as excited about these today as we were then.

ASIC: In terms of re contracting we continue to believe the strong long term fundamentals, we spoke about on that call. Furthermore, we believe these fundamentals can drive higher pricing for longer duration relative to our current contracting profile. We will also selectively look for opportunities to contract our assets with data.

Speaker Change: Capital all drive a differentiated ability to execute M&A in the market, we view as compelling while generating material cash flow accretion our achievements in 2024, clearly demonstrated our ability to execute on our shareholder value creation priorities. Furthermore, it enhanced.

ASIC: And our customers with a focus on Genesee. We will also continue to advance long term opportunities at our other assets for data Center co location. We continue to believe the optimization of existing generation to be a compelling use of capital and we'll look for more opportunities to do so in the future as we are doing.

Roy Auto: Our already strong positioning for 2025 and beyond and we are excited for the opportunity in front of us with that I will hand, it over to Roy.

Speaker Change: Thanks for those on the line. This concludes the formal portion of our presentation. We will now open the forum to the research analyst to take questions. Operator, please take it from here.

ASIC: In Ontario now.

Roy Auto: Thank you ladies.

ASIC: In terms of M&A, our ability to create value through this has not been diminished we were relatively quiet on the upfront. During 2024. This should be viewed as us being disciplined not being unable to compete for acquisitions or investment grade platform in house operational expertise and access to low cost.

Roy Auto: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please stand by while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Maurice Choy with RBC capital markets. Your line is open.

ASIC: Capital all drive a differentiated ability to execute M&A in the market, we view as compelling while generating material cash flow accretion our achievements in 2024, clearly demonstrated our ability to execute on our shareholder value creation priorities. Furthermore, it enhanced.

Maurice Choy: Thanks, and good morning, everyone.

Speaker Change: If I could just start with.

Speaker Change: Discussion about data centers, but instead of looking at that but I wanted to see if I can.

Speaker Change: Pivot over to the U S.

Speaker Change: It's clearly you're making progress and I just wanted to know if you could comment on any opportunities that you may have in the states. How those may differ whether it's offering complexity as well as timing versus Alberta.

ASIC: Our already strong positioning for 2020, five and beyond and we are excited for the opportunity in front of us.

Roy: With that I will hand, it over to Roy.

Speaker Change: Thanks for those on the line. This concludes the formal portion of our presentation. We will now open the forum to the research analysts to take questions. Operator, please take it from here.

Speaker Change: Thanks for the question Larry.

Speaker Change: And I think we've talked about this in the past, but our journey on data centers started.

Speaker Change: Thank you.

Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone.

Speaker Change: In Q2 2023 in the U S. Our U S portfolio.

For your name to be announced to withdraw your question. Please press star one again, please stand by while we compile the Q&A roster.

Relative to Genesee in Alberta, it is different in that.

Speaker Change: Each and every opportunity requires.

Speaker Change: Our first question comes from the line of Maurice Choy with RBC capital markets. Your line is open.

Speaker Change: Much more collaboration and cooperation with multiple stakeholders, including utilities and off takers, So management of <unk>.

Maurice Choy: Thanks, and good morning, everyone.

Speaker Change: Scott with.

Speaker Change: Offtake agreement, whether it goes behind the fence or in front of the meter.

Speaker Change: Discussion about data centers, but instead of looking at that but I wanted to see if I could.

Speaker Change: Those conversations are much more involved in.

Speaker Change: Over to the U S.

Speaker Change: It's clearly you're making progress and I just wanted to know if you could comment on any opportunities that you may have in the states.

Speaker Change: We will take longer as we are seeing across the spectrum.

Speaker Change: The U S. Texas is probably the one jurisdiction.

Speaker Change: How those may differ whether it's offering complexity as well as timing versus Alberta.

Speaker Change: You've got.

Speaker Change: And the seven months of speed to market.

Speaker Change: Go behind the fence more quickly, but the rest of it.

Speaker Change: Okay.

Speaker Change: Thanks for the question Laurie.

Speaker Change: Other jurisdictions.

Speaker Change: And I think we've talked about this in the past, but our journey.

Speaker Change: It's more complex.

Speaker Change: But we continue to see.

Speaker Change: Lot of interest.

Speaker Change: On data centers started.

Multiple sites there.

Speaker Change: In Q2 2023 in the U S on our U S portfolio.

Speaker Change: Do you think you are.

Speaker Change: The journey in the U S just to characterize it as more events and in the states and.

Speaker Change: Relative to Genesee in Alberta, it is different in that.

Speaker Change: Gilbert maneuver.

Speaker Change: I think that would have been the case.

Speaker Change: Each and every opportunity requires.

Speaker Change: Much more collaboration and cooperation with multiple stakeholders, including utilities and off takers, So management of <unk>.

Speaker Change: Year, and a half ago and through much of 2024, but.

Speaker Change: We have been advocating for natural gas is a critical part of their solution.

Speaker Change: Offtake agreement, whether it goes behind the fence or in front of the meter.

Speaker Change: Really right from the beginning and I think the thing that really changed as we continue to advocate for natural gas, one and to advocate for Alberta.

Speaker Change: Those conversations are much more involved in.

Speaker Change: It will take longer as we're seeing across the spectrum.

Speaker Change: Through the back end of 'twenty, three and into 'twenty four I would say only in the last six months have hyperscale or some data center providers really expanded their aperture to start looking at Alberta. So I think today, Alberta is ahead.

Speaker Change: U S. Texas is probably the one jurisdiction.

Speaker Change: You've got.

Speaker Change: And the third months of speed to market.

Speaker Change: Go behind the fence more quickly, but the rest of it.

Speaker Change: Other jurisdictions.

Speaker Change: More complex.

Speaker Change: But we continue to see.

Speaker Change: Lot of interest.

Speaker Change: For us yeah.

Speaker Change: Multiple sites there.

Speaker Change: Versus the U S portfolio.

Speaker Change: But it's really been this at the rapid advancement of evaluation of Alberta.

Speaker Change: Do you think you are.

Speaker Change: The journey in the U S. As you characterize it as more beds in the states.

Speaker Change: <unk> has a speed to market advantage over the next couple of years in existing generation capacity for us at Genesee, but.

Speaker Change: Gilbert <unk>.

Speaker Change: I think that would have been the case.

Speaker Change: Year, and a half ago and through much of 2024, but.

Speaker Change: But also existing overcapacity on transmission and distribution.

Speaker Change: We have been advocating for natural gas is a critical part of the solution.

Speaker Change: Understood and then forget just finish off with the <unk>.

Speaker Change: Guidance for the year, it's only obviously been five to six weeks since the release and during that time.

Speaker Change: Really right from the beginning and I think the thing that really changed as we continue to advocate for natural gas, one and to advocate for Alberta.

Speaker Change: For our prices have obviously come down quite meaningfully.

Speaker Change: You've reaffirmed the guidance today, and obviously still early in the year can you speak to some of the potential tailwind that you might see.

Speaker Change: Through the back end of 'twenty, three and into 'twenty four I would say only in the last six months have hyper scaler in data center providers really expanded their aperture to start looking at Alberta. So I think today, Alberta is ahead.

Speaker Change: To offset some of this.

Speaker Change: Lower power price spot level.

Speaker Change: For example, at the GDP, yielding better savings and thank God and some others.

Speaker Change: Yes, so I think that the way that we mitigated the lower power prices and just the fact that we have hedged our our portfolio largely through the year. So when you look at our our spark spread on our portfolio and it's well above where the market is with respect to end market spark spreads. So I think that the mitigation.

Speaker Change: For us.

Speaker Change: Versus the U S portfolio.

Speaker Change: But its really business at the rapid advancement of evaluation of Alberta.

Speaker Change: Has a speed to market advantage over the next couple of years in existing generation capacity for us at Genesee.

Speaker Change: <unk> solar power prices is something that we did coming into the frame.

Speaker Change: But also existing overcapacity on transmission and distribution.

Speaker Change: We're able to.

Speaker Change: Our hedge position.

