2025 Q2 Transcript

Corporate Participants

Please go ahead, sir.

Roy Arthur

Vice President Strategic Planning and Roy Arthur

Investor Relations Good morning, everyone. My name is

Roy Arthur, Vice President, Strategy,

Avik Dey Planning and Investor Relations. Thank

President and Chief Executive Officer you for joining us to review Capital

Power's second quarter 2025 results

Sandra Haskins which we published earlier today.

Senior Vice President, Finance and

Chief Financial Officer Our second quarter report and presentation for this conference call are

Participants

available on our website. During today's

Robert Hope call our President and CEO, Avik Dey,

Scotiabank will provide an update on our business.

Tanner James Following that, Sandra Haskins, SVP,

Jefferies Finance and CFO, will review the quarter end and year-to-date financials

Mark Jarvi for the company in addition to our

CIBC revised guidance for 2025. Avik will then conclude the formal part of the

Maurice Choy presentation before we open the floor to

RBC Capital Markets questions from analysts and our interactive Q&A.

Patrick Kenny

National Bank Financial Before we start, I would like to remind everyone that certain statements about

John Miller future events made on the call are

TD Cowen forward-looking in nature and are based on certain assumptions and analysis

Benjamin Pham made by the company. Actual results

BMO Capital Markets could differ materially from the company's expectations due to material

Operator risks and uncertainties associated with

Thank you for standing by. And our business. welcome to the Capital Power

Corporation’s Second Quarter 2025 Please refer to the cautionary statement

Analyst Conference Call. on forward-looking information on Slide

3 or our regulatory filings available on

(Operator Instructions) SEDAR Plus.

Please note that today's conference may be recorded. In today's discussion, we will be referring to various non-GAAP financial measures and ratios also noted on Slide approximately 610 megawatts of

3. These measures are not defined capacity, delivering nine terawatt hours financial measures according to GAAP of power across our strategically and do not have standardized meanings positioned portfolio including prescribed by GAAP and therefore are contributions from our newly acquired unlikely to be comparable to similar PJM assets. measures used by other enterprises.

And lastly, continuing to deliver

These measures are provided to operational excellence by optimizing complement the GAAP measures, which and maintaining our assets, completing are provided in the analysis of the 62% of our scheduled outage days for company's financial results from the year. This includes 18 planned management's perspective. turnarounds, 14 on our flexible

Reconciliations of these non-GAAP generation assets and 4 on our financial measures to their nearest renewable fleet.

GAAP measures can be found in our quarterly financial statements. In summary, we continue to make tangible progress in delivering on our

We acknowledge that Capital Power's strategy. None of this would be possible head office in Edmonton is located without the enormous contribution of our within the traditional and contemporary people from our exceptional operational home of many Indigenous Peoples of staff to our corporate services team and

Treaty 6 Region and the Métis Nation of everyone in between.

Alberta Region 4, we acknowledge the diverse Indigenous communities that are Capital Power is truly a leading North in these areas whose presence American independent power producer continues to enrich the community and of scale. Our recent transformation has our lives as we learn about the created a more resilient, diversified and

Indigenous history of the land in which growth-oriented business. anchored by we live and work. one of the most efficient gas fleets in

North America. This, combined with our

With that, I will hand it over to Avik. ability to operate, expand and optimize safely, efficiently and economically,

Avik Dey continues to set us apart from our peers.

Thank you, Roy. Good morning, everyone and thank you for joining us We now have operations across five today. core markets, which means our portfolio is less exposed to the volatility of any

In the second quarter of 2025, we single market, enhancing the stability of announced and closed our largest our cash flows and reinforcing our acquisition to date, adding 2.2 gigawatts investment-grade credit rating. of capacity. This transaction is part of a significant transformation of our During the past three years, we've business over the past three years, maintained our track record of delivering which we will explore in more detail compelling risk-adjusted returns and are throughout the presentation. Key better positioned than ever to grow and highlights from Q2 2025 include create long-term shareholder value. reaching commercial operation on our Between 2022 and 2025 we have

Goreway uprate project with an delivered impressive growth in our U.S. extended contract term to 2035 flexible generation portfolio, positioning progressing growth projects totaling us as one of the top five natural gas

2 | Pag e independent power producers in North maximizing value for an organization

America. like ours. This liquidity means access to a broad, high-quality set of

We've expanded our flexible generation counterparties and enables us to asset base by approximately 5 transact across a wide range of gigawatts and now have over 10 durations in this rising price gigawatts of flexible generation capacity environment. in Canada and the U.S. Our growth has largely been through M&A and Since closing the acquisition, we've concentrated in core markets with moved quickly to implement significant strong fundamentals. We continue to hedges and other contracts covering the see opportunities to acquire generation balance of 2025 and beyond. We've capacity for significantly less cost than executed these at pricing levels aligned new builds. with our business case and at a pace far exceeding what would be possible in

As a result of our significant growth and Alberta. The benefits of a diversified entry into new markets, we now have 12 portfolio are especially clear when we gigawatts of total capacity with no single examine single variable sensitivity to market representing more than 30% of energy price changes in our merchant our portfolio. In each of our core markets. markets, we continue to see strong fundamentals. Growing demand has For example, if we were fully unhedged outpaced additions of new supply a $5 per megawatt hour change in PJM driving increased capacity and energy prices would result in a 4% to 5% prices in regions such as PJM and change in full year adjusted EBITDA. In

MISO and continued growth demand in contrast, the same price movement in

Ontario has resulted in more calls for Alberta would have a smaller impact power. Across our portfolio, re- approximately 3% to 4% going forward. contracting continues to be a strong This is a significant move down from priority for our business. approximately 7% to 8% in 2023.

