Q1 2026 Capital Power Corp Earnings Call

Speaker #1: We acknowledge the diverse Indigenous communities that are in these areas and whose presence continues to enrich the community and our lives as we learn more about the Indigenous history of the lands on which we live and work.

Speaker #1: With that, I will hand it over to Abbott.

Roy Arthur: We acknowledge the diverse indigenous communities that are in these areas and whose presence continues to enrich the community and our lives as we learn more about the indigenous history of the lands on which we live and work. With that, I will hand it over to Avik Dey.

Avik Dey: Thank you, Roy. Our Q1 2026 results reflect the prudence of our strategy and the resilience of our portfolio, even against a volatile macro backdrop. Relentless execution is core to who we are. It's what sets the Capital Power team apart in times of uncertainty, driving durable growth. There are three key takeaways we want to leave you with today. First, our business remains stable. Despite heightened macro and geopolitical uncertainty around the world, our business and strategy are unchanged here in North America, and we continue to see multiple pathways to create value. Second, we are benefiting from diversification. Diversification across geographies or electricity markets, technologies, and markets continue to de-risk our portfolio and strengthen the opportunities that we can pursue. As we will touch on later in the presentation, we continue to see strong supply and demand fundamentals in each of the core markets where we operate.

Thank you, Roy. Our Q1 2026 results reflect the prudence of our strategy and the resilience of our portfolio, even against the volatile macro backdrop. Relentless execution is core to who we are. It's what sets the Capital Power team apart in times of uncertainty, driving durable growth.

There are three key takeaways we want to leave you with today. First, our business remains stable, despite heightened macro and geopolitical uncertainty around the world. Our business and strategy are unchanged here in North America, and we continue to see multiple pathways to create value.

Second, we are benefiting from diversification diversification across geography or electricity markets, Technologies and markets continue to de-risk our portfolio and the opportunity that we can pursue.

Avik Dey: Importantly, we also see compelling opportunities for growth across our three core generation technologies: natural gas, renewables, and storage. Finally, our approach to risk and return has not changed. We remain disciplined and consistent in how we allocate capital with a clear focus on compelling risk-adjusted returns. Our business remains resilient, and we continue to offer compelling long-term value creation supported by stable cash flows and disciplined growth. We continue to make steady progress on our 2026 priorities and remain disciplined in our approach to value creation. Our success reflects the tireless dedication and strong execution of our team across North America. This quarter, we're also pleased to highlight several important leadership updates that further strengthen our organization. Kevin MacIntosh, who joins me on this call, has stepped into the role of Senior Vice President, Finance and Chief Financial Officer.

We will touch on later in the presentation. We continue to see strong supply and demand fundamentals in each of the core markets. Where we operate importantly, we also see compelling opportunities for growth across our 3 core generation Technologies, natural, gas, Renewables, and Storage

Finally, our approach to risk and return has not changed. We remain disciplined and consistent in how we allocate capital, with a clear focus on compelling risk-adjusted returns. Our business remains resilient and we continue to offer compelling long-term value creation, supported by stable cash flows and disciplined growth.

We continue to make steady progress on our 2026 priorities and remain disciplined in our approach to Value creation, our success, reflects the tireless, dedication and strong, execution of our team across North America. This quarter. We're also pleased to highlight, several important leadership updates, that further strengthen our organization.

Avik Dey: In addition, Andrew Pearson, who has been an integral part of our organization since 2008, has joined the executive team as Senior Vice President, US Commercial, and is based in our newly opened Washington, DC office. Looking ahead, effective 1 July 2026, Steve Wollin has decided he will retire after 25 years of outstanding service and leadership. Mike Tashima will join the executive team as Senior Vice President and Chief Commercial Officer based in our Edmonton headquarters. We are deeply grateful to Steve for his leadership and the lasting impact he has had on Capital Power. Together, these transitions underscore the depth of our leadership bench and our continued focus on building and sustaining a high-performing team.

Kevin McIntosh, who joins me on this call, has stepped into the role of Senior Vice President of Finance and Chief Financial Officer.

In addition, Andrew Pearson who has been an integral part of our organization. Since 2008, as joining executive team as senior vice, president us commercial as based in our newly opened Washington, DC office, looking ahead, effective, July 1st 2026. Steve Wallen has decided, he will retire after 25 years of outstanding service and Leadership and Mike teshima will join the executive team as senior vice president and chief commercial officer based on our Edmonton headquarters,

We are deeply grateful to Steve for his leadership and the lasting impact he has had on Capitol power.

Avik Dey: For Q1 2026, performance highlights include the extension of the Arlington Valley contract through 2038, which reinforces our commercial optimization strategy, securing durable long-term contracts with investment-grade counterparties, progressing Arlington Valley and Hummel upgrades, advancing construction on 4 fully contracted projects totaling roughly 280 MW across Canada and the US, all with investment-grade counterparties. Operationally, the team delivered another strong quarter, generating approximately 11.5 TWh across the fleet. Importantly, more than half our generation came from the US portfolio, which continues to underscore the success of our diversification strategy. Finally, our planned outages are progressing on schedule, enhancing reliability and efficiency of our fleet. For the second consecutive year, we saw the market get off to a rocky start owing to macro disruptions. Our strategy and our business have stayed consistent.

Together, these transitions underscore the death of our leadership bench and our continued focus on building and sustaining a high-performing team for Q1 2026. Performance highlights include the extension of the Arlington Valley contract through 2038, which reinforces our commercial authorization strategy, securing durable, long-term contracts with investment grade counterparties.

Progressing Arlington, Valley, and Hummel upgrades.

Advancing construction on four fully contracted projects, totaling roughly 280 megawatts, across Canada and the US, all with investment-grade counterparties.

Operationally, the team delivered, another strong order generating, approximately 11.5, PW hours across the fleet. Importantly, more than half our generation came from, the US portfolio, which continues to underscore the success of our diversification strategy. Finally, our planned outages are progressing on schedule enhancing reliability and efficiency of our Fleet.

Avik Dey: While oil prices and broader market volatility have increased meaningfully, natural gas prices have declined, reinforcing why gas fire generation continues to be structurally advantaged. Natural gas offers low-cost fuel, operational flexibility, and meaningful insulation from global disruption here in North America, which reinforces our conviction that this fuel source is pivotal to meeting long-term power demand growth and preserving affordability. The bottom line is simple: Positive industry fundamentals remain intact for power generation, and we are staying the course in our pursuit of delivering reliable and affordable power to our customers in pursuit of creating long-term shareholder value. Our return profile reflects a combination of contracted cash flow and merchant generation capacity. From 2021 to 2025, our contracted EBITDA grew at a compounded annual rate of approximately 18% due to a combination of acquisitions, development, and recontracting of existing assets.

No flexibility and meaningful insulation from Global disruption here in North America, which reinforces our conviction that this fuel source is pivotal to meeting long-term power demand growth and preserving affordability.

The bottom line is simple.

Positive industry, fundamentals remain intact for power generation. And we are staying the course in our pursuit of delivering reliable and affordable power to our customers in pursuit of creating long-term shareholder value.

Our return profile reflects a combination of contracted cash flow and merchant generation capacity from 2021 to 2025. Our contracted EBITDA grew at a compounded annual rate of approximately 18%.

Avik Dey: The contracting successes in Ontario, MISO, and the Desert Southwest illustrate our ability to unlock meaningful value by optimizing our existing asset base. We continue to make tangible progress delivering the CAD 1 billion of the embedded upside we articulated to you at our Investor Day in December. As a result of the recent contracting agreements at MCV in Arlington Valley, we have already delivered approximately CAD 170 million of contracted EBITDA upside, with more to come. We operate approximately 12 GW across our North American portfolio, with roughly 7 GW targeted for contracting or recontracting. That gives us a long and visible runway for incremental value creation from assets already in place. As power market fundamentals continue to tighten, that optionality becomes increasingly valuable, reinforcing that contracting remains one of our most powerful levers for long-term value creation.

due to a combination of Acquisitions development, and recontracting of existing assets,

The contracting successes in Ontario, MISO, and a dozen Southwest illustrate our ability to unlock meaningful value by optimizing our existing assets. We continue to make tangible progress delivering the $1 billion of the embedded upside we articulated to you at our Investor Day in December. As a result of the recent contracting agreements at MCV and Ireland and Valley, we have already delivered approximately $170 million of contracted EBITDA upside, with more to come.

Avik Dey: As we pursue further acquisitions, we will prioritize assets where our platform and expertise can unlock incremental value through commercial optimization. While we have enhanced our diversification in recent years, Alberta remains a meaningful part of our business. It's an attractive market and presents a unique and compelling value proposition for data center investment. We are encouraged by recent regulatory progress, including the Alberta Canada MoU, eliminating the CER for Alberta and continued progress on the AESO Phase One and Two data center interconnection processes. These steps improve investment certainty and support continued data center growth while maintaining affordability, reliability, and meaningful economic benefit for Alberta and Canada. We believe Alberta has some structural advantages over other regions looking to attract large data centers. For instance, existing underutilized infrastructure includes generation, transmission, and distribution.

