Effective April 5, 2012, EPCOR exchanged 9,775,000 of its exchangeable common limited partnership units in CPLP for common shares of Capital Power on a one-for-one basis and sold 9,775,000 common shares of Capital Power to the public pursuant to a secondary offering at $23.55 per common share. Capital Power did not receive any of the approximate $230 million of proceeds from EPCOR’s sale of common shares. This transaction reduced EPCOR’s ownership interest in CPLP to approximately 29% from its interest of approximately 39% at December 31, 2011. EPCOR has advised that it intends to sell all or a portion of its remaining interest in CPLP as its demands for capital require and market conditions permit. On February 21, 2012, CPLP completed a public offering of $250 million unsecured medium-term notes. The notes have a coupon rate of 4.85%, with interest payable semi-annually commencing on August 21, 2012, and mature on February 21, 2019. The net proceeds of the offering were used for repayment of amounts owing under credit facilities, financing on ongoing capital projects, working capital requirements, and general corporate purposes. On February 10, 2012, the Company completed the sale of its shares in Atlantic Power, which were acquired in November 2011 as part of the Atlantic Power acquisition of CPILP, for proceeds of $52 million on a bought deal basis. These shares were initially recorded at $48 million and subsequently adjusted to their fair value of $53 million as of December 31, 2011 resulting in an unrealized gain of $5 million recognized in 2011. In the first quarter of 2012, the Company recognized a realized pre-tax gain of $4 million with income taxes estimated to be $1 million offset by the reversal of the unrealized gain of $5 million recognized in the previous year. On February 28, 2013, the purchase of the first tranche of the Company’s interest in Shepard closed. Upon close of this transaction, the Company paid $237 million and acquired a 25% interest in Shepard. The total amount incurred by the Company to the date of close was $287 million compared with the total anticipated capital cost of $860 million. The second tranche, expected to close in the first quarter of 2014, will result in the Company’s acquisition of an additional 25% interest in Shepard bringing its total ownership interest to 50%. Subsequent to the close of the first tranche, and prior to the close of the second tranche, all decisions related to Shepard will require unanimous approval by the Company and ENMAX. As a result, the Company jointly controls Shepard with ENMAX upon close of the first tranche. Based on the terms of the Shepard agreements, the Company will account for the Shepard joint arrangement, under the new accounting standard for joint arrangements, as a joint operation. Secondary offering of Capital Power common shares by EPCOR $250 million debt issue Sale of Atlantic Power shares Subsequent Event Capital Power Corporation Management’s Discussion and Analysis 2012 25