Speaker Change: Understood and if I could just finish off with.

Speaker Change: At the same pricing as but we had indicated earlier in the high $70 and.

Speaker Change: The guidance for the year, it's only obviously been five to six weeks since the release and during that time.

Speaker Change: What we're seeing now is just the procurement of the roller which is extending out into 'twenty five as well as 26, you'll see a lift in prices relative to what would have been there in the fall as a roller is pushing up prices as is the announcement of a 400 megawatts of thermal being mothballed.

Speaker Change: For prices to come down quite meaningfully.

You've reaffirmed the guidance today, and obviously still early in the year can you speak to some of the potential tailwind that you might see.

Speaker Change: To offset some of this.

Lower power price spot level.

Speaker Change: For example, GDP, yielding better savings and think guidance of others.

Speaker Change: As well as some expectation around increased mode. So I think we're well positioned.

Speaker Change: Yes, so I think that the way that we mitigated the lower power prices as just the fact that we have hedged our our portfolio largely through the year. So when you look at.

Speaker Change: That's sort of been locked in I don't think its a tailwind where you will see tailwind I guess is if there is incremental.

Speaker Change: Mothballing or weather related excursions that would allow us to capture more than what we anticipated through through our pekin facilities and we've been modest with the expectation that this year that we'd be an oversupply there is that potential for.

Speaker Change: Our spark spread on our portfolio and it's well above where the market is with respect to that market spark spreads. So I think that the mitigation solar power prices is something that that we did coming into the year and we're able to even increase our hedge position.

Speaker Change: For some upside there.

Speaker Change: Okay.

Speaker Change: Understood. Thank you very much.

Speaker Change: At the same pricing as what we had indicated earlier in the high $70 and what we're seeing now is just the procurement of the roller which is extending out into 'twenty five as well as 26, you will see a lift in prices relative to what would have been there in the fall as a roller is.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

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

Speaker Change: Good morning, everyone.

Robert Hope: Can you maybe comment on kind of the status or the outlook at the M&A market seems to be a focus for capital power, especially just given the fact that you guys are cashed up right now.

Speaker Change: Pushing up prices as is the announcement of 400 megawatts of thermal been mothballed as well as some expectation around increased load. So I think we're well positioned.

Robert Hope: Have you seen opportunities bid away or how evaluations trended versus a couple of months ago, just trying to get a sense of how our how the thermal market has changed over the last three to six months.

Speaker Change: That's sort of been locked in I don't think its a tailwind where you will see tailwind I guess is if there is incremental.

Robert Hope: Thanks, Rob.

Speaker Change: Mothballing or weather related excursions that would allow us to capture more than what we anticipated through through our peaking facilities. So we've been modest with the expectation that this year that we'd be an oversupply. So there is that potential for some upside there.

Robert Hope: I would say in particular, the back half of 2020 four we've seen more assets come to market.

Robert Hope: More auctions.

Robert Hope: Particular around asset packages and when I speak about M&A I'm talking mostly about the U S M&A market.

Speaker Change: Okay.

Robert Hope: In terms of valuation.

Speaker Change: Understood. Thank you very much.

Robert Hope: Think what's been the most interesting data point is that we're seeing more players come.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

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

Robert Hope: To play in these auctions a broader universe of buyers that include financials and potentially strategic obviously the transaction of most note was constellation's acquisition of Calpine, which I think was a great affirmation of our strategy and approach I think overall from a valuation.

Robert Hope: Good morning, everyone.

Robert Hope: Have you seen opportunities bid away or how are valuations trended versus a couple of months ago, just trying to get a sense of how.

Robert Hope: Perspective, we're not seeing a huge uptick in valuation.

Robert Hope: The surgical market has changed over the last three to six months.

Robert Hope: For the past decade, the governor on valuation has really been credit capacity on the mark on the types of assets.

Robert Hope: Thanks.

Speaker Change: Thanks, Rob.

Speaker Change: I would say in particular over the back half of 2024, we've seen more assets come to market.

Robert Hope: And for the most part most of these transactions our asset base.

Speaker Change: More auctions.

Robert Hope: Our asset transactions that require.

Speaker Change: Particular around asset pack years, and when I speak about M&A I'm talking mostly about the U S M&A market.

Robert Hope: Higher asset based lending.

Robert Hope: So until we see leverage profile dramatically change, we continue to see compelling opportunities more.

Speaker Change: In terms of valuation.

Speaker Change: Think what's been the most interesting data point is that we're seeing more players come.

Robert Hope: Myers.

Robert Hope: But we don't see a fundamental shift in valuation.

Robert Hope: The big catalyst for valuation shift.

Speaker Change: To play in these auctions a broader universe of buyers that include financials and potentially strategic obviously the transaction of most note was constellation's acquisition of Calpine, which I think was a great affirmation of our strategy and approach I think overall from a valuation.

Robert Hope: The asset market in the U S will be when and if we see contracted miss materially lengthened.

Robert Hope: These types of assets I think that would be the major catalyst there.

Speaker Change: Perspective, we're not seeing a huge uptick in valuation because for the past decade.

Robert Hope: Not just overall interest and demand in these assets.

Robert Hope: Maybe one final point I would say is.

Speaker Change: Governor on valuation has really been credit capacity on the mark on the types of assets.

Robert Hope: In PJM for example, where we've seen higher capacity.

Robert Hope: Markets.

Speaker Change: For the most part most of these transactions our asset base.

Robert Hope: There you will see a value left but that's largely flow through.

Robert Hope: Because that just shows up earlier in your net present value per kw.

Speaker Change: Asset transactions.

Speaker Change: Require asset base lending.

Speaker Change: Until we see leverage profile dramatically change, we continue to see compelling opportunities more more buyers.

Robert Hope: Alright, I appreciate that.

Robert Hope: And then maybe moving over to Genesee you've had another three months under your belt, taking a look at the opportunity for data centers there can.

Robert Hope: Can you maybe add a little bit more color kind of what the shape or kind of what.

Speaker Change: But we don't see a fundamental shift in valuation I think the big catalyst for valuation shift.

Robert Hope: Capital power solution to be out on that site would it be.

Robert Hope: Rising three units at Genesee plus the grid connection and then longer term, how do you think or other units fit into data centers in Alberta.

Speaker Change: In the asset market in the U S will be when and if we see contract business materially lengthened on these types of assets I think that would be the major catalyst there.

Robert Hope: Okay.

Robert Hope: Yes, I can make a couple of comments on that.

Robert Hope: We did talk about the site preparedness for Genesee.

Speaker Change: Not.

Robert Hope: After our third quarter.

Speaker Change: Just overall interest and demand in these assets.

Robert Hope: And obviously many of you have seen our own.

Speaker Change: Maybe one final point I would say is.

Speaker Change: In PJM for example.

Robert Hope: Positioning on the interconnect Q.

Speaker Change: We've seen higher capacity.

Robert Hope: The biggest point around Genesee is that we have significant optionality on that site given our existing excess capacity on.

Speaker Change: Markets.

There you will see a value well lift, but that's largely flow through.

Speaker Change: Because that just shows up earlier in your net present value per kw.

Robert Hope: Genesee, one and two repower.

Speaker Change: Alright, I appreciate that.

Speaker Change: And then maybe moving over to Genesee you've had another three months under your belt, taking a look at the opportunity for data centers there can.

Robert Hope: Existing interconnect and available land.

Robert Hope: So in terms of our Optionality there.

Speaker Change: Can you maybe add a little bit more color kind of what the shape or kind of what.

Robert Hope: And now this is all subject to us working with the government and the ISO and the AUC.

Speaker Change: Capital power solution to be out on that site would it be.

Robert Hope: Working through a solution that works for all parties.

Speaker Change: Rising three units at Genesee plus a grid connection and then longer term how do you think your other units fit it into data centers in Alberta.

Robert Hope: At our physical site, we have the opportunity to co locate we have the opportunity to go behind the fence, we have the opportunity to grid connect and we have significant capacity.

Yes, I can make a couple of comments on that.

