CAPITAL POWER CORPORATION Notes to the Consolidated Financial Statements (Tabular amounts in millions of Canadian dollars, except share and per share amounts) Net after tax gains related to derivative instruments designated as cash flow hedges are expected to settle and be reclassified to net income in the following periods: The Company’s cash flow hedges extend to 2017. Details of the fair value of the finance lease receivables are given in note 29. Finance income of $5 million was recognized in other income during the year ended December 31, 2012 (year ended December 31, 2011 - $4 million). Certain power generation plants operate under PPAs that convey the right to the holder of the agreement to use the related property plant and equipment. Consequently, these power generation assets held by subsidiaries of the Company, comprised of the Roxboro, Genesee units 1 and 2, Miller Creek, Brown Lake and Island Generation power generation assets are accounted for as assets under operating leases. Miller Creek and Brown Lake were disposed of in October 2012 as described in note 8. During the comparative period, through to the disposal of CPILP in November 2011, the Manchief, Mamquam, Moresby Lake, Kenilworth, Greeley and Williams Lake power generation assets were also accounted for as assets under operating leases. As at December 31, 2012 the cost of such property, plant and equipment was $1,220 million (December 31, 2011 - $1,250 million), less accumulated depreciation of $186 million (December 31, 2011 - $143 million). Plants under operating leases 15. Leases: Finance lease receivables 14. Derivative financial instruments and hedge accounting, continued: December 31, 2012 Within one year $ 8 Between one and five years 14 After five years - $ 22 Minimum lease payments Present value of minimum lease payments December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Amounts receivable under finance leases: Less than one year $ 31 $ 5 $ 13 $ 3 Between one and five years 123 18 57 12 More than five years 571 56 404 46 Unearned finance income (251) (18) - - Lease payment receivable 474 61 474 61 Less current portion: (included within trade and other receivables (note 12)) 13 3 13 3 $ 461 $ 58 $ 461 $ 58 The PPAs under which the Company’s wind generation facilities located in Kingsbridge, Ontario (Kingsbridge) and Tumbler Ridge, British Columbia (Quality Wind) operate expire in 2026 and 2037 respectively and have effective rates inherent in the leases of 3.21% and 3.99% respectively. The lease receivables contain unguaranteed residual values of $13 million and nil for the Kingsbridge and Quality Wind facilities respectively. 102