We have maintained high operating  availability over a growing fl eet and  production volumes. Our average plant  availability was 91% in 2012, and it has  averaged 92% during the past four years  – a period when our actual megawatt  production has nearly doubled. In 2013,  we are targeting a comparable 93%  average plant availability.  With the Capital Power Energy Centre  operating as a merchant facility when it  begins operations later in the decade, our  current focus is on contracted development  projects in Canada and the US in order  to maintain a balance of contracted and  merchant assets in our portfolio. reflects the competitive landscape  for market opportunities. We have also  divested our small interests so we could  focus on signifi cant investments. For 2013, management is focused on  delivering strong operational performance  across the fleet, improving performance  from our US assets, completing the  Port Dover and Nanticoke wind project,  continuing the development of K2 Wind  Ontario project, and working with ENMAX  on the construction of the Shepard facility  for a successful completion in 2015. Our investment grade credit rating that  provides access to low cost capital is a  key component of our strategy, and we are  firmly committed to maintaining the rating.  Our long-term debt-to-capital ratio target of  40-50% provides a strong metric to support  the credit rating. We continue to have strong  access to the capital markets as noted by  the successful $400 million of capital raised  in 2012, through a $150 million preferred  shares offering and a $250 million debt  offering to fund our growth. Capital Power’s financial performance in  2012 was mixed, with normalized earnings  per share (EPS) falling signifi cantly below  target while cash flow performance met  the target. Our financial targets, which  we announced in December 2011,  were based on an average Alberta power  price forecast of $74 per megawatt hour  (MWh) for 2012, which was used to set  the target range of $1.50 to $1.70 for  normalized EPS. Normalized EPS of  $1.29 came in below target primarily due  to a lower-than-expected average Alberta  power price of $64/MWh, a one-time  settlement loss on the heat rate option for  the Bridgeport facility, and lower earnings  from the North East U.S. plants primarily  from an unplanned outage. Despite being  below our earnings target, the company  continues to generate strong cash fl ow  with $381 million in funds from operations  in 2012, which represented an 8.2%  increase from the prior year and was  within our target range. Looking ahead, we continue to focus on  developing our competitive advantages  – our people, our market intelligence, the  development and construction of generation  facilities, and the optimization of our  existing assets. With our investments in the  Shepard facility and Capital Power Energy  Centre, Capital Power will continue to be  a dominant power producer in Alberta and  will have the best fleet of power generation  assets in the province. All of these initiatives  are aligned with our strategy of being a  competitive power producer and positions  us to deliver shareholder value. Thank you for your continued support. There’s been a tremendous amount of  change in our asset portfolio over the  last four years. We have reduced our  geographical footprint and our range of  technologies to ensure that our growth  remains focused and disciplined and  Maintaining a strong base of contracted  cash flow from creditworthy counterparties  is the cornerstone of Capital Power’s  ability to meet our fi xed commitments  and dividends through all business cycles.  Looking ahead to 2015 when the two  Ontario wind projects and the Shepard  facility are completed, our contracted  megawatts will increase to 47% of  our portfolio compared to 42% today.  Contracted cash flows provide Capital  Power with a stable financial base, while  the merchant cash flows provide upside  with higher power prices.  BALANCE OF CONTRACTED  AND MERCHANT GENERATION LOOKING AHEAD FINANCIAL PERFORMANCE INVESTMENT GRADE CREDIT  RATING AND CONSISTENT  ACCESS TO LOW COST CAPITAL OPERATIONAL EXCELLENCE CAPITAL POWER  2012 ANNUAL REPORT 3 “Our strategy is to create shareholder value  through operational excellence, maintaining  or enhancing our financial strength and  flexibility, and disciplined growth.” BRIAN VAASJO  PRESIDENT AND CEO BRIAN VAASJO  PRESIDENT AND CEO