We did talk about the site preparedness for Genesee.

Robert Hope: To expand.

Speaker Change: After our third quarter.

Robert Hope: So as we look at what the first data Center project looks like on our site, it's really about tailoring that to what the customer needs and wants for initial capacity at that site, and then coordinating and working with government and they saw an ASC to allow for that capacity there.

Speaker Change: And obviously many of you have seen our own.

Speaker Change: Positioning on the interconnect Q I think the biggest point around Genesee is that we have significant optionality on that site.

Speaker Change: Given our existing excess capacity on.

Robert Hope: Come on and either a half.

Speaker Change: Genesee, one and two repower.

Robert Hope: Grid support through backup or a direct connect into the grid. Those are the things that we're trying to collaborate and solve for it. So it doesn't directly answer your question.

Speaker Change: Existing interconnect and available land.

Speaker Change: In terms of our Optionality there.

Speaker Change: And now this is all subject to us working with the government and the ISO and the AUC.

Robert Hope: Here's scenario, a b C, but what I would say when you look at the interconnect queue and what I've told you is we've got the ability to according in that.

Speaker Change: Working through a solution that works for all parties, but at our physical site, we have the opportunity to co locate we have the opportunity to go behind the fence, we have the opportunity to grid connect and we have significant capacity.

Robert Hope: That capacity and it's really trying to find that customer.

Robert Hope: And land the plane for what an initial project.

Robert Hope: Satisfy the customers' needs are.

Robert Hope: Perfect. Thank you.

Speaker Change: To expand so as we look at what the first date of summer project looks like on our site, it's really about tailoring that to what the customer needs and wants for initial capacity at that site, and then coordinating and working with government and they saw an ASC to them.

Robert Hope: Thank you.

Robert Hope: Please standby for our next question.

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

Mark Jarvi: Thanks, I just wanted to extend my condolences to Brian in your family friends and colleagues of capital power and kind words there Eric.

Speaker Change: Now for that capacity to come on in either a half grid support through backup or a direct connect into the grid.

Speaker Change:

Speaker Change: Just continuing on the data center conversation.

Speaker Change: In light of what FERC came out last week.

Speaker Change: Viewing co location does that change anything in terms of timelines around U S opportunities and then does that change anything in terms of the attractiveness or the path forward in Alberta.

Speaker Change: Those are the things that we're trying to collaborate and solve for so it doesn't directly answer your question.

Speaker Change: So here's scenario.

Speaker Change: But what I would say when you look at the interconnect Q than what I've told you is we've got the ability to a court again.

Speaker Change: Yes. Thank you Mark I appreciate your comments on Brian.

Speaker Change: Yes and no.

Speaker Change: Well I think I mean, it's early days that was one conversation.

Speaker Change: That capacity and it's really trying to find that customer and land the plane for what an initial project.

Speaker Change: FERC, but I think if you take that.

Speaker Change: At face value.

Speaker Change: It would satisfy the customers' needs are.

Speaker Change: It could potentially make Alberta more interesting.

Speaker Change: Perfect. Thank you.

Speaker Change: Because of our direct path of speed to market to co locate.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: In the U S for us it doesn't change a single thing.

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

Speaker Change: Because from day, one when we came out and started talking about the data center opportunity. We said we didn't view this as a bilateral opportunity for us.

Mark Jarvi: Hi, Thanks, I just wanted to extend my condolences to Brian and his family friends and colleagues of capital power.

Speaker Change: Sir Alec.

Speaker Change: Just continuing on the data center conversation in light of what FERC came out last week reviewing co location does that change anything in terms of timelines around U S opportunities and then.

Speaker Change: Do direct offtake with Hyperscale.

Speaker Change: From day, one we said with opportunity was one of them were balanced energy solutions would win.

Speaker Change: That change anything in terms of the attractiveness or the path forward in Alberta.

Speaker Change: Why we came out with that is our strategy early in 'twenty four and from day. One we said the role for a capital power would be playing the intermediary between ourselves and the off taker and then ourselves as a utility to provide solutions that ulta.

Speaker Change: Yes. Thank you Mark I appreciate your comments on Brian.

Speaker Change: Yes.

Speaker Change: Well I think I mean, it's early days.

Speaker Change: One conversation.

Speaker Change: FERC, but I think if you take that at face value.

Speaker Change: Currently benefit the consumer and the off taker.

Speaker Change: It could potentially make Alberta more interesting.

Speaker Change: It's that tradeoff between short term access for power for the off taker.

Speaker Change: Just because of our direct path of speed to market co located.

Speaker Change: And remediated and addressing reliability and affordability for the consumer through new capacity additions and or <unk>.

Speaker Change: In the U S for us it doesn't change a single thing because from day, one when we came out and started talking about the data center opportunity. We said we didn't view this as a bilateral opportunity for us to do direct offtake with Hyperscale.

Speaker Change: Benefits to transmission distribution cost for the rate base.

Speaker Change: So for us in particular, it hasnt changed anything but as I've said.

Speaker Change: Quarter over quarter on this journey.

Speaker Change: From day, one we said with opportunity was one of them were balanced energy solutions would win.

Speaker Change: These are not easy solutions, they require heavy lifting and it requires in depth knowledge of market structure of regulatory environment, and then understanding assessing and working with partners to <unk>.

Speaker Change: And viable solutions.

Speaker Change: Why we're excited about the opportunity so hope that answers the question.

Speaker Change: Great and then just picking up on that just in terms of Alberta has there been anything has become more complicated to navigate whether it's with the ACO or the government or with the counterparties that have.

Speaker Change: Currently benefit the consumer and the off taker. So it's that tradeoff between short term access for power for the off taker.

Speaker Change: <unk> created a little bit more work to be done to solve something.

Speaker Change: I'm, just curious how the tone and feel around speed to market has evolved over the last couple of months.

Speaker Change: And remediated and addressing reliability and affordability for the consumer through new capacity additions and or <unk>.

Speaker Change: It's a great question I would say.

Speaker Change: What happened over the last three or four months, whether it's with our colleagues at the <unk>, our AUC or government I think we get more and more clarity on what the past months look like to be able to deliver this capacity.

Benefits to transmission distribution cost for the rate base.

Speaker Change: So for us in particular, it hasnt changed anything but as I've said.

Speaker Change: Quarter over quarter on this journey.

Speaker Change: The tone has not changed at all in terms of the support for.

Speaker Change: And our commitment to.

Speaker Change: Finding a solution for Alberta to lead on data centers, but as we get deeper into it and understand what whether there's exceptions that are required or pathways.

Speaker Change: Fearing viable solutions.

Speaker Change: Why it we're excited about the opportunity so hope that answers the question.

Speaker Change: To getting approval to go behind the fence or a grid connect.

Speaker Change: Create a little bit more work to be done to solve something.

Speaker Change: That's the piece, where everyone's rolling up their sleeves.

Speaker Change: Trying to find solutions for so I think active active engagement.

Speaker Change: I'm, just curious how the tone and feel around speed to market has evolved over the last couple of months.

Speaker Change: More questions have arisen.

Speaker Change: It's a great question I would say.

Speaker Change: But the commitment.

Speaker Change: What's happened over the last three or four months, whether it's with our colleagues at the <unk>, our AUC or government I think we get more and more clarity on what the past months look like to be able to deliver this capacity.

Speaker Change: The resolute I'm trying to find a path to get there.

That's good to hear and then maybe on re contracting your comments about obviously going term earlier.

Speaker Change: In terms of well before the expiry of the current Ppas and then your comment about higher pricing is that something you feel more confident on today around the higher pricing and Thats just an affirmation of a police you've had for a while and then any sense of what that uplift could be on pricing and types of term in terms of contract duration. You think are possible at this point.

Speaker Change: The tone has not changed at all in terms of the support for.

Speaker Change: And our commitment to.

Speaker Change: Finding a solution for Alberta to lead on data centers, but as we get deeper into it and understand what whether there's exceptions that are required or pathways.