We operate a personally 12. Gigawatts across our North American portfolio with roughly 7. Gigawatts targeted for Contracting or recontracting that gives us a long and visible. Runway for incremental value creation from assets already in place as our Market fundamentals, continue to tighten that optionality comes increasingly valuable reinforcing that Contracting remains 1 of our most powerful levers for long-term value creation, as we pursue further Acquisitions, we will prioritize assets where our platform and expertise can unlock incremental value through commercial optimization.

While we have enhanced our diversification in recent years, Alberta remains a meaningful part of our business. It's an attractive market and presents a unique and compelling value. Proposition for data center Investments. We are encouraged by recent regulatory progress, including the Alberta Canada, mou, eliminating, the CER for Alberta and continued progress on the ASO Phase 1 and 2 day Center interconnection processes. These steps improve investment certainty and support continued data center growth by maintaining affordability reliability and meaningful economic benefit for Alberta and Canada.

Avik Dey: The nature of the Phase One process puts the focus on generation, it's important not to lose sight of the transmission and distribution infrastructure. Based on our analysis, the addition of 1.5 GW of load would result in approximately CAD 6 per month savings for the average residential customer in Alberta, with existing transmission and distribution spread across more load. In addition to efficient and reliable generation, Alberta benefits from a deep supply of low-cost fuel, with forward prices trading below other major North American natural gas sales points. Alberta also has a strong track record of load co-location, with approximately 3 GW, about 25% of provincial load co-located with generation. This all reinforces our enthusiasm for this industry to succeed here and create benefits for constituents. Beyond Alberta, diversification continues to benefit our portfolio, with growth coming from multiple areas.

We Believe Alberta has a structural advantages over other regions, looking to attract large data centers. For instance, existing honor. Utilized infrastructure. Includes generation transmission and distribution. The nature of the phase 1 process, puts the focus on generation but it's important not to lose sight of the transmission distribution infrastructure.

Based on our analysis, the addition of 1.5 gigawatts of load would result in approximately 6 dollars per month savings for the average residential customer in Alberta with existing transmission and distribution spread across more load.

In addition to efficient and reliable generation after the benefits from a deep supply of low-cost fuel with forward prices trading below other major North American Natural, Gas sales points. Alberta also has a strong track record of load collocation with. Approximately 3, gigawatts about 25% of provincial, load co-located with generation. This all reinforces our enthusiasm for this industry to succeed here and create benefits for constituents.

Avik Dey: This geographic and market diversity reduces reliance on any singular regulatory or pricing environment and gives us multiple pathways to create value over time. In PJM, energy forward prices continue to exhibit strong long-term spark spreads with greater visibility to capacity prices out to 2030. In addition, we are encouraged that the recent reliability backstop procurement proposal supports the most cost-effective new capacity, which we believe will include brownfield expansions and upgrades on existing generation. Meanwhile, MISO continues to exhibit strong supply and demand fundamentals. From a bilateral pricing perspective, we were able to recontract MCV, the largest gas cogeneration plant in the US, out to 2040 at attractive pricing. Capacity pricing in this region also continues to see significant upward pressure owing to growing demand. Q1 2026 provides a great example of the benefits of diversification in action.

Beyond Alberta, diversification continues to benefit our portfolio, with growth coming from multiple areas. This geographic and market diversity reduces reliance on any singular regulatory or pricing environment, and gives us multiple pathways to create value over time.

New capacity, which we believe will include brownfield expansions and upgrades on existing generation.

Meanwhile, MSO continues to exhibit, strong supply and demand. Fundamentals from a bilateral pricing perspective, we were able to recontract MCV the largest gas co-generation plant in the us out to 2040 at attractive pricing

Avik Dey: We saw elevated gas prices and price volatility in PJM, we also saw strong contributions in Ontario and MISO, underscoring the benefits of our diverse and resilient portfolio. In addition to geographic diversification, we continue to focus on 3 core power generation technologies, being natural gas, renewables, and storage. In contrast to the forward outlook, historical power generation growth has been muted over the past 20 years, averaging about 0.5% per annum. These 3 technologies have demonstrated significant and consistent growth well in excess of that. Over the past 20 years, natural gas-fired generation has grown steadily as aging coal units retire and rising renewable penetration has increased the need for reliable, dispatchable power. That same push for reliability has also fueled rapid growth in utility-scale battery storage, supported by declining lithium costs and longer storage duration to better integrate intermittent renewables.

Capacity pricing in this region also continues to see significant upward pressure owing to growing demand. 21826 provides a great example of the benefits of diversification in action. Although we saw elevated gas prices and price volatility in PJM, we also saw strong contributions in Ontario and MISO, underscoring the benefits of our diverse and resilient portfolio.

In addition to Geographic diversification, we continue to focus on 3, core power generation Technologies being natural gas Renewables and Storage.

To contrast to the forward Outlook historical power, generation growth has been muted over the past 20 years, averaging about 0.5% per annum.

Avik Dey: When we look forward, we continue to see opportunities across all three of our businesses. Natural gas, renewables, and storage each play an important role in meeting the needs of the grid as power demand continues to rise. As we indicated at Investor Day, natural gas will play a starring role. Together, this technological mix positions us well to capture rising demand while maintaining flexibility, allowing us to respond to the needs of our customers across our markets. I will hand it over to our Chief Financial Officer, Kevin MacIntosh, to provide our financial update.

However, these 3 Technologies, demonstrated significant and consistent growth. Well, in excess of that over the past 20 years, a gas fry generation has grown steadily as aging. Coal units, retire and Rising renewable. Penetration has increased, the need for Reliable dispatchable power. That same push for reliability, has also fueled rapid growth in utility scale, battery storage supported by declining lithium cost and longer storage duration to better integrate intermittent, Renewables. When we look forward, we continue to see opportunities across all 3 of our businesses natural gas, Renewables and storage each plane important role in meeting. The needs of the grid is powered, man continues to rise. As we indicated at investor day natural. Gas will play a starring role

Kevin MacIntosh: Thank you, Avik, good morning, everyone. I'm Kevin MacIntosh, I'm pleased to join you today as Capital Power's new CFO. We have significant opportunities ahead, and while our ambition is bold, we are starting from a position of incredible strength with a high-quality asset base and strong strategic positioning. Before we walk through the quarter, I'd like to briefly revisit a few of the key themes outlined at Investor Day as they continue to guide how we think about risk, return, and capital allocation across the business. Looking at the past decade, our performance demonstrates a consistent ability to deliver durable growth and strong shareholder returns. First, on returns to shareholders, we have increased our dividend for 12 consecutive years, compounding at roughly 7% annually from CAD 1.51 per share in 2016 to CAD 2.69 per share in 2025.

Together, this technological mixed positions us, well to capture Rising demand, while maintaining flexibility, allowing us to respond to the needs of our customers across our markets. Now, I will hand it over to our Chief Financial Officer. Kevin McIntosh to provide our financial update.

Thank you. Ah, and good morning, everyone. I'm Kevin McIntosh and I'm pleased to join you today as cattle Powers new CFO.

We have significant opportunities ahead. And while our ambition is bold, we are starting from a position of Incredible strength, with a high quality, asset base, and strong strategic positioning

before we walk through the quarter, I'd like to briefly revisit a few of the key themes outlined at investor day as they continue to guide how we think about risk return and capital allocation of the business

Looking at the past decade our performance demonstrates. A consistent ability to deliver durable growth and strong shareholder. Returns first on returns to shareholders. We have increased our dividend of 12th consecutive years compounding at roughly 7%, annually from 1.51, cents per share.

Kevin MacIntosh: Second, dividend growth has been supported by real business growth. Adjusted EBITDA has grown at approximately 13% compounded annually, increasing from CAD 509 million in 2016 to CAD 1.6 billion in 2025. This growth has been achieved within clear financial guardrails, including maintaining a 30% to 50% targeted dividend payout ratio, approximately 4x net debt to EBITDA, and a largely contracted cash flow base. This is a track record of excellence built through dedication and discipline. I'm excited to be part of this team and build on this legacy, delivering real value for you, our shareholders. Our balance sheet remains a core strength and is the foundation that supports fleet growth, capital deployment, and long-term value creation. In 2026, approximately 75% of our cash flow is secured through long-term contracts or hedges, providing a high level of visibility and durability.

Uh, in 2016 to 2.69 cents per share in 2025.

Second dividend growth has been supported by real business growth. Adjusted IBA has grown approximately 13% compounded. Annually increasing from 509 million in 2016 to 1.6 billion dollars in 2025.

This growth has been achieved within clear financial guardrails, including maintaining a 30% to 50% targeted dividend payout ratio, approximately 4 times net debt to EBITDA, and a largely contracted cash flow base.

This is a track record of Excellence built through dedication and discipline. I'm excited to be part of this team and build on this Legacy delivering real value for you. Our shareholders

Our balance sheet remains a core strength and is the foundation that supports fleet growth, capital deployment, and long-term value creation.

