Adjusted EBITDA Capital Power uses adjusted EBITDA to measure the operating performance of plants and categories of plants from period to period. For previously reported periods prior to the three months ended December 31, 2011, the Company defined EBITDA as earnings before finance expense, income tax expense and depreciation and amortization. Commencing with the Company’s December 31, 2011 year-end, adjusted EBITDA was defined to also exclude impairments, foreign exchange losses and gains on disposals. Management believes that EBITDA, as a measure of plant operating performance, is more meaningful if results not related to plant operations such as impairments, foreign exchange losses and gains on disposals are excluded from the adjusted EBITDA measure. All comparative EBITDA amounts for quarters prior to those ended on December 31, 2011 were revised to reflect this change. A reconciliation of adjusted EBITDA to net income is as follows: (unaudited, $millions) Year ended December 31 Three months ended 2012 2011 Dec 2012 Sep 2012 Jun 2012 Mar 2012 Dec 2011 Sep 2011 Jun 2011 Mar 2011 Revenues 1,291 1,691 282 392 249 368 382 414 455 440 Other income 40 79 14 2 12 12 25 19 17 18 Energy purchases and fuel (553) (904) (134) (162) (110) (147) (169) (189) (255) (291) Gross income 778 866 162 232 151 233 238 244 217 167 Other raw materials and operating charges (132) (149) (37) (29) (36) (30) (40) (43) (37) (29) Staff costs and employee benefits expense (143) (155) (34) (39) (34) (36) (34) (40) (42) (39) Other administrative expenses (62) (77) (18) (12) (17) (15) (14) (22) (26) (15) Adjusted EBITDA 441 485 73 152 64 152 150 139 112 84 Depreciation and amortization (221) (229) (62) (52) (53) (54) (62) (45) (64) (58) Impairments (74) (43) - - (74) - - - (43) - Foreign exchange losses - (13) - - - - - (7) (4) (2) Operating income (loss) 146 200 11 100 (63) 98 88 87 1 24 Gains on disposals 15 93 15 - - - 93 - - - Finance expense (75) (105) (21) (19) (17) (18) (29) (32) (35) (9) Income tax recovery (expense) 4 - 14 (18) 22 (14) - (11) 12 (1) Net income (loss) 90 188 19 63 (58) 66 152 44 (22) 14 Net income (loss) attributable to: Non-controlling interests 28 111 4 24 (26) 26 68 29 3 11 Shareholders of the Company 62 77 15 39 (32) 40 84 15 (25) 3 Net income (loss) 90 188 19 63 (58) 66 152 44 (22) 14 Capital Power Corporation Management’s Discussion and Analysis 2012 19