Speaker Change: Yes, Thanks, Marc I mean at this point I can't comment on price and duration, but I would say absolutely and the affirmation of the thesis we've been laying out for the past year.

Speaker Change: To getting approval to go behind the fence or a grid connect.

Speaker Change: In terms of interest and again I go back to the answer on the data centers.

Speaker Change: That's the piece, where everyone's rolling up their sleeves.

Speaker Change: Our engagement on the data center opportunity has been across all stakeholders. We've had a good sense for what our utility partners are being faced with.

Speaker Change: Trying to find solutions for so I think active active engagement.

Speaker Change: More questions have arisen.

Speaker Change: But the commitment.

Speaker Change: The resolute I'm trying to find a path to get there.

Speaker Change: Within their own integrated resource plans and as a result have a good sense of you know.

Speaker Change: That's good to hear and then maybe on re contracting your comments about obviously going term earlier.

Speaker Change: How our own generation fits within their own plant.

Speaker Change: In terms of well before the expiry of the current Ppas and then your comment about higher pricing is that something you feel more confident on today around the higher pricing or that's just an affirmation of a belief you've had for a while and then any sense of what that uplift could be on pricing and types of term in terms of contract duration. You think are possible at this point.

Speaker Change: So.

Speaker Change: As we predicted we continue to expect to see really compelling and interesting re contracting opportunities I cant speak to when will.

Speaker Change: Solidify those and for what duration or what price, but indicative Lee we're seeing across the board opportunities to increase net present value per kw at those facilities. We are today in active conversations Bob.

Speaker Change: Yes, Thanks, Marc I mean at this point I can't comment on price and duration, but I would say absolutely and the affirmation of the thesis we've been laying out for the past year.

Speaker Change: In terms of interest and again I go back to the answer on the data centers because our engagement on the data center opportunity has been across all stakeholders.

Speaker Change: Okay, well I wish I wish you would give us more details, but we will patiently wait for it thanks Alex.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

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

Speaker Change: We've had a good sense for what our utility partners are being faced with.

Speaker Change: Hi, Thanks, Good morning, maybe.

Speaker Change: Maybe just.

Speaker Change: Within their own integrated resource plans and as a result have a good sense of.

Speaker Change: Broader question on the macro.

Speaker Change: Environment I'm, just wondering if maybe asking <unk> question a bit of a different way are you seeing any impact on customer interest in Alberta, as a result of a broader trade dynamics or or uncertainty.

Speaker Change: How our own generation fits within their own plants and.

Speaker Change: So.

Speaker Change: As we predicted we continue to expect to see really compelling and interesting re contracting opportunities I cant speak to when we will.

Speaker Change: From your perspective of those dynamics at all Nudged, Alberta further down the list of preferred markets. When you weigh it all that's positive.

Speaker Change: As potential counterparties.

Speaker Change: Various locations for them to make additional investments in just wondering what your what you're seeing on that front.

Speaker Change: As an early read John we have not seen diminished interest.

Speaker Change: Alberta as a result of.

Bob: Okay, well I wish I wish you would give us more details, but we will patiently wait for it thanks Patrick.

Speaker Change: The trade tariff conversation or bilateral dialogue between Canada and the U S.

Bob: Thank you.

Speaker Change: Please standby for our next question.

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

Speaker Change: It's not to say that couldn't come at a later point in time, but to date in terms of number of parties interested.

John Mould: Hi, Thanks, Good morning, maybe.

Speaker Change: Maybe just.

Speaker Change: How hyper scaler or data center providers are evaluating Alberta as a market.

Speaker Change: Broader question on the macro.

Speaker Change: The interesting, Canada hasn't deterred because of that trade talk to date.

Speaker Change: Okay. That's helpful Great.

Speaker Change: If you go from your perspective of those dynamics at all merged Alberta further down the list of preferred markets. When you weigh it all it's positive.

Speaker Change: And then just on the supply demand dynamics.

Speaker Change: Right now given pricing year to date in your I guess in your broader stakeholders discussions how just when we think about the scale of oversupply.

Speaker Change: As potential counterparties.

Speaker Change: Various locations for them to make additional investments. So just wondering what your what you're seeing on that front.

Speaker Change: In the in the province, and how that factors into our broader stakeholder perspectives on on.

Speaker Change: As an early read John we have not seen diminished interest.

Speaker Change: What can be added interim to the market in terms of <unk>.

Speaker Change: Alberta as a result of.

Speaker Change: The trade tariff conversation are.

Speaker Change: Load without having a.

Speaker Change: Large impact on pricing I'm, just wondering how the recognition of that oversupply is evolving.

Speaker Change: Lateral dialogue between Canada, and the U S.

Speaker Change: It's not to say that Couldnt come at a later point in time, but to date in terms of number of parties interested.

Speaker Change: Just based on the.

Speaker Change: Pricing and supply dynamic we've seen so far this year.

Speaker Change: How hyper scaler or data center providers are evaluating Alberta as a market.

Speaker Change: Yes, I think.

Speaker Change: Yeah, I think of.

Speaker Change: Well I think it was murray's too.

Speaker Change: The interesting Canada hasn't deterred because.

Speaker Change: Mark said earlier in terms of softness.

Speaker Change: Of that trade talk to date.

Speaker Change: In the Alberta market to start out with.

Speaker Change: Okay. That's helpful Great.

Speaker Change: I think as this new capacity as I'll come on.

Speaker Change: And then just on the supply demand dynamics.

Speaker Change: Albertsons are.

Speaker Change: Hey, Robert or Dale Gibbons pricing year to date and your I guess in your broader stakeholders discussions how just when we think about the scale of oversupply.

Speaker Change: As a general rule of thumb or fairly sophisticated in terms of their knowledge of energy markets in power markets at home.

Speaker Change: So it is broadly understood that.

Speaker Change: In the in the province, and how that factors into broader stakeholder perspectives on on.

Speaker Change: We have excess capacity and we're benefiting the consumers are benefiting from that for lower prices.

Speaker Change: What can be added interim to the market in terms of.

Speaker Change: In terms of new capacity coming on the conversation.

Speaker Change: Load without having a.

Speaker Change: Large impact on pricing I was just wondering how the recognition of that oversupply is evolving.

Speaker Change: As the Premier herself a fad.

Speaker Change: From day, one when she was elected.

Speaker Change: She was very much focused on reliability and more importantly, affordability for consumers of electricity. So the conversation I would say over the course of the last two or three quarters.

Speaker Change: Just based on the two.

Are you, saying and supply dynamic we've seen so far this year.

Speaker Change: Yes, I think.

Speaker Change: I think of.

Speaker Change: This emphasis on data centers has come forward.

I think it was murray's too.

Speaker Change: Mark said earlier in terms of softness.

Speaker Change: We can and will only pursue data centers in the province.

Speaker Change: In the Alberta market to start out with.

Speaker Change: So long as we're not compromising.

Speaker Change: I think as this new capacity as I'll come on.

Speaker Change: Our reliability and affordability for the customer and so that's been a overarching fanatic for how we've been looking at building out capacity. So as the conversation is evolving within the province, I think there is a few competing factors that play as we consider.

Speaker Change: Albertsons are.

Speaker Change: As a general rule of thumb or fairly sophisticated in terms of their knowledge of energy markets in power markets at home.

Speaker Change: So it is broadly understood that.

Speaker Change: That we have excess capacity and we're benefiting the consumers are benefiting from that for lower prices.

Speaker Change: Or what the supply.

Speaker Change: Dynamic looks like over the next five to 10 years, it's one ratification ultimately of the restructured energy market and what those rules are we've made some meaningful change there secondly, the work minister New Dorff and his staff have been leading around viability of news.

Speaker Change: In terms of new capacity coming on the conversation.

As the Premier herself a fad.

Speaker Change: From day, one when she was elected.

Speaker Change: Clear medium to long term, we're still early days on that work.

Speaker Change: But as far as new capacity on generation and our ability to contract. This two data centers I think that overall the <unk>.

Speaker Change: This emphasis on data centers has come forward.