Kevin MacIntosh: That stable cash flow base gives us the flexibility to pursue M&A in merchant markets, grow the dividend, and ultimately deliver strong total shareholder returns. The quality of that contracted base is equally important. Roughly 90% of our PPAs are with A-rated or higher counterparties, reinforcing revenue certainty and credit quality across the portfolio. Our weighted average contract life has consistently remained in the 9 to 11 years range, reflecting the strong positioning of our asset base to meet customer needs. We remain confident in our ability to execute commercial optimization, including long-term contracting throughout our portfolio. Recent examples include the Arlington Valley and MCV contracts, both which extended contract duration on existing assets with investment-grade utility counterparties, adding long-dated, higher-value cash flows and highlighting the significant embedded value across our portfolio.

A high level of visibility and durability. That stable cash flow base gives us the flexibility to pursue M&A in merchant markets.

Grow the dividend and ultimately deliver strong total shareholder returns.

Quality of that contract, debase it equally important, roughly 9% of our ppas, are with a rate or higher counterparties, reinforcing Revenue, certainty and credit quality of the portfolio.

Our weighted average contract life has consistently remained in the non to 11 years range, reflecting the strong positioning of our asset base.

Kevin MacIntosh: Finally, our investment-grade credit ratings across S&P, Fitch, and DBRS validate our asset quality, financial strength, and provide us with efficient access to both Canadian and US public debt and hybrid markets. That low-cost access to capital enhances our ability to commercialize megawatts and finance acquisitions, supporting AFFO per share growth over time. Now let's dive into our Q1 2026 results. We delivered a strong quarter, both operationally and financially, with solid execution across the portfolio and meaningful progress on continued investment in our assets in the form of sustaining capital.

To meet customer needs. We remain confident in our ability to execute commercial optimization, including long-term Contracting throughout our portfolio. Recent examples, include the Arlington Valley and MCV contracts, both, which extended contract duration on existing assets with investment grade utility counterparties, adding long-dated, higher value, cash, flows, and highlighting the significant embedded value across our portfolio.

Finally, our investment grade credit ratings across SNP, Fitch and dbrs, validate our asset Quality Financial strength and provide us with efficient access to both Canadian and US public debt, and hybrid markets.

That low-cost access to capital enhances our ability to commercialize megawatts and finance acquisitions, supporting AFFO per share growth over time.

Kevin MacIntosh: Looking at the key metrics, adjusted EBITDA for the quarter was CAD 404 million, up CAD 37 million year over year due to contributions from the Hummel Station and Rolling Hills facilities acquired in 2025 and partially offset by higher corporate expenses driven by higher staffing costs due to growth in the US and higher equity-based compensation due to the company's share price performance. AFFO for the quarter was CAD 154 million, down CAD 64 million year over year, primarily due to higher sustaining capital expenditures reflecting increased activity across the US flexible generation portfolio, higher financing expense, increased current income tax expense, mainly due to less tax depreciation, and partially offset by the higher adjusted EBITDA, which I described earlier.

Now, let's dive into our first quarter of 2026 results. We delivered a strong quarter, both operationally and financially with solid execution, across the portfolio, and meaningful progress on continued investment in our Assets, in the form of sustaining capital,

Looking at the key metrics adjusted IBA for the quarter was 404 million up, 37 million year-over-year. Due to a contributions from the Hummel station and Rolling Hills facilities, acquired in 2025, and partially offset by higher corporate expenses driven by higher Staffing costs, due to growth in the US and higher Equity, based compensation due to the company's share price performance.

Afo for a quarter was 154 million down 64 million year-over-year primarily due to higher sustaining Capital expenditures reflecting increased activity across the US flexible generation portfolio. Higher financing expense.

Kevin MacIntosh: Overall, this quarter reinforces our ability to execute our strategy and maintain strong financial performance, even as we proactively invest in the reliability and long-term performance of the fleet. Based on our performance year to date and our outlook for the balance of the year, we are reaffirming our 2026 guidance ranges for adjusted EBITDA, AFFO, and sustaining capital. As previously disclosed, sustaining capital expenditures in 2026 will be in the range of CAD 290 million to 330 million. This reflects a planned maintenance cycle across the fleet, including 493 outage days and 39 planned outages. This investment is intentional and positions the business to capitalize on strong market fundamentals long term. Finally, this outlook supports a 2% dividend increase in 2026, subject to board approval, consistent with the framework we outlined at Investor Day.

increased current income tax expense, mainly due to less tax depreciation and partially offset by the higher adjusted ebita, which I described earlier

overall this quarter reinforces our ability to execute our strategy and maintain strong, financial performance, even as we proactively invest in the reliability and long-term performance of Fleet,

Based on our performance year to date and our outlook for the balance of the year, we are reaffirming our 2026 guidance ranges for adjusted IBA, AFFO, and sustained capital.

As previously, disclosed.

Sustaining Capital expenditures in 2026 will be in the range of 290 million, to 330 million. This reflects a planned maintenance cycle across the fleet, including 493 outage days and 39 planned outages. This investment is intentional and positions the business to capitalize on strong Market fundamentals, long term,

Finally, this outlook supports a 2% dividend increase in 2026, subject to board approval.

Kevin MacIntosh: Overall, these guidance ranges reflect our confidence in the resilience of the portfolio, the durability of our cash flows, and our ability to generate strong financial results while continuing to invest for future growth. With that, I will hand it over to Avik for closing remarks.

Consistent with the framework. We outlined at investors.

Avik Dey: Thank you, Kevin, and once again, welcome to the team. We remain confident in our ability to deliver industry-leading performance and generate superior returns for our shareholders over the long term. As we communicated at our Investor Day, by 2030, we are targeting annual AFFO per share growth of 8% to 10%. Approximately 50% growth in our US total, US-owned capacity, and 13% to 15% total shareholder return. We will also aim for 2% to 4% annual dividend growth. This combination of compelling risk-adjusted growth and yield positions Capital Power for compelling shareholder value creation. With that, I will hand it back to Roy to close out the call.

Overall, these guidance ranges reflect our confidence in the resilience of the portfolio, the durability of our cash flows, and our ability to generate strong financial results while continuing to invest for future growth. With that, I will hand it over to Avik for closing remarks.

Again, welcome to the team. We remain confident in our ability to deliver industry-leading performance and generate Superior returns for our shareholders over the long term as we communicated at our investor Day by 2030. We are targeting annual afo per share growth of 8 to 10%.

Approximately 50% growth in our us, total us-owned capacity and 13 to 15% total shareholder return.

We will also aim for 2 to 4% annual dividend growth.

This combination of compelling risk. Adjusted growth and yield positions. Capital power for compelling. Shareholder value creation.

Roy Arthur: Thanks, Avik. This concludes the formal presentation part of the call. Operator, we are now ready to take questions.

With that, I will hand it back to Roy to close out the call.

Operator: Ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, simply press star one one again. Again, if you have a question or comment, please press star one one on your telephone keypad. Please stand by while we compile the Q&A roster. Our first question or comment comes from the line of Robert Hope from Scotiabank. Mr. Hope, your line is now open.

Exotic. This concludes the formal presentation part of the call Operator. We are now ready to take questions.

Ladies and gentlemen, if you have a question or comment at this time, please press star 1-1 on your telephone keypad. If your question has been answered and you wish to remove yourself from the queue, simply press star 1-1 again.

Again, again, if you have a question or comment, please press star 1, 1, 1 on your telephone keypad.

Please stand by while we compile the Q&A roster.

Robert Hope: Morning, everyone. Want to start off on the PJM market and the reforms there. I appreciate the commentary that you provided on the call. When we look at the potential reforms that are happening there and do note that your comments regarding how it does support your asset base there. At what point do you think there'll be enough certainty to really kickstart conversations for upgrades and further expansions of your assets there? I guess secondly, you know, when you think about concentration, would you be willing to continue to add merchant in that market?

Our first question or comment comes from the line of Robert Hope from Scotia Bank Mr. Hope, your line is now open

Good morning, everyone. I want to start off on the PGM market and the reforms there, and I appreciate the commentary that you provided on the call. So, when we look at the potential reforms that are happening there, and do note your comments regarding how it does support your assets there,

At what point do you think there'll be enough certainty to really kickstart, uh, conversations for upgrades and, uh, further expansions of your assets there? And secondly, you know, when we think about concentration, would you be willing to continue to add merchants in that, uh, market?

Avik Dey: Thanks for the question, Rob. I think it's important to recognize, you know, when we look at the potential reforms and the announcement of the backstop auction, what was concurrently announced was also an extension on the floor and cap on the BRA auction. That was actually reaffirmed this morning in support with the FERC announcement on the approval of the extension of the BRA cap and floor through 2030. When you step back and look at PJM and the dynamic between balancing the capacity market and the energy market, the energy market continues to be attractive, and that's reaffirmed with the BRA auctions being extended through 2030. From an energy perspective, we look favorably upon PJM.