As we strive to maximize the value of Our other merchant markets in the U.S. the existing generation, current are smaller and contribute even less to fundamentals give us confidence in the overall volatility. So despite having ability to recontract at compelling prices greater merchant capacity in the for longer duration than we have seen in portfolio, we expect reduced volatility of the past. We are engaged in multiple our cash flows. negotiations to extend our current contracts given the growing need for We have already taken steps and will reliable and affordable power across continue to do so to actively manage

North America. risk through hedging in both Alberta and

PJM. Our Genesee repowering project

In PJM, where we have recently added is an excellent example of how our

2.2 gigawatts of generation, there is growth efforts have contributed to our strength in both capacity and energy superior portfolio positioning. pricing. Capacity payments typically represent about a third of the total gross Since 2023, Alberta pool pricing has margin from our PJM business, with the declined by approximately 70%. Despite remainder coming from energy sales. this decline, our 2025 year-to-date clean

PJM is the most liquid power trading spark spreads at Genesee one and two market globally, an important factor for have increased through a combination

3 | Pag e of improved efficiency, lower carbon peers. We operate a younger, more intensity and hedging. Our repowered efficient fleet and important advantage units are now the most efficient in in merchant markets where higher

Canada. efficiency translates into stronger returns across the cycle. Further, the

We've also reduced their carbon younger age of our assets implies a intensity below the Alberta tier longer remaining useful life, which benchmark threshold, which means we enhances our competitiveness for long- currently pay no carbon tax on these term contracting opportunities. These units. Finally, we continue to actively contracts are key to driving both hedge power pricing and input costs to improved returns and greater stability of stabilize returns. our cash flows.

Overall, through our resilient asset base, With that, I will hand it over to Sandra to

Alberta remains a market where we can walk through our funding considerations harvest returns in the short and long and financial results before I conclude term. This includes data center the call and open the floor to questions. opportunities. Genesee is well positioned to benefit from any data Sandra Haskins center demand that comes to the Thanks, Avik. We are proud of our province. growth and how we have funded it.

That said, we continue to believe it Our approach has been balanced and represents one of the most compelling based on our ability to access multiple sites in North America for a gigawatt pools of low-cost capital. Most recently, scale data center to be co-located. It we proudly executed our inaugural U.S. offers a comprehensive solution that debt issuance on the back of getting our balances affordability, and reliability third investment grade credit rating from concerns and allows for a gigawatt scale Fitch at BBB-. data center to move forward in a timely fashion, which is critical in the market This $1.2 billion private offering was today. multiple times oversubscribed for both the 3-year and 10-year tranches.Our

Under ASO's large load interconnection debt maturity profile continues to be well process, a 1-gigawatt project is not laddered, which reduces refinancing risk viable under Phase I. However we will in any given year. From an equity continue to pursue the 1-gigawatt scale perspective, we have been highly option through Phase II and further successful in accessing discrete consultation with government. common equity.

In addition, we chose not to pursue a Our ability to deliver sustainable growing smaller project at Genesee. However dividends while maintaining a low-risk we will pursue opportunities to provide capital structure and investing in high-

PPAs to other DC projects that require a quality growth sets us apart from our generation partner with available IPP peers. Reflecting on our recent dispatchable power today. efforts, we're proud to have completed and achieved commercial operation of

The Genesee repowering project, which our largest growth project, closed the moved us off coal and our accretive largest acquisition in our history and acquisitions have reinforced our strong expanded into a new U.S. market, asset positioning relative to industry increased our dividend by 6%, all while

4 | Pag e remaining within our guardrails from a million from the same period in 2024. payout and leverage perspective. These Key drivers included stronger achievements underscore our strong contributions from our U.S. flexible positioning for continued growth. generation portfolio reflecting full period results from La Paloma and Harquahala

Now let's dive into our Q2 2025 results. which closed February 2024 and the

Capital Power delivered strong financial addition of Hummel Station and Rolling and operational performance. Adjusted Hills, which closed June 2025. Lower

EBITDA was $322 million, which was emissions costs from our Canadian flat year-over-year, driven by the flexible generation portfolio driven by the diversification of our U.S. flexible Genesee repowering and reduced generation contributions offset by the corporate expenses, primarily driven by sell-down of PDN and quality wind in Q4 lower salary costs.