Speaker Change: We can and will only pursue datacenters in the province.

Speaker Change: Market market participants and overall perception is that we've got 500 megawatts to 2000 megawatts of capacity in the overall market that could be contracted.

So long as we're not compromising.

Speaker Change: Reliability and affordability for the customer and so that's been a overarching somatic for how we've been looking at building out capacity. So as the conversation is evolving within the province.

Speaker Change: And if and when Ram gets ratified.

Speaker Change: That'll be the next stage gate under which players like ourselves and others would consider building new capacity.

Speaker Change: Theres a few competing factors at play and if we consider what the supply.

Speaker Change: Okay. That's very helpful and maybe one last one just because you mentioned the Ram.

Speaker Change: Being ratified.

Speaker Change: We've got the higher level framework, but still lots of details to sort out I can appreciate that but all those details are necessary for you to make.

Speaker Change: An investment decision on new generation, what I'm wondering is on.

Speaker Change: Clear medium to long term, we're still early days on that work, but as far as new capacity on generation and our ability to contract. This two data centers I think that overall the market market participants and overall perception is that we've got.

Speaker Change: The large loan contracting side.

Speaker Change: It was where the ran out and.

Speaker Change: Its progress to date at all a barrier to being able to finalize.

Speaker Change: The off take agreements at all for your facilities in the province.

Speaker Change: We don't think it'll be a barrier to doing offtake agreements. Obviously the day ahead market will add some complexity and volatility to the market, but we don't see it preventing us from being able to contract.

Speaker Change: <unk> thousand 500 megawatts to 2000 megawatts of capacity in the overall market that could be contracted.

Speaker Change: And if and when Ram gets ratified I think that'll be the next stage gate under which players like ourselves and others would consider building new capacity.

Speaker Change: And I think the important point there is that the market changes that we've collectively in the province has been working towards solidifying are all still.

Speaker Change: Okay. That's very helpful. Maybe one last one just because you mentioned the Ram.

Speaker Change: Exactly consistent with what minister renewed or came out with.

Speaker Change: You know being ratified we've we've got the higher level framework, but still lots of details to sort out.

Speaker Change: The first day.

Speaker Change: In March of last year.

Speaker Change: I can appreciate that but all those details are necessary for you to make it.

Speaker Change: So it's really been a build from that point, but no. We still feel like there's a market here that we can contract and very much would be prepared to do so.

Speaker Change: An investment decision on new generation, what I'm wondering is on the.

Speaker Change: The large load contracting side.

Speaker Change: Yeah.

Speaker Change: It was where the ran out and.

Speaker Change: Okay. Thank you those are my questions I'd, just like to Echo condolences too.

Speaker Change: Its progress to date at all a barrier to being able to finalize.

Speaker Change: Brian to these family and colleagues and friends at the company. Thanks.

Speaker Change: The off take agreements at all for your facilities in the province.

Speaker Change: Thank you John.

Speaker Change: Please standby for my next question.

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

Benjamin Pham: Alright. Thanks, Good morning, I also want to take that my condolences to Brian didn't even as family May you rest in peace.

Speaker Change: And I think the important point there is that the market changes that we've collectively in the province has been working towards solidifying are all still.

Benjamin Pham: Maybe just secondly on.

Benjamin Pham: Some of my questions.

Benjamin Pham: To start off on Genesee.

Benjamin Pham: I wanted to what the Repowering can.

Speaker Change: Exactly consistent with what minister renewed or came out with that.

Speaker Change: Can you remind us what your target returns on that and on contracted market.

Speaker Change: Your first day at <unk>.

Speaker Change: In March of last year.

Speaker Change: How do you think about that in the algorithm that you look to contract that out with potential data center companies is there a qualitative element that you have to incorporate into that.

Speaker Change: So it's really been a build from that point, but no. We still feel like there's a market here that we can contract and very much would be prepared to do so.

Speaker Change: Okay. Thank you those are my questions I'd, just like to Echo condolences too.

Speaker Change: Thanks, <unk>. So when you look at the returns on merchant.

Brian Denise: It's Brian to these family and colleagues and friends at the company. Thanks.

Speaker Change: Thermal you do see it being at the high end of our target hurdle rates. So it's 13, 15% Levered returns that project being a brownfield project and it's hard to determine exactly what the M.

John Mould: Thank you John.

When you stand back our next question.

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

Speaker Change: Return is but as we've said in multiple calls in the past that that project is very accretive just in terms of the avoidance of carbon tax.

Benjamin Pham: Alright. Thanks. Good morning, I also wanted to extend my condolences to Brian didn't even as family May you rest in peace.

Speaker Change: Maybe just secondly on <unk>.

Speaker Change: Doesn't it doesn't really impact directly but we'd be looking for from an off take with respect to a data center I think that would be a completely different commercial agreements. So there's a lot of elements in terms of where we land there relative.

Benjamin Pham: Some of my questions.

Benjamin Pham: Start off on Genesee.

Benjamin Pham: I wanted to put the repowering.

Speaker Change: Remind us what your target returns are on that and on contracted market in <unk>.

Speaker Change: Relative to the merchant exposure, if we were to have more contracted Lincoln, Alberta does give us the opportunity to explore other more lucrative.

Speaker Change: Price curves in other markets that we could take on more merchant exposure. So.

Speaker Change: Thanks, <unk>. So when you look at the returns on Merck's anti <unk>.

Speaker Change: There's a lot of points at play, but certainly we wouldn't be looking at.

Speaker Change: Thermal you do see it being at the high end of our target hurdle rates. So it's 13, 15% Levered returns that project being a brownfield project is hard to determine exactly what the M. <unk>.

Speaker Change: Doing a <unk>.

Speaker Change: A similar type of analysis or contracting at Genesee relative to what a merchant asset.

Speaker Change: It becomes much more involved in that.

Speaker Change: So it sounds like it's more of a if you think about.

Speaker Change: Churn is but as we've said in multiple calls in the past that that project is very accretive just in terms of our fee.

Speaker Change: The potential contract 10 minutes, it's an isolation of.

Speaker Change: So that is not an apples to apples comparison, you're making.

Speaker Change: Avoidance of carbon tax.

Speaker Change: Yeah, that's right I think we would look at that and independently and across the impact on having increased contract length.

Speaker Change: Doesn't it doesn't really impact directly what we'd be looking for from an off take with respect to a data center I think that would be a completely different commercial agreements. So there's a lot of elements in terms of where we land there.

Speaker Change: Reduced exposure and the value of.

Relative to merchant exposure so.

Speaker Change: And our view on price curve.

Speaker Change: Relative to the merchant exposure, if we were to have more contracted Lincoln, Alberta does give us the opportunity to explore other more lucrative.

Speaker Change: Thank you I would look at it as high as <unk>.

Speaker Change: Comparison.

Speaker Change: Between the two opportunities.

Speaker Change: Price curves in other markets that we could take on more merchant exposure. So.

Speaker Change: Okay got it and.

Speaker Change: I don't advocate even.

Speaker Change: There's a lot of points at play, but certainly we wouldn't be looking at.

Speaker Change: Your.

Speaker Change: This call you've emphasized.

Speaker Change: Doing a <unk>.

Speaker Change: The deposit characteristics of a need for Alberta data centers.

Speaker Change: A similar type of analysis or contracting at Genesee relative to what a merchant asset that it becomes much more involved in that.

Speaker Change: Can I ask like if where we.

Speaker Change: We're having a discussion even in a year's time.

Speaker Change: There's really.

Speaker Change: No no material updates or there's no data center announcements in Alberta.

Speaker Change: So it sounds like it's more of a if you think about.

Speaker Change: The potential contract I mean, it's an isolation of.

Speaker Change: What do you think I'm wrong, there, maybe just from a broader industry perspective.

Speaker Change: So that it's not an apples to apples comparison, you're making.

Speaker Change: I think.

Speaker Change: That's right I think we would look at that independently and across the impact on having increased contract length.

Speaker Change: Probably two things.

