Executing our strategy
Throughout 2012, we remained focused on executing a strategy that is designed to create value throughout the business cycle. Our corporate strengths are the pillars supporting our strategy and our vision to be one of North America’s most respected, reliable, and competitive power producers.
“Our strategy is to create shareholder value through operational excellence, maintaining and enhancing our financial strength and flexibility, and disciplined growth.”
This is our corporate strategy
Our corporate strategy comprises a business strategy, which sets out how we will become an increasingly competitive priced power producer, and a financial strategy, which is designed to provide consistent access to low-cost capital.
Strategies for managing risk, achieving a level of diversification by region and fuel type, ensuring safety, and becoming a desirable employer are key pieces of of our corporate strategy.
Our corporate strategy is assessed annually by management, in consultation with our board of directors, to ensure it remains effective. As market conditions warrant, refinements and enhancements are made. The board of directors annually reaffirms and approves the strategy.
Management also submits an annual corporate plan to the board of directors for review and approval. The plan outlines management’s objectives and initiatives to execute the strategy and is used to formulate departmental plans throughout the organization.
We are delivering on strategy
Our business strategy was set out at the time of our Initial Public Offering in 2009. We continued to deliver on that strategy in 2012.
- Operational excellence was achieved, while we selectively pursued growth opportunities that aligned with our investment criteria.
- An appropriate balance of merchant and contracted facilities was maintained in the target markets identified in our business strategy.
- We completed construction of two wind power projects in two markets, and partnered with ENMAX on the construction of a large natural gas-powered facility.
- We successfully accessed capital markets to finance our growth and to maintain our investment-grade credit rating, despite low power prices in 2012.
Our corporate strengths
- A modern fleet with proven operating history.
- A solid platform for growth.
- Cash flow from long-term contracts that provide stability in meeting financial obligations.
- Financial strength with access to capital.
- A diversified portfolio in North American markets.
Key elements of our strategy include:
- Our Vision: Become one of North America’s most respected, reliable, and competitive power generators.
- Geographic focus. A geographic focus in a limited number of target markets to facilitate the management of assets on a portfolio basis, the application of market expertise, and to create economies of scale.
- Technology focus. A technology focus that includes developing and operating a limited number of power generation technologies, which builds expertise in operations, maintenance, and construction, and better supplier relationships.
- Investment-grade credit rating. Maintaining an investment-grade credit rating for access to low-cost capital throughout the business cycle by balancing contracted and merchant generation and providing shareholders with a dividend competitive with our peers.
New generation
Between now and 2015, Capital Power will commission three power generation assets:
- A 105-MW wholly-owned wind-power facility in Ontario (Port Dover & Nanticoke), which will be commissioned in 2013
- A 270-MW wind farm in Ontario, K2 Wind*, which is being built and operated as a joint venture with two other partners. It will be commissioned in 2014
- An 800-MW natural gas-powered facility in Alberta, (Shepard Energy Centre), which is being built in partnership with ENMAX. It will be commissioned in the first quarter of 2015 and operated by ENMAX.
We continue to analyze opportunities to acquire or develop power generation assets in our target markets. In the next few years, we will focus on natural gas, wind, and solar-powered generation assets in Canadian and US markets, and on developing a natural gas-powered generation facility in Alberta (Capital Power Energy Centre), which will be commissioned later in the decade.