2024 and lower renewable resource in

2025. AFFO reached $235 million, up AFFO totaled $454 million, up $126

$57 million from Q2 2024 driven by million year-over-year, driven by the lower income tax, reduced sustaining same factors noted in the Q2 variance. capital and settlement of coal Most notably, tax recovery, lower compensation. sustaining capital and coal compensation settlement, partially offset

These gains were partially offset by by higher financing costs. Due to the higher financing costs from recent debt addition of Hummel and Rolling Hills to issuances and lower joint venture our portfolio, we have updated our 2025 contributions. Overall, the quarter full year guidance. The revised adjusted reflects our ability to execute our EBITDA range is now projected to be strategic priorities and made between $1.5 billion and $1.65 billion, macroeconomic uncertainty. This slide reflecting nearly seven months of breaks down adjusted EBITDA variance contributions from the newly acquired across our four new reporting segments. PJM assets. The range continues to be supported by our strong long-term

Our U.S. flexible generation is up 10% contracts and prudent risk management in Q2 2025, driven by partial activities across our uncontracted contributions from PJM assets and assets. strong dispatch performance. Our

Canadian flexible generation is up 2%, The revised AFFO range is expected to supported by strong Alberta dispatch be between $950 million and $1.1 and lower emissions costs. Repowered billion, a significant increase from

Genesee units, which incurred minimal original guidance due to the favorable carbon tax enabled margin expansion tax impacts and the newly acquired despite a $5 per megawatt hour drop in assets. Sustaining capital is now captured price. And finally, our forecast between $215 million and $245 renewables portfolio continues to million, covering over 40 planned contribute meaningfully so adjusted outages. These revisions reinforce our

EBITDA declined year-over-year due to confidence in the strategy and our ability lower wind resource in Canada and the to deliver strong financial performance.

U.S. The values in this table are fully consolidated for comparability purposes With that, I will hand it back to Avik to with prior periods. conclude the call.

For the first half of 2025, adjusted

EBITDA was $689 million, up $77

5 | Pag e

Avik Dey opportunity there. Are you able to

Thanks, Sandra. To recap, the monetize your allocation there? And as transformation of our business has part of that, can you make a contingent created a more resilient, diversified and that it is included with some sort of PPA growth-oriented platform with one of the with the eventual buildout there? And I most efficient natural gas fleets in North guess secondly, how should we think

America. Our ability to operate safely, about kind of the timing of Phase II efficiently and economically is what there? distinguishes us from our peers.

Avik Dey

As we look forward, we have multiple Hi Rob, thanks. Let me just start by ways to win from both organic and saying our business in Alberta is inorganic growth perspective. Our Genesee and Genesee is Capital business is comprised of a young and Power. If I was to characterize our efficient fleet strategically positioned in Alberta business, I would say two markets with strong fundamentals. We things. it's resilient and it's positioned for have a proven ability to deliver rooted in growth when growth comes to Alberta. disciplined capital allocation and a strong balance sheet, which has driven And the slide showed just in terms of our compelling 10-year total shareholder our ability to capitalize on lower prices returns of approximately 15% per year. while increasing spark spread. Why that's important for this data center

We are a leading North American conversation? We started on this data independent power producer positioned center journey two years ago in the U.S. to capture value in markets that are We've been incredibly fortunate that expanding. We are excited about the we've been able to learn from our future and the opportunities we see partners amongst data center providers, unfolding in this sector. hyper-scalers, of what's required to build hyper data centers. And so that as a

Before we start Q&A, I'm pleased to preamble, we have incredible flexibility announce that we will be hosting our on the Genesee site.

2025 Investor Day event on December

9&10 in Toronto. We will provide more As a leading generator in Alberta, our details in due course. Capital Power's core business is to provide power. And leadership team is excited to connect so with this Phase I we do expect to be with our investors at this event. able to monetize our capacity by providing power to other data center

We appreciate your continued support projects because that's our role in the of our business. I will now hand it over province and thereby actually preserving to the operator to start Q&A. Thank you. optionality on our site.

Operator Our physical site at Genesee is

(Operator Instructions) incredibly advantaged for a large hyper

Our first question coming from the line data center. We chose not to use that of Robert Hope with Scotiabank. Your 375 megawatts for a smaller data center line is now open. project because our site has the advantage of redundant access to fiber,

Robert Hope which is critical for a large data center.

Morning everyone. Just regarding the

Genesee commentary on the data centers, they're not pursuing a smaller

6 | Pag e

Our site has access to transmission and companies, I've never been involved in distribution that would require no bulk a transaction where we announced system upgrades thereby reducing costs financing closed the transaction of this for power for Albertans. And so size, all in the same quarter. So our preserving that optionality was ability to execute, I think is well important. But make no mistake, we will established. In terms of forward be a participant because we are a opportunity, we're continuing to see preeminent generator in the province. inbounds, both bilateral and auctions.

And those data center projects that require generation partners through And I think what's really separating us is

PPAs, we will likely be a player there. our ability to execute and operate

So hopefully, that answers the question. efficiently and safely because what's underpinning the opportunity to acquire

But it's an important positioning point for assets today is two things. The relative us because for us, data centers are a are between the cost to purchase these new customer for our generation assets and what the cost of new entry is capacity on both sides of the border. In continues to widen.