Thanks for the question, Rob. Uh, so I think it's important to recognize, you know, when we look at the potential reforms and the announcement of the backed up option, what was concurrently announced was also an extension of the floor and tap on the B option. And that was actually reaffirmed this morning in support with the FUR announcement, uh, on the approval of the extension of the VRA cap and forth through '29-'30. So when you step back and look at PJM and the dynamic between balancing the capacity market and the energy market, the energy market continues to be attractive, and that's reaffirmed with the VRA options, uh, being attended.

Avik Dey: We'd be willing to take on more exposure there given the diversification of our portfolio and the depth of the market to be able to hedge and contract into. In terms of uprates and upgrades and potential expansions, those conversations have not stalled because of the uncertainty around the PJM auction process. In fact, they've accelerated. As you'll know, with PJM's recommendation on the proposed backstop auction, they've proposed a bilateral process under which they can match load to supply in advance of that backstop auction. That process is one that, you know, all generators are actively involved in, as are we. To really cut and get down to the fine points on it is we think the market is active. We continue to be bullish on it.

Through 2930. And so from energy perspective, we look favorably upon pjm. Uh, we'd be willing to take on, uh, more exposure there, given the certification of our portfolio and the depth, uh, of the market, to be able to head and contract into, uh, in terms of upgrades and upgrades, uh, and potential expansions, those conversations have not stalled because of the, uh, uncertainty around the pjm option process. In fact, they've accelerated, so, as you'll know, uh, with pjm's recommendation on the proposed back stop option, as they proposed the bilateral process under which they can match load to supply uh in advance of that back, stop option. And that process is 1 that, you know, all generators are actively involved in as are we

Avik Dey: We think there's opportunities in particular around existing generation, you know, to add to the portfolio. I think given that we've got a strong balance sheet, we're investment grade, we're well-diversified, we're well-positioned to capitalize on it.

So uh, to to really cut and get down to to the Fine points on it is, we think the market is active, we continue to be bullish on it. Uh, we think there's opportunity in particular around existing generation uh to, you know, add to the portfolio. Um, and I think we given that we've got a strong balance sheet. Where investment grade. Uh, we're well Diversified, we're well positioned to cap capitalize on it.

Robert Hope: Appreciate that. Maybe moving over to the recontracting initiatives. You've seen a number of successes over the last 12 to 18 months. As you look forward for the remainder or the rest of the asset base, which does have contracts expiring in the next 5 to 7 years? How do you think about timing that? You know, could you capture some upside now or, you know, just given that you have had some wins in the past, could you wait to better position yourself to capture upside on a longer term basis. Just trying to get a sense of how you're thinking about the capture the upside now versus wait and maybe get a little bit more.

Term basis just to get a sense of how you're thinking about the capture of The Upside Now versus weight and maybe get a little bit more.

Avik Dey: You know, that is exactly the calculus we enter into on each and every plant and expiry. It's a commercial decision on what we see, you know, the supply-demand outlook versus where we see current pricing, versus what we see as, you know, current CONE in each and every market. What we have done, and will continue to do, is optimize against our current outlook in the market to try and maximize NPV per kW on each and every plant. What we are not doing is trying to schedule and cascade this to be able to hit on a consistent basis an announcement, you know, every quarter or every two quarters on a contracting, on a future contracting. We will do one at each plant as an independent decision on maximization of NPV per kW.

You know, that is exactly the calculus we enter into on each, and every plant and expiry. It's a commercial decision on what we see, you know, the supply demand Outlook versus where we see current pricing, uh, versus what we see is, you know, current cone in each and every market. So what we have done and we'll continue to do is optimize against our current Outlook and the market to try and maximize NPD for KW on each and every client what we are not doing is trying to schedule and Cascade this to be able to hit on a consistent basis and announcement about every quarter or every 2 quarters on a Contracting uh, on a future. Contracting.

Avik Dey: With that said, we've had more active dialogue going on today than we did last year, around recontracting opportunities, and we continue to advance those. You know, when we announce it, you can be assured we've made the announcement that we feel, you know, best maximizes NPV.

We will do 1 at each plant as an independent decision on maximization of npv for KW. So with that said, uh we've got our active dialogue going on today. Then we did last year uh around recontracting opportunities and we continue to advance those. But you know, when we announced it you can be measured. We've made the announcement that we feel, you know, best maximizes npv.

Robert Hope: Thank you.

Thank you.

Operator: Thank you. Our next question or comment comes from the line of Nick Amicucci from Evercore ISI. Mr. Amicucci, your line is open.

Nick Amicucci: Hey, Avik. How are you? Welcome, Kevin. Look forward to working with you. Just a kind of a quick one for me too. Avik, you had mentioned, just in your prior comment, kind of the acceleration of discussions particularly within the PJM. Just so I get a sense, are you getting the sense that there's kind of an increased sense of urgency, for, you know, kind of large load customers to bilaterally negotiate on their own terms rather than kind of leave it to the quote, unquote, you know, power tender that we're gonna be exposed to?

Thank you. Our next question or comment comes from the line of Nick amakuchi from evercore isi Mr. Amakuchi align is open.

Avik Dey: I love that analogy, Nick. What we are seeing is definitely increased activity in conversations. I think if you asked any of the generators that are active in PJM, they would say we are all having more conversations. I think PJM has put forward a plan that is encouraging those bilaterals to occur in advance of that backstop auction. I think, you know, we need further visibility on the process. I think we are seeing more activity, not less. I think it is good news for everyone if we see more of these bilaterals entered into in advance of the backstop auction. The best case scenario is, you know, we are working down what is required for the auction because we are figuring it out ourselves.

Hey, how are you? And, uh, and welcome. Kevin. I look forward to working with you. Um, just a, a kind of a quick 1 for me. You mentioned, um, just in the in your prior comment, um kind of the the acceleration of of uh, discussions just particularly within the pjm just want to get. Are you see? Are you getting a sense that there's kind of an increased sense of urgency, um, for you know kind of large load customers to bilaterally, negotiate on their own terms, rather than kind of Leave It to the quote unquote, you know, power Tinder that we're, uh, that we're going to be exposed to

I love that analogy Nick. Um, so what we are seeing is definitely increased activity, in conversations. I think if you asked any of the generators, uh, that are active in pjm, they would say we're all having more conversations. Uh, I think pjm is supportive of plan. That's encouraging those bilateral to occur in it in advance that backs up auction. Uh, but I think, you know, we need further visibility on the process, so I think we're seeing more activity, not less. Um, and I think it's good news for everyone. If we see more of these bilateral entered into

Nick Amicucci: Great. I guess as we, as we kind of think about it too, I mean, would you guys? I mean, I would think you guys are somewhat more strategically positioned just given that, you know, we kind of had, I guess the administration's initial intent seemed like it was directed towards new builds, gas gen, where now we do have the ability to have uprates and kind of, you know, kind of more leveraging of efficiencies at existing assets. Is that, is that a fair characterization?

In advance to the best of often. So that's the case scenario is, you know, we're working down what's required for the auction? Because we're figuring it out ourselves.

Avik Dey: Look, I think in our conversations, the administration has been clear with their objective, which is, you know, addressing the need for new capacity to address large load, while not compromising the ratepayer. The push from the Energy Dominance Council is consistent exactly with that. So I think we're in a position right now which we're all encouraged to find ways to add megawatts to each of the grids and markets that we operate in, that's making the grid more reliable and more affordable to the ratepayer while addressing, you know, the need for large load. I think that's why PJM has been an advocate of this bilateral process because it's, you know, trying to facilitate, you know, load and generation to come together in it.

Great. And then I I guess as we, um, as you kind of think about it, too, I mean, would you guys? I mean, I would think you guys are some more strategically positioned just giving that, you know, we kind of had. Um it wasn't I guess the administration's initial intent seemed like it was directed towards new build gas Jam where now we do have the ability to have upgrades and kind of you know, kind of more leveraging of efficiencies that are existing assets. Is that is that a fair characterization?

Nick Amicucci: Perfect. Thanks, guys.

Look, I think in our conversations the Administration has been clear with their objective, which is, you know, addressing the need for new capacity to address large load, uh, while not compromising, uh, the ratepayer. And so the push, um, from the Energy Dominance Council is consistently with that. Uh, so I think we're in a position right now which we're all encouraged to find ways to add megawatts to each of the grids, uh, in markets that we operate in, uh, that's making the grid more reliable and more affordable to the ratepayer while addressing, you know, the need for large load. And so I think that's the—that's why PJM has been an advocate of the bilateral process, because it's, you know, trying to, trying to facilitate, uh, the load, uh, and generation to come together in it.

Operator: Thank you. Our next question or comment comes from the line of Ben Pham from BMO. Mr. Pham, your line is open.

Perfect. Thanks guys.

Ben Pham: Hi, morning, team. First question, I wanted to ask on slide 10 of the presentation on the Wild Bird. You have a 2 gigawatt figure you've highlighted on unrealized infrastructure. Are you assuming then that that amount, 1.2 gig phase one to 0.8 gigawatts, you expecting that not to fall under the bring your own generation?

