CAPITAL POWER CORPORATION Notes to the Consolidated Financial Statements (Tabular amounts in millions of Canadian dollars, except share and per share amounts) 17. Deferred tax, continued: 18. Intangible assets: 105 Contract rights include the cost of acquired management and operations agreements, water rights and a 20- year agreement whereby the Company will sell Renewable Energy Credits produced by the Halkirk Wind Project to a third party. The Alberta PPAs are owned under equity syndication agreements with an equity syndicate. Under the terms of the agreements, the syndicate members receive their proportionate share of the committed generating capacity in exchange for their proportionate share of the price paid for the Alberta PPAs and all payments to the generation unit owners. Acquired PPAs are recorded at the cost of acquisition. Under the terms of the Company’s Sundance and Joffre PPAs (Alberta PPAs), the Company is obligated to make fixed and variable payments to the owners of the underlying generation units over their respective terms. Such amounts are recorded as operating expenses as incurred. As at December 31, 2012 the Company has non-capital losses carried forward of approximately $178 million (December 31, 2011 - $114 million), of which $160 million (December 31, 2011 - $111 million) relates to certain U.S. subsidiaries. Of the non-capital losses relating to certain U.S. subsidiaries, $101 million (December 31, 2011 - $106 million) are subject to an annual limitation under Internal Revenue Code Section 382. These losses expire between 2024 and 2032. As at December 31, 2012, the Company has no capital losses for income tax purposes (December 31, 2011 - nil). There are non-capital losses available to be carried forward of $17 million (December 31, 2011 - $22 million) and other deductible temporary differences of $119 million (December 31, 2011 - $118 million) for which no tax benefit has been recognized. Alberta PPAs CPILP PPAs Contract rights Customer rights Other rights Emission credits Software Total Cost As at January 1, 2011 $ 140 $ 388 $ 101 $ 4 $ 74 $ 19 $ 15 $ 741 Additions from separate acquisition - - 28 - 33 33 9 103 Disposal of CPILP - (394) (100) - - - - (494) Other disposals - - - - - (20) - (20) Foreign currency translation adjustments - 6 - - - - - 6 As at December 31, 2011 $ 140 $ - $ 29 $ 4 $ 107 $ 32 $ 24 $ 336 Additions from separate acquisition - - 7 - 7 36 18 68 Disposal of hydro assets (note 8) - - - (4) - - - (4) Other disposals - - (1) - - (25) (4) (30) As at December 31, 2012 $ 140 $ - $ 35 $ - $ 114 $ 43 $ 38 $ 370 Accumulated amortization At January 1, 2011 $ (18) $ (53) $ (15) $ - $ (1) $ - $ (3) $ (90) Disposal of CPILP - 70 58 - - - - 128 Other disposals - - - - - - 1 1 Amortization (13) (16) (1) - (2) - (3) (35) Impairments (note 10) - - (43) - - - - (43) Foreign currency translation adjustments - (1) - - - - - (1) As at December 31, 2011 $ (31) $ - $ (1) $ - $ (3) $ - $ (5) $ (40) Other disposals - - - - - - 3 3 Amortization (12) - - - (2) - (3) (17) As at December 31, 2012 $ (43) $ - $ (1) $ - $ (5) $ - $ (5) $ (54) Net book value As at January 1, 2011 $ 122 $ 335 $ 86 $ 4 $ 73 $ 19 $ 12 $ 651 As at December 31, 2011 $ 109 $ - $ 28 $ 4 $ 104 $ 32 $ 19 $ 296 As at December 31, 2012 $ 97 $ - $ 34 $ - $ 109 $ 43 $ 33 $ 316