Alberta, it's unique because we happen to have a very unique physical site. But to be able to capture that value, you need to be able to come in, take

Robert Hope ownership of these assets and steward

Right. Appreciate that. operational efficiencies, uprates, expansions and re-contracting and the

And then maybe just switch gears. broader universe of investors does not

There's a lot going on in the currently. It's not to say they can't build it organization with integration of PJM and but not -- they don't currently have the as well as data centers. When we think same capability and capacity, i.e., the about incremental M&A, do you think people to go execute that. So we feel you have enough horsepower to focus pretty good about the acquisition on transacting in the near term? And pipeline, the expansion pipeline, the re- what does that market look like? contracting pipeline. All of that continues to get more favorable for us as a

Avik Dey company.

Just in PJM or more broadly?.

Operator

Robert Hope Our next question coming from the line

More broadly? of Julien Dumoulin-Smith with Jefferies.

Avik Dey Tanner James

Look, I think we have a 15-year track This is Tanner on for Julian. record of acquiring plants, integrating them, optimizing them, finding up rates So thank you for your commentary on and expansions. Nothing has changed. the re-contracting opportunity. Just a

This journey for us in terms of follow-up to that. Has the tenor of expansion, we identified this as an conversations with existing customers at opportunity at our January 2024 Investor all shifted given the recent inflationary

Day and we've executed against it. data points for electricity prices?

I made this comment to our team this week in my career, having been a serial acquirer and investor in assets and

7 | Pag e

I know last quarter, Avik, you mentioned the accretion figures you initially you're always balancing options and provided? perhaps in the event you can't reach agreements on commercial terms, you Perhaps specifically here kind of given could weigh options for expansion or the age and the composition of Rolling collocation. Has that line of thinking Hills, could there be some opportunity evolved? for some form of optimization or improvement relative to your initial

Avik Dey expectations?

It has evolved only from the standpoint that we're seeing more interest in re- Sandra Haskins contracting and more parties coming to Yes. Thanks for the question, Tanner. the table at our different facilities. But Yes. What we're seeing right now is the context that's changing is we're able having on the assets for just over six to have more comprehensive weeks is that they are performing in line conversations around what a re- with business case currently. But as we contracting looks like whether it's term, noted at the time of the acquisition is it's pricing, it's how do we talk about that we do see the ability for us to further partnerships with potential off optimize and improve and then be able takers. to do upgrades on the site as well.

How do we parlay those conversations So while nothing there is scheduled to into broader discussions, whether it's occur in the immediate term here. We through expansions or upgrade do expect that there will be the same projects? So I think the tailwinds of opportunities with those assets as what increasing demand, reducing reliability we saw with other acquisitions, where and the importance of addressing near- we're able to just find some term grid firming requirements is improvements and increase the opening up a broader opportunity set for accretion on those. re-contracting. All of that is subject to utilities and their IRPs and most And when we think about capital importantly, us having strong working allocation to operate expansions, relationships with those utilities and whatnot, we go into 2026 and the load-serving entities, but we're excited integration continues to go extremely about the opportunity set. well with these assets is that the current development projects now that

We are not in a position to announce repowering is done, Halkirk 2 and our something now but I would say things solar projects in Ontario operates is that are progressing and we continue -- we're going into 2026, with the we're having more conversations and expectation of having over $1 billion of they're moving forward in a positive discretionary cash flow that we'll be able direction. to deploy to uprates to acquisitions to expansion.

Tanner James

Great. Switching gears here. So with that and leveraging that up allows us to do $2 billion in growth

On the PJM acquisition, now that you opportunities next year. without even have the PJM assets in the portfolio, accessing the equity market. So expect you've had a better look at them. Are that there's a lot of opportunity for us there further opportunities for upside to over the next 18 months to announce highly accretive growth initiatives.

8 | Pag e

Operator we have an opportunity to provide a

Our next question is coming from the PPA and participate in Phase II just as a line of Mark Jarvi with CIBC. straight up power provider, which requires no capital on our behalf, just

Mark Jarvi the monetization of megawatts while

And in terms of, I think you mentioned continuing to work with government and you could provide power to other data pursue what we think is -- would be a center operators. How do you balance transformative project, not just for that in terms of maybe locking in some Alberta, but for the country. offtake versus keeping the optionality open for a bigger gigawatt type Mark Jarvi opportunity at Genesee? Just based on the Phase I allocations, your choice to not move forward right

Avik Dey now and maybe a bit longer timeline at

Great question. There's 1,200 Genesee -- what sort of the confidence megawatts that was accounted for by level that you'll actually see that 1,200 the AESO as available for generation for megawatts that excess generation be large loads starting in 2027. That does absorbed by data centers by 28,29 not include the capacity that we timeframe in Alberta? currently have installed at Genesee that's above the 466 MSCC limit. Avik Dey

I can't comment on what others are

So it goes back to the original point I doing. I think we've been in the midst of made around resilience and position for a number of commercial organizations growth in Alberta. We, as a large and feel confident that others are going generator with the most efficient and to be able to execute some smaller largest power plant in Alberta, are in the projects, which we welcome and think is middle of providing critical baseload great news for the province and the power and have the flexibility to contract industry. And look, all new demand that capacity. So in our view, given coming in and new industry coming in to where we stand on T&D and the fact create jobs and bring capital into Alberta that there isn't a significant investment in as positive for the Alberta power

T&D required to co-locate a data center industry. And with Genesee specifically at our site. We believe we've got is positive for consumers around significant flexibility to not just provide electricity pricing which is where our

PPAs to others in the short to medium focus is. So I think there will be projects term but also to pursue the larger done. We'll see where it comes out project on our site with a partner. relative to the 1,200.