Thank you. Comes from the line of Benjamin. Fam from Emomr. Fam, your line is open.

My first question—I wanted to ask: on slide 10 of the presentation on the Wild Bird, you have a 2 gigawatt figure that you've highlighted under U.S. infrastructure.

Are you receiving uh there that uh that amount 1.2 gig?

Phase 1, the 28 gigawatts you expecting that not to fall under under the bring your own generation.

Avik Dey: Thanks, Ben. I would describe it differently. I would say it's our, you know, zoom out look into Alberta, and when you combine the phase one plus MSSC and available generation, then we think that the capacity is closer to 2. When the phase one was announced, we were consistent with that messaging as well. You know, in our view, that number is closer to 2. There's that wiggle room between the 1.2 that was announced and 2, which we, you know, we expect some accommodation through the phase two dialogue as well. I would take that as a general comment on the market and our confidence around capacity being available in Alberta without compromising affordability to the ratepayer.

Thanks Ben. I I would describe it differently, I would say it's our you know zoom out look into Alberta and when you combine the phase 1, plus MSS MSD uh and available generation. Uh, then we think that the capacity is closer to 2

So I when when Phase 1 was announced we were consistent with that messaging as well. Uh, you know, in our view that number is closer to Due. Uh and so there's that wiggle room uh, between the 1.2 that was announced and 2.

Which, you know, we expect some accommodation through the Phase 2 dialogue as well.

Ben Pham: Okay. Got it. You also mentioned the CER and also the MOU potentially improving the odds of a data center build-out or supporting it. Can you clarify what you meant by that?

so, I would take that as a general comment on the market and our confidence, uh, around capacity being available in Alberta without compromising affordability, to the rate payer

Avik Dey: Yeah. Look, I think the MOU is very important in terms of encouraging new build gas generation. I think our ability to take some or any merchant risk around a new build in Alberta will be predicated on our ability to operate a gas plant for the life of that asset. The importance of repealing CER for Alberta is critical to that. It doesn't mean we can't build plant gas explicitly for behind-the-fence data centers, but I think, you know, the repeal of it is a opens the market for broader commercial opportunities.

Okay. Got it. And and you also mentioned the CR and and also the mou to actually improving the the odds of a data center build it or supporting it. Can you can you clarify what you meant that?

Avik Dey: I think our positioning in Alberta, as one of the largest generators and with the most efficient fleet that's effectively providing base load into the market, we're best positioned to price that marginal megawatt, contract that marginal megawatt, and provide, you know, energy services through long-term offtakes to large customers.

Yeah, look, I think it's the mou uh, is very important in terms of encouraging new build gas generation. I think our ability to take some, or any Merchant Mis around the new build in Alberta will be predicated on our ability, to operate a gas plan for the life of that asset. And so, the importance of repealing C for Alberta is critical to that, uh, it doesn't mean we can't build 1 Gap explicitly for, uh, behind the fence data centers, but I think, you know, the repeal of it, uh, is a, uh, opens the market for for broader commercial opportunities and I think our positioning in Alberta, uh, as 1 of the largest generators. And with most efficiently, that's effectively providing base loaded into the market. We're best positioned to price that marginal megawatt contract that marginal megawatt, uh, and provide, you know, energy sources through long.

Term law Stakes to large customers.

Ben Pham: Okay. Got it. Maybe one more just last one. Staying with Alberta, you have your updated hedge for 2028, and I noticed the forward curves have dropped dramatically since the last presentation ahead of the quarter. I mean, just maybe talk about directionally your thought process with hedging a certain percentage versus leaving it open, how you think about just where Alberta power prices could be going.

No, maybe 1 or just this last 1 stainless Alberta, you have your updated hitch for 2028 and get and no notice that the 4 curves have dropped dramatically since the the last presentation it had a quarter just maybe talk about just directional your your thought process with uh edging.

Avik Dey: Yeah. I think first and foremost, our commitment to our balance sheet strength and our IG credit rating is paramount and, you know, maintaining stable cash flows for the company. Our general approach to hedging has not changed in terms of 80, 65, 50, year one, year two, year three. That approach has not changed, and it will be consistent with that. I think strategically as we look at it, we do have flexibility at the enterprise level, in particular now that we're more diversified as a company. We will hold to that to maintain stable cash flows and maintain our approach to our balance sheet strength.

Certain percentage versus leaving it open—how do you think about this? Where the power presses could be going.

Avik Dey: Now that we've got more exposure in more markets and we've nearly doubled in size in terms of capacity over the last 3 years, we do have more leverage to pull, to take advantage of that contracted merchant exposure and how to optimize that. I know it's not a direct answer to your question on what and how much, but I would emphasize that fact as we think about going out in that curve, in particular year 2, year 3, and beyond. We will stay consistent to the 80, 65, 50, but the constitution of what we're hedging where, we've got flexibility to optimize given our merchant exposure effectively in PJM, Alberta, and CAISO.

Yeah, I think first and foremost. So I commitment to our balance sheet strength and our IG credit rating is Paramount and, you know, maintaining a stable cash flows for the company. So our general approach to hedging uh has not changed in terms of 86550 year 1 year, 2 year 3, uh so that approach has not changed and it will be consistent with that. Uh I think strategically as we look at it we do have flexibility at the Enterprise level in particular now that we're more Diversified as a company. So we will hold to that to maintain stable cash flows uh and maintain our approach to our balance sheet strength but now that we've got more exposure and more markets. And we've nearly doubled in size in terms of capacity over the last 3 years. We do have more leverage to pull uh to take advantage of uh that contracted merchants and the culture and how to optimize that. So I know it's not a direct answer to your question on what?

Ben Pham: Okay. Got it. Very helpful. Thank you.

And how much, but I would emphasize that fact as we think about going out in that curve in particular year, 2 year, 3 and Beyond, we will stay consistent to the 8065. 50, but the constitution of what we're hedging where, uh, we've got flexibility to optimize given our Merchants exposure effectively in PGM, Alberta and Kao.

Operator: Thank you. Our next question or comment comes from the line of Maurice Choy from RBC Capital Markets. Mr. Choy, your line is now open.

Okay, got it. Very helpful. Thank you.

Maurice Choy: Thank you. Good morning, everyone. Just following up on the last question. Like, notwithstanding all the regulatory progress and the structural advantage of the Alberta, you know, obviously the 2028 onwards forward is still only a touch higher than current year being about high 50s, low 60s. Maybe just focusing on the power price alone and not the hedges, like, how would you characterize these forwards? Directionally, what do you think the market's missing?

Next question comes from the line of Maurice, Troy from RBC Capital markets, Mr. Troy, your line is now. Open.

Thank you, and good morning, everyone. I'm just following up on the last question. Like, notwithstanding all the regulatory progress and the structural advantage of Alberta, you know, obviously the 2028 onwards will be just still only a touch higher than the current year, being about high 54 to 60. So maybe just focusing on the power price alone and not hedges—how would you characterize these forwards and, directionally, where do you think the market's missing?

Avik Dey: Thanks, Maurice. We had an interesting look back on this one. If you looked at, you know, historically 2018 or 2020 looking forward into 2023, and the forecast or the forward strip in Alberta, we saw a similar dynamic at play, which is given the lack of liquidity in the back end of the curve and the structural configuration of the market here, the market, where you've got steepness of slope in the curve, there isn't the motivation or incentive to lock in at the back end of the curve when you have steeper contango in that curve. It's not that the market doesn't understand it's given the lack of liquidity, there isn't an incentive to transact. We continue to rely on the fundamentals in our outlook on pricing.

Avik Dey: I would say where you've got the steepness of contango today, what's missing is the understanding of the tightening supply, the tightening of the supply-demand gap here over the next 3 years, and it's underestimating, you know, what the future spot price will be. You know, I can't tell you, Maurice, whether we are going to be at, you know, 80 or 90 in Q1 2028, but I can tell you with a high degree of confidence, we see a tightening market here, and a return to higher pricing, over that 3-year period of time. You know, to defend this question before, that's what we're thinking about in terms of, you know, medium to long-term, you know, hedging and contracting in Alberta. We really like the exposure we have. We think the upside is asymmetric to the upside.

Thank you, Maurice. Uh, we we had an interesting look back on this 1. Uh, and if you look this, you know, historically, 2018 or 2020 looking forward into 2023, uh, and the forecast or the forward strip in Alberta. We saw a similar Dynamic at play, which is given the lack of liquidity in the back end of the curve and those structural, uh, configuration of the market here, the market, uh, where you've got deepness of slope in the curve. There isn't the motivation or incentive to log in at the, at the back end of the curve. When you have steeper contango in backer, and so it's not that the market doesn't understand it, it's given the lack of liquidity. There isn't an incentive to transact, so we continue to rely on the fundamentals, in our outlook, on pricing and I would say where you've got the sweetness of contango today.

Avik Dey: In particular, as we look out at potential new builds in the market, and data center load coming in and continued economic growth in Alberta, which relative to the rest of the country is running well ahead.

