Capital Power Corp. affirmed its dividend growth guidance for 2017 at 7%, in line with expectations, and presented a positive view of its projected cash flows and its role in Alberta's transition to a capacity market for electricity.
"Based on Capital Power's projected cash flows over the next two years, which include the initial coal compensation payments from the Alberta government, the Company is well positioned to add to its fleet of contracted power generation assets across North America and deliver on its 7% annual dividend growth guidance through 2018," said Brian Vaasjo, president and CEO of Capital Power.
The company touted its agreements for developing its Whitla Wind Project, as well as cash payments from the government of Alberta to compensate for invested capital in coal generating assets, which would be shelved by the end of 2030.
Whitla Wind, located near Medicine Hat, Alberta, is a planned 300-MW project to be completed in two 150-MW phases. The first phase would be bid into the Alberta Electricity System Operator's first competition scheduled for early 2017. The competition is expected to draw up to 400 MW of renewable electricity generation due for operation in 2019.
The payments from Alberta would be treated as a government grant and included in adjusted EBITDA through 2030. Depreciation expenses would also increase by an estimated C$27 million for the next five years, yielding a net positive impact to annual earnings amounting to about 19 cents per share.
In addition, Capital Power expects a capacity-weighted average plant availability of 95%, C$85 million in plant maintenance capital and sustaining capital expenditures, plant operating and maintenance expenses of C$195 million to C$215 million and adjusted funds from operations of C$305 million to C$345 million.