I think the key point in all of this is it's But our business in Alberta is resilient, not about the data center. It's about and I go back to the point that 60% of providing power generation to our business is focus in thriving and customers. This has been our core growing U.S. markets. So as we've competency for 15 years in all the demonstrated in 2025, our business, we markets that we play and predominantly increased our spark spread amongst the in our home market, which is Alberta. 70% drop in price in 2025. And why that's important is it positions us well to

So for us, that was our calculus in provide offtakes to new customers in making that decision to either elect, this province. pursue more megawatts and the decision we've ultimately made, which is

9 | Pag e

Mark Jarvi IRPs and trying to firm up infrastructure

Maybe just moving to the U.S. business, build-out over the next decade. It's a talked about re-contracting critical point. If that's the conversations opportunities. We're also seeing on the that are happening amongst load- gas supply, some of the producers, serving entities and RTOs right now. infrastructure firms become more involved on the power side of things. Operator

How do you think that's shaping in terms And our next question coming from the of gas supply, spark spread realization, line of Maurice Choy with RBC Capital are you thinking more longer term, if you Markets. lock in on the power supply that you sort of match that with gas supply under sort Maurice Choy of active dialogue there? Just wanted to come back to the Alberta data center theme here. It's clear that

Avik Dey Phase II is a focus for you and your

There's absolutely active dialogue stock and you previously wrote that. across the entire gas to molecule to there were things in Phase I that were computed megabyte value chain. It's suboptimal. When you look at Phase II, something that we're a huge advocate of what tangibly do you think needs to be because as we said in January 2024, changed for your gigawatt scale data this is all going to be about balanced center opportunities to materialize? energy solutions and how you bring that value chain together. Avik Dey

Maurice, thanks for the question. I think

I think specifically around gas supply Phase II is really going to be dependent midstream contracts and firming up the upon two things. infrastructure to provide gas generation capacity. That's more tied to IRP One, how much capacity remains requests or around new generation available from Phase I to be discussed capacity. We're not seeing that being as in Phase II because Phase II will really relevant to uprates and expansions. So be a conversation around what the glide if you look at our business, which is path is to installed capacity. Phase I is primarily focused on acquiring mid-merit where data centers and data center

CCGTs and peakers and finding ways to providers are going to have to put up a uprate, expand, recontract those the gas deposit to execute projects but the long- supply for the most part, because our term opportunity is how do we create an historic strategy for 15 years has been ecosystem that allows for new going where there's firm gas supply generation build and large-scale data going where there's existing T&D it's centers to be installed and built in the less of a concern in the plants that we're province. targeting.

Why we are so focused on our site as a

But I think it's going to be a critical hyper data center is all the ingredients component to the broader ecosystem as exist for the customer at the end of the it develops. Mid-streamers are going to day this opportunity only exists because have to be part of the conversation for it's an economic one with access to new build upstream companies are market in a timely fashion. It's not a going to have to be part of the business we can create without creating conversation as we continue to look at the economic conditions for those new builds and utilities are considering customers to come in at scale and for that right now. They're looking at their

10 | Pag e duration for an investment that will be in We've been incredibly fortunate with the tens of billions of dollars. deep dialogue with a number of hyper- scalers and data center providers over

So, we will be an active participant in the last two years as this business is

Phase II the government and the AESO maturing rapidly. And what's been clear has been clear that they in their to us is the market is not focused on in- allocation process that they thought the service dates that are 2029, 2030, 2031. smaller allocations were the better way All of the attention of hyper-scalers and to go about it, we're supportive of that. data center providers as it relates to AI-

By virtue of us participating the way we related compute, is laser-focused on hope to participate, but it doesn't take 2027, 2028 and maybe first half of 2029. our foot off the gas of advocacy for this So that's why, for us, preserving the

1,000 megawatt site. So whether it's option value and continuing this

Phase II or it's through further advocacy is important because we've conversations and dialogue to identify a got a 12 gigawatt fleet across North pathway for that 1,000 megawatt site America. we'll continue down that path. And I think it's important also to recognize that We're seeing this play out in different we are not a data center provider. markets. And we believe the best play for us is to continue to advocate for a

We're not in the data center business. quick in-service date and because we've what we're trying to do to what we're got the ingredients at Genesee to trying to do is firm up bringing in new advocate for that. But again I would go demand for the market in Alberta, back to the point in terms of materiality whether it's on our site or someone for us in our business, Alberta is resilient else's we believe that having these large and it's positioned for this growth, sites is in the best interest of all market whether it's our data centers or participants. someone else's.