It's missing is the, uh, understanding of the tightening Supply, uh, the the tightening of the supply demand Gap here over the next 3 years. And it underestimating, you know what, the future spot price will be. So, you know, I I can't tell you Marie whether we are going to be at, you know, 80 or 90 in q1 2028. But I can tell you with a high degree of confidence. We see a a tightening Market here. Uh and a return to higher pricing uh over that 3 year period of time. And you know, to defend the question before, that's what we're thinking about in terms of, you know, medium the long term, you know, hedging and Contracting in Alberta. We really like the exposure. We have. We think the outside did asymmetrically outside, uh, in particular, uh, as we look out at potential, new builds in the market. Uh, and data center load coming in and continued, uh, you know, economic growth in Alberta which row

Maurice Choy: Just as a quick follow-up to that. When you think about the supply and demand dynamics that drive the timing of this potential spike, maybe supply doesn't come any earlier, but any thoughts on whether or not demand arrives a little later?

to to the rest of the country is, is you know running? Well ahead.

Just as a quick follow up to that when you think of the supply and demand dynamics that drive the timing of this uh potential Spike.

Maybe Supply doesn't come any earlier, but any any thoughts were not demanded a little later.

Avik Dey: Sorry, I don't understand the question. Maybe you could repeat that, Maurice.

Maurice Choy: Obviously phase one anticipates the demand arriving call it 2027, 2028. Maybe the supply to support that new supply, to support that comes closer to the start of the next decade. You know, if you start seeing demand arriving a little bit later, then perhaps you don't see the spike in price, perhaps later in the decade than 2028.

Sorry, I don't understand the question. Maybe you could repeat that 1.

Avik Dey: Yeah, it's an interesting, it's an interesting point. If you look at the existing market structure, and how the marginal electron is priced. By the way, there's a similar dynamic at play in PJM, where you had a 2-year BRA auction. You know, historically, that was enough to incent, you know, generators to go into new builds because the cycle of the consecutive BRA auctions allowed you enough visibility to FID build in 2 to 3 years, and then play into that market dynamic. In Alberta, the dynamic is similar, but there's no capacity payment to incent new builds. Historically, the merchant market responded to higher pricing, but we had 2 to 3-year cycle times between FID and COD.

So, uh, obviously Phase 1 anticipates the demand, rotting, calling something 8, um, and then maybe just apply, uh, to support the new supply to support that comes closer to the start of the next decade. Um, you know, if you start seeing them arriving a little bit later, then perhaps you don't see the spike in price, um, perhaps later in the decade than to meet.

Avik Dey: Today, where that cycle time is four to five years and the cost of new build is two to three times what it was five years ago, I don't think the response time or the elasticity of supply matching demand is the same as it once was. I think what that means for your question is that the matching of new load to new supply, you and we will all have much more visibility on in the marketplace.

Yeah. It's an interesting. It's an interesting point, and if you look at the existing Market structure, uh, and how the marginal electron is priced, and by the way, there's a similar Dynamic, at play in pjm where you had a 2-year bra option, you know, historically, that was enough to invent, you know, generators to go into new builds because the cycle of the consecutive VRA auctions, allowed you enough visibility to FID build in 2 to 3 years. Uh, and then play into that into that market dynamic in Alberta. The dynamic is similar, but there's no capacity payment to incent new goals. So historically, the merchants Market responded to higher pricing, but we had 2 to 3 year cycle times between FID and pod. And so,

Avik Dey: If prices run in Alberta in this merchant market, the probability of seeing new merchant capacity coming in and coming online and dampening the back end of the curve, in the back end I mean year two, year three, year four, we don't see as viable as it once was just because, you know, lead time, supply chain, construction times are much longer for a new build. The resilience of this market, from a pricing perspective, is looking actually pretty favorable for us.

Maurice Choy: That makes a lot of sense. If I could just finish off with a broader Canadian question. Yesterday we saw the federal government unveil a number of pillars for its forthcoming national AI strategy. Just wondering what your first takes are of this framework, in particular, you know, whether any difference to the Alberta government's approach may mean better opportunities for Capital Power outside of Alberta.

Is that the matching of new load to new Supply you and we will all have much more visibility on in the marketplace. So if price is run in Alberta in this Merchant Market, the probability of seeing new Merchant capacity, coming in and coming online and dampening, the back end of the curve and the back end. I mean year 2 year, 3 year 4, uh we don't see as viable as it once was just because you know, lead time. So I changed uh, construction times are much longer for new builds, so the resilience of this Market uh for a pricing perspective. Um is is is is is looking actually pretty favorable for us.

Avik Dey: Well, to talk my own book here, Maurice, I think we continue to believe Genesee is one of the most attractive sites to host a data center in North America. We're in the business of selling power, so it's not incumbent upon us to do it at the site, but the opportunity there exists. I do believe there's strong alignment between the province of Alberta and the feds around facilitating investment in AI, creating a sovereign data strategy for Canada, and I think we can play a part in that. I think the federal government's push to facilitate capital investment, expedite approval process is all in favor of that. I think the good news in Alberta is that train has already left the station in terms of Alberta's support of data center capacity, you know, phase one, going into phase two.

It makes sense. Um, if I could just finish off with a, a broader Canadian question yesterday we saw the federal government unveil a number of pillars for its forthcoming. National AI strategy just wondering what your first takes are of this framework and particular, you know, whether any difference to the output of government's approach, May mean better opportunities for Capital power, outside of Alberta.

Well, uh, to talk my own book here. Maurice, I think we continue to believe Genesis is one of the most attractive bites to host a data center in North America. Now, we're in the business of selling power, uh, so it's not incumbent upon us to do it at the site, but the opportunity—

Avik Dey: I think any further alignment between federal support for sovereign data centers and Alberta's continued welcoming of that industry without compromising reliability for consumers is moving in that direction. I think yesterday was a positive in that regard. I think the next step, though, is how do we move that into, we need 250 MW or 500 MW, and we need a COD by X date. I think those are conversations all of us are part of.

There exists. I do believe there are strong alignment between the province of Alberta and the FEDS around facilitating investment. In AI, creating a sovereign data strategy for Canada and I think we can play a part in that. Um, and I think the federal government's push to facilitate capital investment, expedite approval process is all in favor of that. I think the good news in Alberta is that train has already left the station in terms of Alberta support of Data Center capacity, you know, Phase 1, uh going into phase 2. Um, but I think any further alignment between Federal support for uh, Sovereign data centers, uh, and Alberta's continued, you know, welcoming of that industry without compromising, reliability for consumers, uh, is moving in the in that direction. So I think yesterday was a positive in that regard. I think the next step though is how do we move that into, you know, we need

You know, 250 megawatts or 500 megawatts, and we need a COD by '88, and I think those are conversations, you know, all of us are a part of.

Maurice Choy: Thanks for that. My congratulations to Kevin, Andrew, and Mike for the appointments and best of luck to Steve for upcoming retirement.

Thanks. So then, my congratulations to Kevin, Andrew, and Mike for the appointments, and best of luck to Steve for the upcoming retirement.

Avik Dey: Thank you, Maurice.

Operator: Thank you. Again, ladies and gentlemen, if you have a question or comment at this time, please press star one one on your telephone keypad. Our next question or comment comes from the line of Patrick Kenny from NBCM. Mr. Kenny, your line is now open.

Thank you, Maurice.

Thank you again, ladies and gentlemen, if you have a question or comment at this time, please press star 1. 1 on your telephone keypad. Our next question, or comment comes from the line of Patrick Kenny from nbcm Mr. Kenny, your line is now open.

Patrick Kenny: Thank you. Good morning, everyone. Just on the East-West transmission build-out discussion these days for national security, I was just wondering, you know, as an incumbent IPP here in Alberta, what you see as some of the major benefits or drawbacks to expanding intertie capacity and, you know, how you might be positioning the company to either capitalize on these market opportunities or, you know, mitigate risks associated with more interties down the road, whether it be East-West or North-South.

Thank you. Uh, good morning, everyone.

On the uh, the West transmission buildout discussion. These days for National Security. I was just wondering

You know, as an incumbent IPP here in Alberta, um,

What do you see as some of the major benefits or drawbacks to expanding intertie capacity? And, you know, how you might be positioning the company to either capitalize on these market opportunities or, you know, how many risks are associated with, um, more interties down the road, whether it be east-west or north-south?

Avik Dey: Hi, Pat. Thanks for the question. Look, I think from an intertie question, to the extent it's a national security issue, and there's support for it amongst provinces, you know, we are and will continue to be an active player in the conversation. You know, Alberta is an islanded power market. It's facilitated by, you know, a base load that's supported by ratepayers for transmission distribution, but it's also supported by generators through private investment. You know, how that works in a market with interties, where you've got different constituents, I think is an important consideration because you don't want to undermine any of the existing market structures that exist that support the build-out and ownership of that infrastructure.

