Financial Highlights (1) The consolidated financial highlights, except for adjusted EBITDA, normalized earnings attributable to common shareholders, normalized earnings per share, funds from operations, funds from operations excluding non-controlling interests in CPILP, cash flow per share, and discretionary cash flow, were prepared in accordance with GAAP. See Non-GAAP Financial Measures. (2) Diluted earnings per share was calculated after giving effect to share purchase options and the exchange of common limited partnership units of CPLP held by EPCOR which are exchangeable for common shares of Capital Power on a one-for-one basis. Refer to Results by Plant Category and Other and Consolidated Other Expenses and Non-Controlling Interests for detailed discussion of the results for the year on a comparative basis. Normalized earnings and normalized earnings per share were determined by excluding the total of net unrealized changes in the fair value of derivative instruments (including forward bond contracts). Accordingly, these net unrealized changes reduced normalized earnings by $2 million for 2012 and by $55 million for 2011 before consideration of taxes and non-controlling interests. Additional significant adjustments to determine normalized earnings and normalized earnings per share were the exclusion of the second quarter pre-tax impairment of $74 million related to the North East U.S. plants and the fourth quarter pre-tax gain of $15 million on the sale of the British Columbia hydro facilities. See Significant Events. Changes in funds from operations for 2012 compared with 2011 were consistent with the changes in net income attributable to shareholders of the Company. Funds from operations Normalized earnings and normalized earnings per share (unaudited, $ millions, except per share amounts) Year ended December 31 2012 2011 2010 Revenues and other income 1,331 1,770 1,762 Adjusted EBITDA (1) 441 485 418 Net income 90 188 77 Net income attributable to shareholders of the Company 62 77 17 Normalized earnings attributable to common shareholders (1) 86 55 32 Basic earnings per share ($) 0.84 1.60 0.77 Diluted earnings per share ($) (2) 0.84 1.59 0.69 Normalized earnings per share ($) (1) 1.29 1.24 1.40 Funds from operations (1) 381 433 374 Funds from operations excluding non-controlling interests in CPILP (1) 381 352 277 Cash flow per share ($) (1) 3.89 3.89 3.53 Capital expenditures 598 493 329 Discretionary cash flow (1) 132 131 110 Dividends per common share, declared ($) 1.26 1.26 1.26 Dividends per preferred share, declared ($) 1.15 1.19 n/a As at December 31 2012 2011 2010 Loans and borrowings including current portion 1,659 1,480 1,869 Total assets 5,134 4,743 5,296 Capital Power Corporation Management’s Discussion and Analysis 2012 23