Maurice Choy Maurice Choy

And maybe just a quick follow-up to that. Understood. Maybe just to finish up on a

I know the system operator is beginning strategy question. its engagement on a long-term framework, perhaps later this year. Is it In your prepared remarks, you fair to say that given that timing any mentioned that you continue to see gigawatt-scale DC announcement you opportunities to acquire generation may make is possibly more of a mid- capacity for significantly less cost than

2026 onwards event? new build. There clearly are some more

PGM assets out there today. So just

Avik Dey your view as to what the gating factors

Well I think there's two there's different are when assessing these opportunities. elements to this, Maurice. For example, how big do you see PJM being as a percentage of your portfolio?

I think the advantage Alberta has today Or whether you need to see the thesis and I've said this publicly and at on Hummel and Rolling Hills play out conferences and multiple meetings with before moving forward more? investors. The advantage Alberta has today is we have a pathway to a large Avik Dey data center that can be in service by Look, I think as I've said before, our

2028. capital allocation process, we've been very clear around how we allocate

11 | Pag e capital, what our return thresholds are coming back online later this year and that above all else is driving where we just how that facility is positioned to deploy capital. participate in future capacity auctions.

We saw the strategic opportunity in PJM Avik Dey because of the market construct, the Yes. Thanks for the question, Pat. Look, size of the market, the complexity of the I think our answer hasn't changed from market with 13 jurisdictions and then the last quarter to this quarter in terms of tailwinds from multiple ways to win in our expectation for the PJM market. terms of demand increase. That clearly has played out, and we've been Obviously this last auction coming out at fortunate in our ability to negotiate and the high end of the range was a surprise close a bilateral transaction of scale in to many but I think the market signals that market. We continue to see from the last auction, the delay and what opportunities to grow there. But I would we're seeing on the demand side, not say that we're sitting here saying certainly, as we said last year, we were

PJM will be four gig or five gig. comfortable with the bookends of the floor and the cap. And I think this

We're sitting here saying, let's go find auction demonstrated that that floor in those opportunities of high-quality the cap was reasonable. At this point, I assets, young CCGTs with a good heat don't expect to see a change in that rate or peaker sites with significant range. I think we're in the same market optionality where they've got existing construct of that $175 million to $325 gas supply access to T&D and an million. opportunity for us to wholesale. That's what we're looking for. So as we've Now with respect to the second part of high-graded overtime I think we your question, whether it's to the mid or continue to see those opportunities in to the high mid to high, I would reaffirm

PJM, MISO and LIC. Obviously, we where we were, like that midpoint when think the opportunity is getting better in we gave our guidance on 5-year

PJM. The market signals there are average, we think is reasonable when excellent. But what's driving our capital you parlay all of the market factors, allocation is going to be plant level design factors around what's happening economics in our outlook against in the market. We, on Rolling Hills I

delivering against three things

uprates, would say six weeks into closing, we expansions and re-contracting. Simple. continue to maintain the same schedule that we had. We've now had a chance to

Operator assess the plant on the opportunity set

Our next question coming from the line around it. Our balanced energy solution of Patrick Kenny with NBF. team has already put forward DC packages and are out to market on

Patrick Kenny those -- so we feel pretty good about

Avik, just back on the recent PJM what our underwrite was. capacity auction clearing above the price cap, do you still see a risk in the I think when we announced the cap coming down over the next two to transaction, we said, look, it would take three auctions through '26? Or perhaps one to two quarters for us to figure out would you see would you have a bias and quantify and qualify what the growth towards the price cap continuing to opportunity set at Rolling Hills was. So move higher? And also, if you had an I'm not in a position to say definitively. update on the unit at Rolling Hills We expect this level of how we'll

12 | Pag e participate in auction versus offtake or Our position on that on the market future expansions, but all indications are overall is on REM, we need clarity. So things are looking favorable for us there. we do have concerns around locational marginal pricing and transmission rights.

Patrick Kenny That continues to be a focus for us.

Okay. Great. I appreciate the update We've provided our full submission on there. And then switching to operate. feedback to the government on that, which we'll highlight that, and that will

Avik Dey ultimately become the specifics of our

One last point I'd make on that, Pat, is feedback will become public sometime we got to start early. I don't think we next quarter. But I think the market expected to be able to close in the same broadly knows that that's a concern quarter we announced. So I think we've amongst generators. got a head start on integration versus our previous timelines and being able to In terms of our position on Alberta is frame up the opportunity set. we've got a resilient business. We've got the most efficient, largest gas plant in

Patrick Kenny the province that's critical for baseload

Yes. Good point. power we take that responsibility very seriously. It is a resilient portfolio that

Then switching to Alberta power prices allows us to maximize and optimize the despite the small market remaining value that may go over the medium to relatively weak here. It looks like the long term. And so from a capital forward curve has at least rebounded allocation perspective, as we've somewhat recently. Not sure if that's demonstrated, we're clearly directing our solely a function of some of the REM capital towards those markets that we design changes that were confirmed last can convert investment into megawatts month or if perhaps, you're seeing other produced quickly, efficiently and market dynamics at play? economically.