Hi Pat, thanks for the question. Look, I think from an inter tight question to the extent. It's a national security issue. Uh, and their support, uh for it amongst provinces, you know, we are and will continue to be inactive player in the conversation. Um, but you know,

Avik Dey: If one province is funded through a crown, all by ratepayers, and the other market is supported by private industry, and ratepayers for transmission distribution, you've got to find an equitable and equitable way to manage that on behalf of both markets, because you can't compromise the market structure in one versus the other. I don't look at the intertie conversation as a threat. I think more infrastructure that connects the country and provides better reliability and affordability for customers and encourages new infrastructure build and new industrial productive capacity. Those are exactly the conversations we should be having as businesses across the country. But, you know, we've got to work through the details to understand, you know, how it impacts each individual jurisdiction and, you know, how it ultimately benefits the whole.

Infrastructure. So, if one moment is funded through a crown, all by rate payers, and the other market is supported by private industry, and repairs for transmission and distribution, you've got to find an equitable and equitable way to manage that on behalf of both markets. Because you can't compromise the market structure in one versus the other.

Avik Dey: It's, it's something that we're actively in conversations around. We're having input on those conversations, but in itself, I don't see it as a threat because I think, you know, ultimately, if it does go through, and I think the economics of it are very, very tough. You know, I'll remind, you know, our country, in terms of, we're 40 million people, just over 2 trillion of annual GDP, and that GDP is half the size of California's.

So I don't look at uh the intertype conversation as a threat. I think more infrastructure uh that connects the country, uh, and provides better reliability and affordability for for customers and encourages, uh, new infrastructure, build and new industrial productive capacity. Those are exactly the conversations. We should be having as businesses across the country. Um, but you know, we've got to work through the details to understand, you know, how it impacts uh, each individual jurisdiction and you know how it ultimately benefits. Uh the whole

So it's it's something that we're actively in conversations around. Uh, we we're having input on those conversations but it itself, I don't see it as a threat because I think it's going, you know, ultimately if it if it does go through. Um and I think the economics of it are very, very tough, you know, I'll remind, you know, our our country's uh, in terms of yeah we're 40 million people uh just over 2 billion of annual GDP. Uh, and

Avik Dey: To be able to invest in such a significant amount of infrastructure where you've got relatively small markets, province to province, trying to connect with, you know, coasts, where a lot of the economic activity occur, the intertie in itself may not be a great value proposition for the ratepayer, and we just have to understand how that all will work.

You know, that GDP is half the size of, uh, California. So, to be able to invest in such a significant amount of infrastructure where you've got relatively small markets Province to Province, trying to connect with, you know, uh, close, uh, where a lot of the economic activity or the intertie in itself. May not be a great value proposition for the rate, payer, we just have to understand how that all will work.

Patrick Kenny: Got it. Appreciate all that color. Maybe just a housekeeping question here on your recontracting outlook. I know it's a relatively small part of the portfolio, but given the contract is expiring in 6 months or so, I believe. Any update on extending the Island Generation facility with BC Hydro or, I guess how you might be looking to monetize or maximize value of the asset if, you know, recontracting doesn't work out?

Avik Dey: We're looking at a number of alternatives on Island Generation, but we don't have an update on that at this point. I would note your comment, it's, you know, relatively small in terms of our overall portfolio and contribution.

Got it. Uh appreciate all the color. Um and then maybe just a housekeeping question here on the recontracting Outlook. I know it's uh, relatively small part of the portfolio but even the contract is expiring in 6 months or so. I believe any update on extending the island generation facility with BC Hydro or um I guess how you might be looking to monetize maximize value of the asset if, you know, recontracting doesn't work out.

We are looking at a number of alternatives on island generation, but we don't have any an update on that at this point.

but I would note your comment is, you know, relatively small

uh, in terms of our overall portfolio and contribution,

Patrick Kenny: Okay, great. I'll leave it there. Thanks.

Be great. I'll leave a good, thanks.

Operator: Thank you. Our next question or comment comes from the line of John Mould from TD Cowen. Mr. Mould, your line is now open.

Thank you. Our next question, comment from John Mold at TD Cowen. Mr. Mold, your line is now open.

John Mould: Hi. Good morning, everybody. Maybe just, starting with Genesee and the 466 MW grid export cap from the MSSC. You did some testing above 466 MW earlier this year and also in 2025. Can you give us an update on how this initiative is going and when you think you might reach the milestone of being able to export 100 MW or 200 MW above that 466 MW into the grid?

Avik Dey: Yeah. Thanks for the question, John Mould. We continue to be in a process of testing on that. We've had, as you noted, we've had preliminary tests, and it's an active program that we are working in partnership with the AESO to advance approval of. We remain confident in getting additional megawatts online, and we, you know, hope to provide a further update as testing continues through the year. I don't have a specific update on when and how much other than, you know, we hope to have an update on that through this year. The initial testing, you know, it's moving forward and advancing in a favorable way, but we've got work to do, and we're working in partnership with the AESO on that.

Hi, good morning, everybody. Um, just, uh, starting with Fantasy and the 466 megawatt created—the export cap from the MSSC. You just have been testing above 466 megawatts earlier this year. And also, in 2025, can you give us an update on how this initiative is going? And when you think you might reach the milestone of being able to export 100 or 200 megawatts of that 466 megawatts into the grid?

Yeah, thanks for the question, John. We continue to be in a process of testing, uh, on that we've got as you noted and we've had preliminary tests, um, and it's an active program that we are working in partnership with the iso to advance approval of. Um, we remain confident in getting additional megawatts, uh, online. Uh, and we've, you know, hope to provide a further update as testing continues through the year, but I don't have a specific update on when and how much other than you know we could we hope to have an update on that through this year with the initial testing, uh, you know

John Mould: Okay, thanks for that. Just a bigger picture question on organic development, either renewables or gas and storage. Most of your development pipeline will be complete by the end of this year. I think you've just got one project due online early in 2027. What kind of opportunities are you seeing to backfill that organic pipeline, and how do the potential returns compare with what you see in M&A markets right now?

It's moving forward and advancing in a available way. But we've got work to do, and we're working in partnership with the ISO on that.

Avik Dey: I think we continue to be bullish on the opportunity to develop. I think, as we came out from under the repowering project, which was our largest CapEx project we've ever undertaken as a company at Genesee, our focus shifted towards our renewable development. As we've expanded and grown the company, I think we see a very compelling opportunity to develop around development. I think the best example of that is the backstop option in terms of what we're starting to see in the market. We're starting to see longer term PPAs associated with data centers and/or load serving entities looking to secure long-term supply. At our investor day, we said we've got about a gigawatt of development pipeline for our company.

In uh, in na markets right now.

Avik Dey: I would say in earnest, we're really focusing on trying to grow that pipeline this year going forward. I would expect that that's going to be a growing focus for us. In terms of relative returns to acquiring, I think it's a trade-off of duration and tail and contractiness versus short-term realizing of short-term pricing. The reality is we have to have a balance of both. I think what we're seeing in greenfield development is, you know, commensurate with us delivering 13% to 15% shareholder returns over time. We think our cost to capital is competitive. We think there's, you know, a number of opportunities on both, and all three actually, renewable storage as well as gas.

I, I think we continue to be, uh, bullish on the opportunity to develop. I think, you know, as we come came out from under the repowering project which was our largest cap exposure, we've ever undertaken as a company and Genesis, um, you know, our Focus shifted towards our renewable development, uh, and then we've expanded and grown the company. I think we see very compelling opportunity to develop, uh, around development. Um, I think, you know, the best example of that is the back stop option. Uh, in terms of what we're starting to see in the market, we're starting to see a lot longer term ppas, uh, associated with data centers, uh Andor, you know, load serving entities, looking to secure long-term Supply. Um, so, you know, as our investor day, you know, we we said we've got about a, a gigawatt of development pipeline for our company. And I would say,

In in Earnest, we're really focusing on trying to grow that pipeline, uh, this year going forward. So I would expect that that's going to be a growing Focus, uh, for us, um, in terms of relative returns to acquiring. Um, I think it's a trade-off of operation and Dale, and contract in this versus short-term realizing a short-term policing and the reality is we have to have a balance of both. Um, but I think

Avik Dey: We're, you know, trying to ramp up our origination efforts in building that pipeline. That's a key focus for us now, I think, given where we are as a company.

What we're seeing in in Greenfield development is you know, commensurate with us uh delivering 13 to 15%. Shareholder return over time. So we think our cost of capital is competitive. Um, we think there's uh, you know, a number of opportunities on both and all 3 actually renewable storage as well as uh gas and we're you know, trying to trying to ramp up our origination efforts in building that pipeline.

John Mould: Okay. I'll leave it there. Thanks very much for taking my questions.

So that's like that's a key Focus for us now, given where we are as a company.

Operator: Thank you. Our next question or comment comes from the line of Mark Jarvi from CIBC. Mr. Jarvi, your line is now open.

Okay, I'll leave it there. Thanks very much for taking my questions.

Thank you. Our next question or comment comes from the line of Mark Jarvy from CIBC. Mr. Jarvy, your line is now open.