Speaker Change: The first one would be.

Speaker Change: Well for weather.

Speaker Change: Reduced exposure and the value of that relative to merchant exposure so and.

Speaker Change: Digital sales tax influencing.

Speaker Change: Major tech companies and their interest in <unk>.

Speaker Change: And our view on price curve.

Speaker Change: Thank you I would look at that asset.

Speaker Change: Playing and investing in Canada.

Speaker Change: Comparison.

Speaker Change: <unk> has an influence.

Speaker Change: Between the two opportunities.

Speaker Change: Secondly.

Speaker Change: Okay got it.

Speaker Change: We rapidly accelerate going from P.

Speaker Change: I know you've been at right here.

Speaker Change: Teaching yellow ams into inference computing and somehow fast track that are in the U S. On federal lands. So that there's super centers that gets reported as the President President Trump has stated his desire.

Sure.

Speaker Change: This call you've emphasized.

Speaker Change: The deposit characteristics of a need for Alberta data centers.

Speaker Change: Can I ask like if where we.

Speaker Change: We're having a discussion given in a year's time.

Speaker Change: There's really.

Speaker Change: And then the inference computing ends up.

Speaker Change: No no material updates or there's no data center announcements in Alberta.

Speaker Change: Coming.

Speaker Change: What do you think went wrong there maybe just from a broader industry perspective.

Speaker Change: Coming ahead and faster and so the shift because of the U S focus on big capital spend pushes back capacity.

Speaker Change: I think.

Speaker Change: Probably two things.

Speaker Change: The first one would be.

Speaker Change: More quickly for some external reason.

Speaker Change: Well for weather.

Speaker Change: Somehow we create 2% or as they ever totally behind the fence and.

Speaker Change: Digital sales tax influencing.

Speaker Change: Major tech companies and their interest in <unk>.

Speaker Change: The five big Tech companies, all coalesce around doing something like that.

Speaker Change: Claim and investing in Canada.

Speaker Change: I think that it would be the existential risk that pushes our Alberta.

Speaker Change: <unk> has an influence.

Speaker Change: Secondly.

Speaker Change: We rapidly accelerate going from low <unk>.

Speaker Change: Of it but what I would say is it doesn't change the necessity for data center capacity in the province.

Speaker Change: In Prince computing and somehow fast track that are in the U S. On federal lands. So that there is super centers that gets reported as the President President Trump is data there's this desire.

Speaker Change: If we accelerate into the inference computing phase faster than we expected, which by the way I don't think we're gonna be able to prove that out in the next year.

Speaker Change: And then the inference computing ends up.

Speaker Change: It's just right now as we're all talking to Hyperscale or <unk>.

Speaker Change: Coming.

Coming ahead and faster and so the shift because of the U S focus on big capital spend pushes that capacity.

Speaker Change: We're talking about.

Speaker Change: 27% and 2028 capacity addition.

Speaker Change: No.

Speaker Change: For for this scenario to play out doesn't really seem reasonable.

Speaker Change: More quickly for some external reason.

Speaker Change: But when we move from teaching LMS into influence computing all of the cloud computing capacity needs also increase and so every center major center in Canada, we'd be seeing a push for more data center capacity. So.

Speaker Change: Somehow we create 2% or as they ever totally behind the fence and.

Speaker Change: The five big Tech companies, all coalesce around doing something like that.

Speaker Change: Yeah, I think that it would be the existential risk that pushes our Alberta.

Speaker Change: Little bit of a of a risk to answer your question, but you know.

Speaker Change: Of it but what I would say is it doesn't change the necessity for data center capacity in the province.

Speaker Change: For me it really is.

Speaker Change: Digital sales tax.

Speaker Change: Or.

Speaker Change: Something.

Speaker Change: If we accelerate into the inference computing phase faster than we expected, which by the way I don't think we're going to be able to prove that out in the next year.

Speaker Change: Journal.

Speaker Change: <unk>.

Speaker Change: Our new solution.

Speaker Change: Okay. That's great. It's very useful thanks, a lot for you.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: It's just right now as we're all talking to hyper scaler we're.

Speaker Change: Our next question comes from the line of Thomas Me, Rick Janney Montgomery Scott Your line is open.

Speaker Change: We're talking about 2027 and 2028 capacity addition.

Speaker Change: Good morning. Thank you for taking the questions just two for me I'll start with U S. M&A.

Speaker Change: So you know.

Speaker Change: For for this scenario to play out doesn't really seem reasonable.

Speaker Change: Just given this time of year, you get a lot of load growth reports ERCOT PJM Newark.

Speaker Change: But when we move from teaching LMS into influence computing.

Speaker Change: I'm curious if.

Speaker Change: All of the cloud computing capacity needs also increase and so every center major center in Canada, we'd be seeing a push for more data center capacity. So it's a little bit of a risk to answer your question, but.

Speaker Change: And then Archie you kind of stands out as being highly attractive just kind of relative to some of those projections or kind of the reverse maybe relatively less attractive.

Speaker Change: To extend into and then give a follow up on Newbuild.

Speaker Change: For me it would it be.

Speaker Change: Really as you know.

Speaker Change: Thanks, Thomas and welcome.

Speaker Change: Digital sales tax.

Speaker Change: So for us.

Speaker Change: Sure.

Speaker Change: Good thing external that creates a new solution.

Speaker Change: Historically taken.

Speaker Change: A very systematic approach to looking at markets for M&A.

Speaker Change: Okay. That's great. It's very useful thanks, Bob for you.

Speaker Change: First and foremost those markets that are dependent on thermal for for Baseload generation stack in those markets that have heavy renewables penetration and third the ones that we can wholesale.

Speaker Change: Thank you.

Speaker Change: Please standby for our next question.

Speaker Change: Our next question comes from the line of Thomas Me, Rick Janney Montgomery Scott Your line is open.

Speaker Change: Yeah, we've been seeing.

Thomas Me: Good morning. Thank you for taking the questions just two for me I'll start with U S. M&A.

Speaker Change: A lot of positive indications from our <unk> in terms of.

Speaker Change: Low demand growth in particular from the retail side in a few key markets, but at last year's Investor Day, We focused on two key markets that we are interested in acquiring capacity in.

Thomas Me: And just given this time of year, you get a lot of load growth reports ERCOT PJM Newark.

Thomas Me: I'm curious if.

Thomas Me: Archie you kind of stands out as being highly attractive just kind of relative to some of those projections or kind of the reverse maybe relatively less attractive.

Speaker Change: One being in PJM and the second being our court.

Speaker Change: And we continue to be focused primarily on PJM as a market that we'd like to expand into as a north American IPP.

Thomas Me: To extend into and then give a follow up on Newbuild.

Thomas Me: Thanks, Thomas and welcome.

Speaker Change: And we continue to have that same conviction.

Thomas Me: So for us.

Speaker Change: Overall demand picture remains strong the reliability gap continues to widen.

Thomas Me: Historically taken.

Thomas Me: A very systematic approach to looking at markets for M&A.

Speaker Change: And in particular as we are focused on whether it's combined cycle units or attractive features and some of these key markets.

Thomas Me: Foremost those markets that are dependent on thermal for for Baseload generation.

Thomas Me: Back in those markets that have heavy renewables penetration and third the ones that we can wholesale.

Speaker Change: We think there is a compelling opportunity there.

Thomas Me: Yeah, we've been seeing.

Speaker Change: And then just last point I would make is continue to see opportunities in MISO and whack.

Thomas Me: A lot of positive indications from our Geos in terms of.

Thomas Me: Low demand growth in particular from the retail side and a few key markets, but at last year's Investor Day, We focused on two key markets that we are interested in acquiring capacity and one being in PJM and the second being our court.

Speaker Change: That are that are compelling and interesting given those are the two key markets that we're already in.

Speaker Change: Thank you for that and then a follow up on new builds just fully understanding the clear strategy of M&A, but I'm curious to kind of put the opportunity on the other side just looking at.

Thomas Me: And we continue to be focused primarily on PJM as a market that we'd like to expand into as a north American IPP.

