Mr. Avik Dey reports

CAPITAL POWER ANNOUNCES AGREEMENT TO ACQUIRE 50.15% INTEREST IN FREDERICKSON 1 GENERATING STATION

Capital Power Corp. has executed an agreement to acquire a 50.15-per-cent ownership interest in the Frederickson 1 generating station from Atlantic Power & Utilities (AP&U) for $100-million (U.S.) ($137-million). The other 49.85 per cent is owned by Puget Sound Energy (PSE). Capital Power will finance the transaction using cash on hand and its credit facilities. The transaction is expected to close in the fourth quarter of 2023, subject to customary regulatory approvals and other closing adjustments and conditions.

Frederickson 1 is a 265-megawatt natural-gas-fired, combined-cycle generating facility in Pierce county, Washington. The facility is well positioned as a flexible and dispatchable resource that provides reliable power in support of the continuing energy transition to renewables in the region. Capital Power will operate and maintain the facility and bring to bear its deep knowledge and experience in plant operations and optimization and will receive an annual management fee under the operating arrangement with PSE.

"We are pleased to acquire this high-quality facility in the Pacific Northwest," said Avik Dey, president and chief executive officer of Capital Power. "Consistent with our midlife natural gas strategy, this acquisition expands our portfolio of dispatchable assets in key markets that support the energy transition by providing reliable, affordable and flexible power while renewables grow and decarbonization solutions develop."

"Frederickson 1 is a strategically located midlife natural gas asset in the growing load centre of the Puget Sound region and will provide accretive near-term cash flows," said Bryan DeNeve, senior vice-president and chief commercial officer of Capital Power. "The facility is supported by long-term contracts out to October, 2030, with creditworthy counterparties and is well positioned for recontracting as a key dispatchable, baseload asset in the region. Additionally, the facility and adjacent lands provide ample room and infrastructure for future non-emitting, flexible generation developments co-located with the facility."

Acquisition highlights:

• Financial projections (Capital Power's portion) -- expected average contracted EBITDA (earnings before interest, taxes, depreciation and amortization) of $15-million (U.S.) ($21-million) per year during the five-year period of 2024 to 2029;
• Accretive transaction -- expected to deliver accretive near-term cash flows;
• Long-term contracts with creditworthy counterparties:
  • Morgan Stanley Capital Group Inc. guaranteed by Morgan Stanley (rated P-1/A-2/F1) -- tolling agreement for 100-per-cent capacity to September, 2025;
  • Puget Sound Energy (rated BBB/negative/A-2) -- tolling agreement for 100-per-cent capacity from October, 2025, to October, 2030;
• Development opportunities -- located southeast of Tacoma in the Puget Sound region load centre, the facility sits on approximately seven acres of land and is adjacent to additional lands owned by Capital Power; current layout and additional space allow for future development such as battery installation or a hybrid opportunity.

Overview of Frederickson 1:

• Nameplate capacity -- 265 megawatts;
• Location -- Pierce county, Washington;
• Commercial operation date -- 2002;
• Equipment -- utilizes a one-by-one combined-cycle configuration with a GE 7FA combustion turbine, a Nooter Eriksen three-pressure heat recovery steam generator and a GE A-11 condensing steam turbine and steam turbine generator;
• Availability -- 98-per-cent PPA (power purchase agreement) availability over the last five years, excluding scheduled planned outages;
• Natural gas source -- Northwest Pipeline through Scott Lateral (part owned by AP&U, PSE and Capital Power);
• Interconnection -- interconnected through the Bonneville Power Administration in the Western Electricity Coordinating Council (WECC) region, which is expected to see significant legacy coal retirements and accelerating renewable deployment.

Territorial Acknowledgment

In the spirit of reconciliation, Capital Power respectfully acknowledges that the company operates within the ancestral homelands, traditional and treaty territories of the indigenous peoples of Turtle Island (or North America). Capital Power's head office is located within the traditional and contemporary home of many indigenous peoples of the Treaty 6 territory and Metis Nation of Alberta Region 4. The company acknowledges the diverse indigenous communities that are located in these areas and whose presence continues to enrich the community.

About Capital Power Corp.

Capital Power is a growth-oriented North American wholesale power producer with a strategic focus on sustainable energy. The company's balanced approach to net zero by 2045 includes natural gas with emerging technologies to achieve decarbonization alongside the growth of renewables to deliver affordable, clean power generation that communities can rely on.

Capital Power owns approximately 7,500 megawatts of power generation capacity at 29 facilities across North America. Projects in advanced development and construction include 224 megawatts of renewable generation in Alberta and North Carolina, 512 megawatts of incremental natural gas combined-cycle capacity from the repowering of Genesee 1 and Genesee 2 in Alberta, and approximately 350 megawatts of natural gas and battery energy storage systems in Ontario.

We seek Safe Harbor.