Mark Jarvi: To the conversation about the 2 GW view you guys have for Alberta versus the 1.2 in Phase 1. Just curious when you think you'll get some clarity on that or on the Phase 2, 2A? We've seen some working documents from the AESO. Just your view on the 4 MW at Genesee being deemed potentially net new megawatts?

Avik Dey: I think our dialogue has been constructive and collaborative on that front on phase two. We don't have a defined view on timing other than what the AESO has announced in terms of directional timing. In terms of unlocking our megawatts over and above 466 MW, our expectation is that would be considered net new megawatts. You know, we believe the dialogue should remain consistent with that. You know, I think everyone. I think one of the reasons we're so bullish on Alberta and on data centers relative to other markets is, you know, Alberta is one of the only jurisdictions right now that at a high level, we may not have agreed on all the different pieces of how we're executing it.

To the conversation about the 2-gigawatt view you guys have for Alberta versus the 1.2 and Phase 1, just curious when you think you'll get some clarity on that or on the Phase 2, 2A? We've seen some working documents from the ASO and just your view on the form of megawatt gen being potentially net new megawatts.

I think, I think our dialogue has been constructive and collaborative on that, run on Phase 2. Uh, we don't have, uh, a defined view on timing. Other than what the iso is a noun in terms of directional timing. But in terms of unlocking, our megawatts over and above 466, um, our expectation is that would be considered

Avik Dey: At a high level, there's alignment between, you know, government, regulator, and industry, on, you know, on how to build and bring in new load into this market structure.

Mark Jarvi: Okay. You obviously got the MOU out there for Genesee. Are there any other conversations you're having with data center customers around something else for Genesee, whether it's just offtake or co-location? Has anything changed in the last couple of months?

That you make a lot. Um and you know we we believe the dialogue between creative consistent with that. So you know I I think everyone I think 1 of the reasons we're so bullish on Alberta and on data centers, relative to other markets is you know, Alberta is 1 of the only jurisdictions right now that has a high level, may not have agreed on all of the, the differences of how we're executing it. But at a high level, there's alignment between, you know, government regulator and Industry, uh, on, you know, on how to build uh and bring in new load into into this Market structure.

Avik Dey: We have multiple conversations ongoing in Alberta around whether it's offtake or co-location with data centers. That actually hasn't changed in the last year and a half. They continue to be, you know, active conversations, not just, you know, passing ones. Yeah, we continue to be just as bullish as we were on the opportunity set, and we're actively working it.

Okay, and then, you know, obviously you got the mou out there for genese. Are there any other conversations you're having with data center customers around something else for Genesis? Whether it's just off take or co-location cuz I think changing the last couple months.

Mark Jarvi: Would the view be with some clarity on phase two, CER, the Alberta MOU being finalized, those conversations can move to the next phase?

We have multiple conversations ongoing uh in Alberta around whether it's uptick or collocation, data sets that actually hasn't changed uh in the last year and a half. Um and they continue to be, you know, active conversations, not just, you know, passing ones. Um, so yeah, we continue to be just as bullish as we work uh, on the opportunities that are more actively working it.

And with the view with some clarity on Day 2, C, the Albert mou being finalized, those conversations can move to the next phase.

Avik Dey: Yeah, I think, you know, Well, if you're looking to stage gates, I would say.

Mark Jarvi: Yeah

Avik Dey: Those are two critical stage gates. You know, I mean, we've been in a position to move quickly at Genesee for a year and a half. Our ability, we've done the work, we have a site, we know, you know, what a site plan looks like. We continue to be in an, I think, in an enviable position to contract to anyone who wants to secure, you know, long-term energy here in Alberta on any project that they're pursuing, whether it's on our site or otherwise.

Avik Dey: For us, you know, it's really, it's similar to the conversation we were having on recontracting in many ways. The arithmetic and the evaluation of how do we maximize net present value per kW at the Genesee site, we're balancing everything there, which is, we see a tightening market, we see a favorable energy market forming in 2028 to 2030. We've got expansion capacity at the site. We've got unlocked megawatts, and it's just balancing whether we use those megawatts to support, you know, a 10-plus year, you know, offtake with someone else on someone else's site, or someone looking for long-term supply, or we use some of those unused megawatts for someone who's co-locating. I really like our positioning in Alberta right now.

If you, if you're looking to Stage Gates, I would say those are 2 critical stage Gates. So, you know, I think, I mean, we've been in a position to move quickly at Genesis, for a year and a half. So our ability, we've done the work, we have a site. We know um, you know what, what a site plan looks like, uh and we continue to be in an I think in an enviable position to contract to anyone in every anyone who wants to secure a, you know, long-term energy. Uh, here in Alberta on any project uh that they're pursuing whether it's on our site or otherwise. So for us, you know it's really it's kind it's similar to the conversation. We were having on recontracting you know in many ways the arithmetic and the evaluation of how do we maximize net present value for KW at the Genesis site? Um we're balancing everything there which is we see a tightening Market, we see a

Avik Dey: I think we're in a very good position on Genesee, where we've got multiple levers to play, and we've got the flexibility to play them.

Favorable, energy Market forming in 2830. We've got expansion capacity at the site. We've got unlocked megawatts and it's just balancing whether we use those megawatts to support, you know, a 10 plus year, you know, offtake with someone else on someone else's site uh, or someone looking for long-term Supply or we use some of those unused make blocks for someone who's co-locating. So I I really like our positioning in Alberta right now.

Mark Jarvi: Maybe I have a last question, just how would you sort of rank, or contrast, compare confidence level or probability of the MOUs for the data centers at Genesee versus Midland today turning into a definitive contract? Do they feel like they're on similar paths in probability, does one feel you have a higher confidence that this is going to progress to a final contract?

I think we're in a very good position on Genesis, where we've got multiple levers of play, and we've got the flexibility to play them.

Avik Dey: Well, I would answer it differently. I would say, what's our probability of contracting and maximizing value of megawatt at either plant? I would say very, very high. You know, on MCV versus Genesee, MCV, we're advancing. I'd say there's high confidence we're gonna contract those megawatts. At, you know, we're advancing the MOU on the data center, but, you know, we've got, you know, uncontracted capacity, you know, that we'll ultimately optimize. That's advancing, and we continue to advance Alberta. I would note we started the MCV process, well, over a year after we started looking at Genesee as a site.

And then maybe you have a lot of question, just, how would you sort of rank or contrast compare confidence level probability of the mou for the data centers at Genesis Midland today? Turning into a different of contract. Do they feel like they're on similar paths and probability or 1 field? You have a higher confidence that this is going to for us to a final contract

Well, I would answer it differently. I would say what's our probability of contracting and maximizing value of megawatt at either plant? I would say very, very high. So, you know, on MCV versus Genesee and CV we're advancing, I'd say there's high confidence we're going to contract those megawatts.

Avik Dey: MCV has greatly benefited from all of the learnings we've had at Genesee and in Alberta, and we've actually, you know, come up from behind very quickly at MCV, right, our team, in terms of working with potential customers there. You know, I think, you know, for us, that's one of our advantages. We've been at this since 2023 on multiple sites across North America, and we've been talking to all of the customers around what their site requirements are, what their ramp schedules are, you know, what their reliability needs are, and, you know, even what their site configurations and power solutions they require. We feel pretty good about, you know, how we can serve the ultimate customer here.

Um, so at, you know, we're advancing the mou on data center, but, you know, we've got, you know, on uncontracted capacity, um, you know, that that will ultimately optimize. So, that's advancing and we continue to advance Alberta. I would know. We started at the MCV process, uh, well over a year, after we started, um, looking at, uh, genesy as a site. So MCV has greatly benefited from all of the learnings we've had at Jesse and and in Alberta and we've actually you know, come up from behind very quickly at MCV, I know our team in terms of working with potential uh customers there. So I think you know for us I want to

Mark Jarvi: Okay. Appreciate that. Thanks.

Of our advantages we've been at this since 23 on multiple sites across North America. And we've been talking to all of the customers around, what their site requirements are, what the rep schedules are? You know what the reliabilities needs are? And you know, even what their site configuration, um, and Power Solutions they require. So we feel pretty good about um, you know, how we can serve the ultimate customer here.

Operator: Thank you. I'm showing no additional questions in the queue at this time. I'd like to turn the conference back over to Mr. Roy Arthur for any closing remarks.

Okay, appreciate that. Thanks.

Roy Arthur: Thank you, operator. If there are no more questions, we will conclude our conference call. Thank you once again for joining us and for your continued interest in Capital Power. Today's presentation and webcast will be made available on our website. Have a great day.

Thanks. Thank you. I'm sure. No additional questions to you at this time, I'd like to turn the conference back over to Mr. Roy author, for any closing remarks.

Operator: Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone, have a wonderful day.

Thank you, operator. There are no more questions. We will conclude our conference call. Thank you once again for joining us and for your continued interest in Capital Power. Today's presentation and webcast will be made available on our website. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program; you may now disconnect. Everyone, have a wonderful day.