CAPITAL POWER CORPORATION Notes to the Consolidated Financial Statements (Tabular amounts in millions of Canadian dollars, except share and per share amounts) 3. Use of judgments and estimates, continued: Key sources of estimation uncertainty, continued Measurement of the Company’s provisions and the related change in discount rate require the use of estimates with respect to the amount and timing of asset retirements, the extent of site remediation required and related future cash flows for the decommissioning provisions and estimates of expected customer renewals for the Company’s other provisions. The key assumptions used in determining these provisions are provided in note 23. Income taxes are determined based on estimates of the Company’s current income taxes and estimates of deferred income taxes resulting from temporary tax differences. Deferred income tax assets are assessed to determine the likelihood that they will be realized from future taxable income. Details of tax losses expected to be utilized and the basis of utilization are provided in note 17. As noted in note 2(f), estimates of the value of electricity and natural gas consumed by customers but not billed until subsequent to period-end are based on volume data provided by the parties responsible for delivering the commodity and contracted prices. Actual results may differ from these estimates. Adjustments to previous estimates, which may be material, will be recorded in the period they become known. 2012 2011 Included in other raw materials and operating charges Research and development costs $ 1 $ 1 Included in staff costs and employee benefits expense Share-based payments (note 28) 3 6 Post-employment defined contribution plan expense 8 9 Post-employment defined benefit plan expense (gain) 3 (1) Included in depreciation and amortization Depreciation of property, plant and equipment (note 19) 198 192 Amortization of intangible assets (note 18) 17 35 Losses on retirement of property, plant and equipment 5 2 Other 1 - 221 229 Included in other administrative expenses Operating lease payments 5 2 4. Expenses: Decommissioning and other provisions Income taxes Revenue recognition 94