Capital Power extends its Arlington Valley tolling agreement to 2038 and increases its summer capacity by 35 MWs, enhancing reliability and long-term value

• Extends Arlington Valley (Arlington) tolling agreement with the current counterparty by 7 years through 2038, increasing the remaining contract life to 13 years
• Adds 35 MW of incremental capacity to meet Arizona’s growing peak power demand
• Delivers a total estimated annual Adjusted EBITDA uplift of ~US$70 million by 2032
  

EDMONTON, Alberta, Jan. 07, 2026 (GLOBE NEWSWIRE) -- Capital Power (TSX: CPX) today announced the extension of its summer tolling agreement for the Arlington facility with the current counterparty, an investment-grade utility. The agreement extends the existing 2031 agreement through October 2038 providing 13 years of contracted revenue and positioning Capital Power for continued growth and value creation in the U.S. southwest.

The 6-month contract structure enables the facility to capture increasing merchant value during the winter months, while retaining the stability of contracted summer revenues. The facility is expected to realize a full year adjusted EBITDA uplift of ~US$70 million annually by 2032, inclusive of the uprate. The uprate is expected to contribute ~US$8M per year adjusted EBITDA over the life of the asset, starting in 2027.

A long-term, trusted partnership to drive value creation

“We are proud to continue our long-term partnership with this agreement, which highlights the essential role Arlington plays as a vital pillar of grid reliability for the region,” said Avik Dey, President and CEO of Capital Power. “We are committed to securing long-term value from our assets and investing in the U.S. southwest.”

Arlington expansion adds 35 MW to support Arizona’s peak demand

Arlington is a 600 MW natural gas-fired combined cycle facility located west of Phoenix, Arizona. Acquired by Capital Power in 2018, it is a vital component of Arizona’s energy landscape, consistently providing dependable power and outstanding operational performance.

As part of this agreement, the facility will undergo a 35 MW capacity uprate to summer capacity; 10 MWs will be added in 2026 and an additional 25 MW in 2027. This investment will strengthen Arlington’s ability to provide reliable power during Arizona’s peak summer demand.

The Arlington toll structure continues to offer strategic benefits by maintaining flexibility during non-summer periods. It provides opportunities for incremental energy and, starting in 2027, capacity value in CAISO and the Desert Southwest. These will both be through trading and commercial optimization to serve evolving market needs.

As North America's fifth-largest natural gas IPP, Capital Power continues to build on established relationships, reinforcing its long-term commitment to reliable energy solutions across the continent.

Forward-looking Information

This news release contains forward-looking information and forward-looking statements (collectively referred to as “forward-looking information”) within the meaning of applicable securities laws. Such forward-looking information is provided to inform Capital Power’s shareholders and potential investors about management’s current expectations and plans relating to the future. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Although Capital Power believes that the expectations represented by such forward-looking information are reasonable, there can be no assurance that such expectations will prove to be correct. Any such forward-looking information may be identified by words such as “anticipate”, “proposed”, “estimated”, “estimates”, “would”, “expects”, “intends”, “plans”, “may”, “will”, or similar expressions, although not all forward-looking information contain these identifying words.

Material forward-looking information in this news release includes but is not limited to expectations regarding the capacity uprate and increase to the full-year adjusted EBITDA for the facility.

Such forward-looking information is based on certain assumptions and analyses made by Capital Power in light of its experience and perception of historical trends, current conditions, expected future developments, and other factors it believes are appropriate, including its review of the anticipated benefits of the agreement. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity and other energy (including natural gas) and carbon prices; (ii) Capital Power’s performance; (iii) business prospects and opportunities including expected growth and capital projects including the capacity uprate; (iv) the energy needs of certain jurisdictions; (v) the status and impact of policy, legislation and regulations; (vi) effective tax rates; and (vii) the development and performance of technology.

Whether actual results, performance or achievements will conform to Capital Power’s expectations and predictions are subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from Capital Power’s expectations and the forward-looking information contained in this news release. Such material risks and uncertainties are: (i) changes in electricity, natural gas and carbon prices in markets in which Capital Power operates and the use of derivatives; (ii) regulatory and political environments, including changes to environmental, climate, financial reporting, market structure and tax legislation; (iii) disruptions, or price volatility within Capital Power’s supply chains; (iv) generation facility availability; (v) ability to fund current and future capital and working capital needs; (vi) developments including timing and costs of regulatory approvals; changes in market prices and the availability of fuel; (vii) changes in general economic and competitive conditions, including inflation; and (ix) changes in the performance and cost of technologies and the development of new technologies, new energy efficient products, services and programs.

For further discussion on risks assumptions and uncertainties that could cause actual results to differ from the anticipated results, refer to “Risks and Risk Management” in Capital Power’s Integrated Annual Report for the year ended December 31, 2024, prepared as of February 25, 2025 and to the risk factors, assumptions and uncertainties described in other documents Capital Power files with Canadian securities regulators which are available on SEDAR + at sedarplus.ca.

Readers are cautioned not to place undue reliance on such forward-looking information, which speak only as of the date made and that other events or circumstances could cause actual results to differ materially from those estimated or projected and expressed in, or implied by, the forward-looking information. Capital Power does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking information to reflect any change in Capital Power’s expectations or any change in events, conditions or circumstances on which any change in events, conditions or circumstances on which any such statement is based, except as required by law.

Non-GAAP Financial Measure

Capital Power uses earnings before, income tax expense, depreciation and amortization, net finance expense, foreign exchange gains or losses, gains or losses on disposals and other transactions, unrealized changes in fair value of commodity derivatives and emission credits, other expenses from our joint venture interests, acquisition and integration costs, and other items that are not reflective of the Company’s facility operating performance (adjusted EBITDA) as a non-GAAP financial measure.

This term is not a defined financial measure according to GAAP and does not have a standardized meaning prescribed by GAAP and, therefore, it is unlikely to be comparable to similar measures used by other enterprises. This measure should not be considered an alternative to net income, net income attributable to shareholders of Capital Power, or other measures of financial performance calculated in accordance with GAAP.

Capital Power uses adjusted EBITDA to measure the operating performance of facilities and categories of facilities from period to period. Management believes that a measure of facility operating performance is more meaningful if results not related to facility operations are excluded from the adjusted EBITDA measure such as impairments, foreign exchange gains or losses, gains or losses on disposals and other transactions, unrealized changes in fair value of commodity derivatives and emission credits, acquisition and integration costs, and other items that are not reflective of the long-term performance of the company’s underlying operations.

Territorial Acknowledgement

In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island (North America). Capital Power’s head office is located within the traditional and contemporary home of many Indigenous Peoples of the Treaty 6 region and Métis Homeland. We acknowledge the diverse Indigenous communities that are located in these areas and whose presence continues to enrich the community.

About Capital Power

Capital Power (TSX: CPX) is a growth-oriented power producer with approximately 12 GW of power generation at 32 facilities, plus battery energy storage across North America. We prioritize safely delivering reliable and affordable power communities can depend on, building lower-carbon power systems, and creating balanced solutions for our energy future. We are Powering Change by Changing Power^TM.

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