And then as a follow-up, if you can So for us, playing that arb of buying comment on whether or not the REM capacity at a much lower cost than the design changes increases your desire to cost of new entry investing in it to continue to diversify your portfolio operate, expand and we repower or outside of Alberta? Or do these changes recontract. That's where our focus is, incentivize you to maintain your current which today means PJM, MISO and exposure to the Alberta market? WAC. But for Alberta, it's we've got a very important business here it's very resilient because of the investment we made in repowering it, and it's well positioned for upside when new demand

Avik Dey comes into this market.

Yeah, thanks. So on the first part of your question on, I mean clearly, '26, '27, '28, But I would emphasize the point that we we all saw the strip come up on the need to get through REM, we need to back of a large load allocation. So I think address some of the concerns that we our view is that was the primary driver of and others have so that we can give pricing coming up, and we continue to clarity to the broader market on how you look to ways to hedge out as we invest in new generation in Alberta. I historically have in that market. think this ties back to the data center point. The data centers that will get built

13 | Pag e in Alberta before 2029 will be one that generally creates opportunity for leverage existing installed generation in investors. the province because new generation can't be built until REM gets resolved. Where we have the advantage of understanding market structure being

Patrick Kenny able to trade and originate short,

Yes. That makes sense. medium and long term and the ability to develop and operate. It should bring

What about on the U.S. renewable compelling opportunities. But I think development front, so adding some we've tremendously benefited over our horsepower with Roger coming on history of being very disciplined around board, which is great. But with the renewables. We didn't chase gigawatt sunset on U.S. tax credits, I'm installed gigawatts we only pursue wondering how that might change your projects that hit our return thresholds

20% capital allocation target through and that hasn't changed. So I can't

2029 at least until you have more clarity comment today if our capital allocation on government subsidies or on the flip will change or not because directionally, side, does your decision not to pursue it could go either way depending on the phase I Alberta data center what the market affords us as opportunity, perhaps open up a bit more opportunities. dry powder to allocate towards U.S. renewables. If renewable, if operating renewable assets that are 12 to 14 years in

Avik Dey average contract length that have good

I think Roger, our new Head of U.S. transmission and distribution access are

Renewables and Corporate miraculously trading at 8 times to 9

Development joined in early June. We times, which is probably where I think are going through an assessment of the they should trade. Given their margin opportunity set in front of us in the U.S. relative on an EBITDA per KW basis right now. relative to gas, then you could -- we might be a purchaser. So I've probably

I think as I've said in past quarters, I gone into more detail than you think we see the opportunity as the bid- expected, but just that's a window into ask spread closes on renewables, in how I think about value. particular, on the operating asset side, that it could be a competitive market for Patrick Kenny us to participate in because we can Okay. No. That's great. I appreciate it. leverage our expertise for repowering I'll leave it there. and development and contracting.

We have not seen that bid-ask spread close so for me, the question around Operator renewables is really around can we hit Our next question coming from the line our return thresholds or not and does it of John Miller with TD Cowen. positively benefit shareholder value creation or not for us as a company. So John Miller

I think that's something we'll have more Maybe going back to your partner for clarity on between now and the end of Genesee, you've stressed the need for the year. But I would say generally, speed to market in this broader data where you have volatility in markets, it center opportunity for the province. I just like some clarity on the timeline of your

14 | Pag e partner. I appreciate you probably don't megawatts or 1 million square feet. You want to speak for them, but what need to know that you've got the timeline do they need for a 1 gigawatt transmission and distribution and facility a Genesee to remain viable? generation to meet that timeline and that ramp schedule. This is really all about

Presumably, at some point, they'll look the ramp and the guarantee for access at flare and this 1 gigawatt opportunity to power and how you match capital and doesn't have an unlimited expiry date. equipment coming in on a timely basis.

Can you comment on that? So I don't think it goes away in ‘28. It's just we have this advantage because of

Avik Dey how much generation we, as the market

Well I think the way to think about it, participants have collectively installed

John, is it's a if we can't build capacity in and what access we have on the

North America, that timeline keeps installed transmission and distribution extending. So next year, '28 becomes infrastructure in the province.

'29.

John Miller

So long as the economic cost and our Okay. And maybe just apologies if this is ability to bring something online within repetitive, but just going back to the that 2- to 3-year timeframe, I think we'll Phase II timelines you commented on continue to have that opportunity in that you're seeking to preserve your

Alberta. It's just the opportunity -- the option value and continuing your risk is, is that other markets figure this advocacy there and advocating for a out and provide incentives and make quick in-service date. Based on your investments in infrastructure to facilitate conversations, with AESO and the large-scale investment. So it's not like government so far. What's your there's a cliff in 2028. It's just those that confidence level that Phase II could can bring capacity on. And part of this result in that relatively quick in-service

issue is the following

when you're date with the glide path that would be signing if you have 1 million square foot needed for something of a larger scale? hyperdata center, those data centers are phased. Avik Dey

I don't think I could answer that with a

It's not like you go build a it's all confidence interval. But what I would modular and clusters. So it's not like you say is I think we all want the same thing build a 1 million square foot haul and here. In the conversations with then you're piling in racks starting COD. government, yes, we agree, we disagreed on the allocation process for large loads in Phase I but I think all

What happens is and what's required is parties in this, whether it's the AESO or the hyper-scaler requires the right to the utilities commission or the have access up to that total capacity or government more broadly are keen to the commensurate power because on a bring this industry to the province. rolling basis, they're ordering and We have a different view on how that procuring the chips and the racks to should be allocated but I think everyone scale with the requirement. is trying to work to the same end game here. And I will concede the AESO and

So this is the chicken and the egg of the the utilities, the utilities Ministry and the data center opportunity, which is if you government are balancing multiple need this requirement for scale, of 1,000 needs and considerations.