Speaker Change: I'm curious kind of what youre seeing in Newbuild cost per kilowatt for combined cycle unit.

Speaker Change: Specifically, just thinking through labor costs, as well as gas turbine steam generator costs or if theres. Some other bucket that you feel are seeing lots of cost increases.

Thomas Me: We continue to have that same conviction, but overall demand picture remains strong the reliability gap continues to.

Thomas Me: Item.

Thomas Me: And in particular as we are focused on whether it's combined cycle units or attractive features and some of these key markets.

Speaker Change: And I'll leave it there thank you.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: Yeah.

Speaker Change: From an M&A perspective, we continue to as suppose to the theory that we have multiple sources of load growth demand.

Thomas Me: There's a compelling opportunity there.

Thomas Me: And then just last point I would make is continue to see opportunities in MISO and whack.

Speaker Change: And so long as we can and when I'm I'm going to take the example of a combined cycle J class as.

Thomas Me: That are that are compelling and interesting. Thank you.

Thomas Me: And those are the two key markets that we're already in.

Speaker Change: As a baseline so that we're running at 80%, 90% capacity factor. So if you take that as a type.

Speaker Change: Thank you for that and then a follow up on new builds just fully understanding the clear strategy of M&A, but I'm curious as to kind of put the opportunity on the other side just looking at.

Speaker Change: As a surrogate.

Speaker Change: In the markets. We're looking at if we can acquire that type of capacity at 800 1300 kw.

Speaker Change: I'm curious kind of what youre seeing in Newbuild cost per kilowatt for combined cycle unit, specifically, just thinking through labor costs as well as gas turbine steam generator costs or if theres. Some other bucket that you feel are seeing lots of cost increases.

Speaker Change: The tone or the cost of new entry Greenfield, we're seeing in the market.

Speaker Change: 2000 and kw.

Speaker Change: So our opportunity as a company to buy and then operate <unk> re contract <unk> expand is it significantly and compelling.

Speaker Change: And I'll leave it there thank you.

Speaker Change: Yeah. Thanks for the question.

Speaker Change: From an M&A perspective, we continue to expose the theory.

Speaker Change: From an from a return perspective.

Speaker Change: Relative to going into a greenfield and enduring the J curve and invested in 2000 and kw.

Speaker Change: That we have multiple sources of load growth demand.

Speaker Change: And so long as we can and when I'm I'm going to take the example of a combined cycle J class.

Speaker Change: So we just continue to see that by an optimized model.

Speaker Change: The single most attractive opportunity in the market.

Speaker Change: As a baseline so that.

Speaker Change: We're running at 80%, 90% capacity factor. So if you take that as a type.

Speaker Change: As it overtime.

Speaker Change: Until there is a convergence because we've added more contracted the valuation of these assets increase and you converge the cost of new entry with what these assets trade for it in the market.

Speaker Change: As a surrogate.

Speaker Change: In the markets. We're looking at if we can acquire that type of capacity at 800 1300 kw.

Speaker Change: The tone or the cost of new entry Greenfield, we're seeing in the market.

Speaker Change: But if you took sargent <unk> lundy.

Speaker Change: Pre COVID-19, which I use as a baseline.

Speaker Change: 2000, and I came up here.

Speaker Change: A combined cycle J class 400 megawatt unit.

Speaker Change: So our opportunity as a company to buy and then up rate and or re contract <unk> expand it.

Speaker Change: It would've been $1 5 million.

Speaker Change: Or 1500 kw.

Speaker Change: And the cost inflation from that to the 2000 and kw I would say the most significant piece of it.

Speaker Change: Significantly and compelling.

Speaker Change: From an from a return perspective.

Speaker Change: Relative to going into a greenfield and enduring a J curve and invested in 2000 and kw.

Speaker Change: The turbines and the cost of steel and all of that has gone up but what we've seen in our own projects, it's really about the labor availability and the cost of labor and the labor productivity.

Speaker Change: So we just continue to see that by an optimized model.

Speaker Change: The single most attractive opportunity in the market.

Speaker Change: Then the biggest factor isn't cost increase and the last point I would make on that because I think it's an important one is the supply chain in the U S.

Speaker Change: Overtime.

Speaker Change: Until there is a convergence because we've added more contracted the valuation of these assets increase and you converge.

Speaker Change: For these businesses.

Speaker Change: Has largely been attrition over the last 10 years.

Speaker Change: Cost of new entry with what these assets trade for it in the market.

Speaker Change: So for us to go do significant newbuild across the lower 48, we've got a region introduced supply chains.

Speaker Change: But if you took charge and in Monday.

Speaker Change: Pre COVID-19, which I use as a baseline.

Speaker Change: To be able to deliver equipment.

Speaker Change: On a combined cycle J class 400 megawatt unit would have been $1 5 million.

Speaker Change: The servicing that's equipment and construction of these types of projects.

Speaker Change: Or 1500 kw.

Speaker Change: And the cost inflation from that to the 2000 and kw I would say the most significant piece of it.

Speaker Change: Very helpful. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you as.

Speaker Change: As a reminder, ladies and gentlemen that start one wanted to ask a question. Please standby for our next question.

Speaker Change: Obviously, the turbines and the cost of steel and all of that has gone up but what we've seen in our own projects, it's really about the labor availability and the cost of labor and the labor productivity.

Speaker Change: Yeah.

Speaker Change: Our next question comes from the line of Patrick Kenny with N. B F. Your line is open.

Speaker Change: Thank you and good morning.

Speaker Change:

Patrick Kenny: I guess now that you've officially backed away from the the net zero targets and I know you're still playing the long game with looking at bringing S M ours into Alberta, but.

Speaker Change: Then the biggest factor isn't cost increase and the last point I would make on that because I think it's an important one is the supply chain in the U S for these businesses.

Patrick Kenny: I'm just wondering if the updated strategy surrounding the pace of decarbonization.

Speaker Change: <unk> has largely been attrition over the last 10 years.

Patrick Kenny: Has any impact on the previous timeline that you had targeted for bringing <unk> into the province.

Speaker Change: So for us to go do significant newbuild across the lower 48, we've got a re introduced supply chains.

Patrick Kenny: And then on the flip side wondering if removing especially the 2030 interim target.

Speaker Change: To be able to deliver equipment.

Patrick Kenny: Might broaden your scope at all from a from an M&A perspective, just in terms of.

Speaker Change: And servicing of equipment and construction.

These types of projects.

Patrick Kenny: Looking at assets that might be heavy carbon emitters today, but you now.

Very helpful. Thank you.

Patrick Kenny: They have a path towards CTG or other emission reduction technologies down the road.

Speaker Change: Thank you.

Speaker Change: As a reminder, ladies and gentlemen that start one wanted to ask a question. Please.

Speaker Change: Please standby for our next question.

Speaker Change: Yeah. Thanks, Bob.

Speaker Change: As it relates to the 23% in 2045 targets firsthand in 2013.

Speaker Change: Our next question comes from the line of Patrick Kenny with N. B F. Your line is open.

Speaker Change: 2030 was largely predicated on us one delivering on Repowering, but secondly on <unk>.

Speaker Change: Thank you and good morning.

Speaker Change: Now that you've officially backed away from the net zero targets and I know you're.

Speaker Change: Us being able to achieve.

Speaker Change: Still playing the long game with looking at bringing <unk> into Alberta, but.

Speaker Change: Ccs.

Speaker Change: And then I would say that the next point around 2045 more broadly.

Speaker Change: Just wondering if the updated strategy surrounding the pace of de Carbonization has any impact.

Speaker Change: With the dramatic shift of the overall market and our own leaning into natural gas.

Speaker Change: Packed on the previous timeline that you had targeted for bringing <unk> into the province.

Speaker Change: And then on the flip side wondering if removing.

Speaker Change: A growth platform for the company.

Speaker Change: And so when we step back and look at.

Speaker Change: Especially the 2030 interim target.

Speaker Change: Might broaden your scope at all from a from an M&A perspective, just in terms of.

