Future cash requirements Off-statement of financial position arrangements Capital resources Capital Power Corporation Management’s Discussion and Analysis 2012 41 The following estimates of future cash requirements are subject to variable factors including those discussed in Forward-looking Information. Capital Power’s estimated cash requirements for 2013 are expected to include approximately $737 million for capital expenditures, approximately $36 million for CPLP distributions to EPCOR (subject to approval by the Board of Directors of CPLP’s general partner), approximately $85 million for Capital Power’s common share dividends, and approximately $12 million for quarterly preferred share dividends (subject to approval by Capital Power Corporation’s Board of Directors). Effective January 1, 2012, the Company launched a Dividend Re-investment Plan where shareholders may elect to reinvest their quarterly cash dividends for additional shares of Capital Power as an alternative to receiving cash dividends. The participation rate in the Dividend Re- investment Plan at December 31, 2012 was approximately 30% and depending on the participation rate for 2013, cash requirements for common share dividends may differ from the above expectations. The current portion of loans and borrowings on the statement of financial position of $19 million consists primarily of $14 million payable to EPCOR in 2013. The Company expects to fund the construction of the Port Dover & Nanticoke and K2 wind projects and the Shepard Energy Centre project from cash flows from operating activities, asset divestitures, proceeds from preferred share issuance and using existing bank credit facilities. When construction is complete, the Company expects to put long- term financing in place. The Company’s other cash requirements identified above, are expected to be funded with cash on hand, cash flows from operating activities and use of existing bank credit facilities. The Company’s two short form base shelf prospectuses provide, market conditions permitting, the Company with the ability to obtain new debt and equity capital from external markets when required for a major investment. Under the short form base shelf prospectuses, Capital Power may raise up to $2 billion by issuing common shares, preferred shares, or subscription receipts exchangeable for common shares or other securities of the Company, and up to $1 billion by issuing medium-term notes with maturities of not less than one year. As of the date of this MD&A, Capital Power has approximately $1.6 billion of equity and $1 billion of debt available under these short form base shelf prospectuses. Financial market stability remains an issue. If instability reoccurs in the Canadian and U.S. financial markets, the Company’s ability to raise new capital, to meet its financial requirements, and to refinance indebtedness under existing credit facilities and debt agreements may be adversely affected. CPLP has credit exposure relating to various agreements, particularly with respect to its PPA, trading and supplier counterparties. While CPLP continues to monitor its exposure to its significant counterparties, there can be no assurance that all counterparties will be able to meet their commitments. The Company has off-statement of financial position arrangements including operating leases and $208 million of outstanding letters of credit for collateral support for trading operations, conditions of certain service agreements and to satisfy legislated reclamation requirements. If the Company were to terminate these off-balance sheet arrangements, the penalties or obligations would not have a material impact on the Company’s financial condition, results of operations, liquidity, capital expenditures or resources. (unaudited, $ millions) As at December 31 2012 2011 Loans and borrowings 1,659 1,480 Less cash and cash equivalents 53 73 Net debt 1,606 1,407 Non-controlling interests 829 1,072 Share capital 1,903 1,499 Retained earnings and other reserves 20 24 Total equity 2,752 2,595 Total capital 4,358 4,002