15 | Pag e your willingness to invest in gas in

So we are looking at it through the lens Canada currently. of optimizing for ourselves and also to the benefit of consumers because of this Avik Dey advantage we have at Genesee. But I Look, I think for Alberta, the question think everyone is keen to bring the mark is equally around REM and clean industry here. So I'm optimistic, but we electricity regs. Federally, it's obviously were on a timeline before this large load clean electricity regs. So that constraint allocation that could have delivered at exists nationally for new gas generation.

27 or early '28. So now we've got to go Our concerns remain the same on clean back to the drawing board, not based on electricity regs. We support the notion of the technical requirements of the CER but we have we still have to see project. But in terms of negotiating how critical changes to the CER that allows we get a customer access to co-locate a for offsets that addresses emissions

1,000 megawatt site at Genesee. caps and specifically addresses end of life, end of prescribed life. So we have

John Miller had conversations.

Okay. And maybe just apologies if I misheard this. A clarification on the I think our current government allocation, which I think you may have understands what the constraints said is about 370 megawatts. Are you around CER are. But I think we'll see not accepting it, so it goes back into the how and if that translates into a pool for other proponents or selling it to legislative change. But I think we've got another party that you believe will best an engaged and willing federal put it to work and bring that load to the government that is listening and province. understanding what the concerns are, for sure.

Avik Dey

What I would say at this point is we are Operator looking to ensure that that load gets (Operator Instructions) utilized. Our monetization of it will be Our next question coming from the line providing power -- so we're keen to see of Benjamin Pham with BMO. the industry get going. So we're trying to be a constructive player within this Benjamin Pham

Phase one process. The benefit to us A couple of clarification questions, a lot will be providing power. has been asked on Phase I, Phase II.

And so just a couple of ones for me. On the one gate that you're targeting is expectation you'll be facing that in over a number of years, you expected to pop

John Miller in right away.

Got it.

Avik Dey

Okay. Maybe I'll just sneak one more in Yes. Specifically for Alberta? because you said new generation can't be built until the REM gets revolved. Benjamin Pham

Just wondering about the clean That's right. electricity regulations, what kind of dialogue you've had there with Avik Dey government since we've had a change It was always phased. I mean that's why in leadership and how that plays into I mentioned to John's question, like this

16 | Pag e whole process on hyper data centers, to support that inference computing that not one of them is COD day one, 100% rising tide will lift all boats. deliverable. It's always a ramp schedule that's negotiated on behalf of an in We are not concerned about other large coordination with the customer and their projects because ultimately, location, requirements. So it's not like they're location and location. The cheapest going out and buying half a million quickest one will get built first. And we,

Nvidea chips, all for delivery for racks on today believe that's our site because of day one. And each customer has largely transmission and distribution and different requirements based on location the way the fiber is laid out in Alberta to and use but it's a ramp that could be be able to meet redundancy over two years, three years, four years, requirements. But that could be different depending on what the customers' two years from now but great. Someone needs are. builds a 1,000-megawatt center and it's not at Genesee and they can do it

So even in this -- and that's the same for before us or within the timeframe, I actually all data centers pretty much. mean that ultimately benefits us. But the long-term growth of this business is

Benjamin Pham going to be predicated on building new

Okay. generation alongside that new capacity.

So I guess theoretically, in a sense, you So this is why we come back to this had some good visibility on the first point that where Capital Power has built phase this build 100 megawatts is more and established generation with your lack of visibility on subsequent capacity and a T&D connect while we're phases, what you needed to see. going through this REM process, our project is one that can be underwritten

Avik Dey and we can get shovels in the ground

Correct. for a customer while REM is getting sorted.

Benjamin Pham

Okay. Then on Phase II then how Operator competitive do you think it could And I'm showing no further questions in materialize because there's a lot of queue at this time. I will now turn the call large-scale projects in the queue, which back over to Roy Arthur for any closing

I think 20 gigawatts now you give time remarks. for your competitors to catch up to you in a sense. But is really your key advantage here is really speed to market. Is that still your main primary benefit? Roy Arthur

There are no more questions. This will

Avik Dey conclude our conference call. Thank you

So if we are successful, there will be for joining us and for your interest in space for many projects. That's the Capital Power. Today's presentation and objective here from a market webcast will be made available on our perspective. the scale requirements for website. We hope you have a great day.

AI and what's going to be required for inference computing, quantum Operator computing, cloud and edge computing

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This concludes today's conference.

Thank you for your participation. You may now disconnect.

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