Speaker Change: Lower carbon opportunities.

Speaker Change: We still see opportunity and growing opportunity in U S renewable development.

Speaker Change: Looking at assets that might be heavy carbon emitters today, but you now.

Speaker Change: We still are looking at optimization.

Speaker Change: We have a path towards CTG or other emission reduction technologies down the road.

Speaker Change: At our existing fleet.

Speaker Change: And then as you mentioned, we're looking at <unk>.

Speaker Change: Yeah. Thanks, Bob.

Speaker Change: As it relates to the 20th 30 in 2045 targets firsthand 2030.

Speaker Change: Alberta.

Speaker Change: I don't think that the current market construct.

Speaker Change: 2030 was largely predicated on us one delivering on Repowering, but secondly.

Speaker Change: In some fashion accelerate nuclear in Alberta, I think the province continues to be very committed to finding lower carbon alternatives for long term power.

Speaker Change: On.

Speaker Change: US being able to achieve C O D on Ccs.

Speaker Change: And then I would say the the next point around 2045 more broadly.

Speaker Change: But to be Frank I think we've accomplished a lot more in a very short period of time collectively now this isn't just off in LPG.

Speaker Change: The dramatic shift of the overall market and our own leaning into natural gas.

Speaker Change: A growth platform for the company.

Speaker Change: So on LPG and other players as well as the government.

Speaker Change: And so when we step back and look at.

Speaker Change: Through consultations.

Speaker Change: Lower carbon opportunities.

Speaker Change: And just overall education of people in Alberta around the viability of nuclear.

Speaker Change: We still see opportunity and growing opportunity in U S renewable development.

Speaker Change: So.

Speaker Change: I'm actually quite encouraged on where we are on nuclear today relative to where we were a year ago, but I don't think in the big in the big picture that we've somehow accelerated.

Speaker Change: We still are looking at optimization.

Speaker Change: At our existing fleet.

Speaker Change: And then as you mentioned, we're looking at <unk>.

Speaker Change: Berta.

Speaker Change: I don't think that the current market construct.

Speaker Change: Being able to deploy.

Speaker Change: In some fashion accelerate nuclear in Alberta.

Speaker Change: <unk>.

Speaker Change: The last point I would make is in particular around whether it's data centers are finding new wholesale customers. When we canceled the Ccs project last year, we cancel that on the grounds of not having security of the of the contract for differences.

Speaker Change: The province continues to be very committed to finding lower carbon alternatives for long term power.

Speaker Change: But to be Frank I think we've accomplished a lot more in a very short period of time collectively now this isn't just off of LPG.

Speaker Change: Support.

Speaker Change: Price of carbon.

Speaker Change: So on LPG and other players as well as the government.

Speaker Change: As we're looking at data centers as we're looking at bringing in new capacity in the province.

Speaker Change: Through consultations.

Speaker Change: And just overall education of people in Alberta around the viability of nuclear.

Speaker Change: And we're looking at those customers, who have been very clear in their appetite for clean electricity.

Speaker Change: So I'm actually quite encouraged on where we are on nuclear today relative to where we were a year ago, but I don't think in the big in the big picture that we've somehow accelerated.

Speaker Change: There may be a commercial opportunity now.

Speaker Change: To deploy.

Speaker Change: <unk> capture and sequestration on gas turbines.

Speaker Change: So I think that's something that's definitely changed in the last two quarters. So I think although we have removed the target.

Speaker Change: Being able to deploy.

Speaker Change: For 2030 in 2045.

Speaker Change: <unk>.

Speaker Change: Nothing's changed from a business perspective.

Speaker Change: And the last point I would make is in particular around when.

Speaker Change: For us in terms of our focus on finding new solutions focus on low carbon ventures, and ultimately delivering what our wholesale customers ultimately want that's the business we're in.

Speaker Change: Other data centers are finding new wholesale customers when we canceled the Ccs projects last year, we cancel that on the grounds of not having security of the of the contract for differences to support.

Speaker Change: As in serving them and that's why our strategy is oriented around.

Speaker Change: Price of carbon.

Speaker Change: <unk> energy solutions, because at the end of the day, we're ultimately going to have to deliver in all of the above solutions to our customers.

Speaker Change: As we're looking at data centers as we're looking at bringing in new capacity in the province.

Speaker Change: And we're looking at those customers, who have been very clear in their appetite for clean electricity.

Speaker Change: Got it that's helpful.

Speaker Change: And then maybe just coming back to the near term outlook here.

Speaker Change: There may be a commercial opportunity now.

Speaker Change: And I know the 12% to 14% total shareholder return is.

Speaker Change: To deploy.

Speaker Change: <unk> capture and sequestration on GAAP turbines.

Speaker Change: You know it can be a bit lumpy, but.

Speaker Change: So I think that's something that's definitely changed in the last two quarters. So I think although we have removed the target.

Speaker Change: Just given the <unk> guidance for 2025 on a per share basis is.

Speaker Change: Really only anticipating to grow year over year somewhere in the mid single digit range.

Speaker Change: For 2030 in 2045.

Speaker Change: Just your thoughts on how much of the remaining 5% to 10% total return target.

Speaker Change: Nothing's changed from a business perspective.

Speaker Change: Do you expect to deliver from executing on M&A activity versus firm.

Speaker Change: Firming up some of these re contracting opportunities or perhaps sanctioning new organic growth.

Speaker Change: In order to help the rewrite of the portfolio.

Speaker Change: As in serving them and that's why our strategy is oriented around that.

Speaker Change: Okay. Thanks, Pat I think it's going to be all of the above we are very optimistic on the M&A front to be able to execute on on a transaction during 2025 that would add that incremental value.

Speaker Change: <unk> energy solutions, because at the end of the day, we're ultimately going to have to deliver in all of the above solutions to our customers.

Speaker Change: Got it that's helpful.

Speaker Change: Likewise on re contracting we see that there is opportunity there obviously premature for us to talk about anything thats in commercial discussions right now, but I sort of see them.

Speaker Change: And then maybe just coming back to the near term outlook here.

Speaker Change: And I know the 12% to 14% total shareholder return is.

Speaker Change: You know it can be a bit lumpy, but.

Speaker Change: All areas contributing to pushing up our <unk> number.

Speaker Change: Just given the <unk> guidance for 2025 on a per share basis is.

Speaker Change: A number of positive everything in terms of our outlook.

Speaker Change: Really only anticipating to grow year over year somewhere in the mid single digit range.

Speaker Change: Okay, that's great I'll leave it there and also.

Speaker Change: Just your thoughts on how much of the remaining 5% to 10% total return target.

Speaker Change: My condolences to Brian Denise family and in all of his friends a couple of hours well. Thank you. Thank.

Speaker Change: Do you expect to deliver from executing on M&A activity versus <unk>.

Speaker Change: Thank you.

Speaker Change: Firming up some of these re contracting opportunities or perhaps sanctioning new organic growth.

Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue I would now.

Bob: Now I'd like to turn the call back to Bob for closing remarks.

Speaker Change: In order to help the rewrite of the portfolio.

Speaker Change: Thank you operator.

Bob: This concludes our year end.

Bob: Presentation and conference call I want to thank everyone for dialing in and have a great day.

Bob: Bye now.

Bob: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Speaker Change: Likewise on re contracting we see that there is opportunities there obviously premature for us to talk about anything thats in commercial discussions right now, but I sort of see.

All areas contributing to pushing up our GSR. So there's a number of positive everything in terms of our outlook.

Speaker Change: Yeah.

Speaker Change: Okay, that's great I'll leave it there and also extend my condolences to Brian Denise family and in all of his friends a couple of hours well. Thank you.

Speaker Change: Yeah.

Speaker Change: Thank you.

Robert Hope: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back to Bob for closing remarks.

Bob: Thank you operator.

This concludes our year end presentation and conference call I want to thank everyone for dialing in and have a great day bye.

Bob: Bye now.

Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.

Q4 2024 Capital Power Corp Earnings Call

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