Capital Power TSE: CPX executives used the company’s first-quarter 2026 earnings call to emphasize portfolio resilience, diversification, and what management described as a growing runway for value creation through recontracting, upgrades, and disciplined investment across North American power markets.
Management highlights stable strategy and diversification
President and CEO Avik Dey told analysts the company’s “business remains stable” despite macro and geopolitical uncertainty, adding that Capital Power’s strategy in North America is unchanged. Dey highlighted diversification across geographies, electricity markets, and technologies as a key risk-mitigation lever, and reiterated a consistent approach to capital allocation focused on “compelling risk-adjusted returns.”
Dey also outlined leadership updates, noting that Kevin MacIntosh has assumed the role of Senior Vice President, Finance and Chief Financial Officer. He added that Andrew Pearson joined the executive team as Senior Vice President, U.S. Commercial, based in a newly opened Washington, D.C. office. Dey said Steve Owens will retire effective July 1, 2026, and that Mike Korus will join the executive team as Senior Vice President and Chief Commercial Officer in Edmonton.
Operationally, Dey said the fleet generated approximately 11.5 terawatt-hours during the quarter, with “more than half” of generation coming from the U.S. portfolio. He added that planned outages are progressing on schedule.
Contracting, upgrades, and projects under construction
Among quarter highlights, Dey pointed to the extension of the Arlington Valley contract through 2038, describing it as supportive of the company’s commercial optimization strategy to secure long-term contracts with investment-grade counterparties. He also cited progress on Arlington Valley and Hummel upgrades.
Dey said Capital Power is advancing construction on four fully contracted projects totaling roughly 280 megawatts across Canada and the U.S., all with investment-grade counterparties.
In describing the company’s contracting opportunity set, Dey said Capital Power continues to make progress toward the “CAD 1 billion of embedded upside” discussed at its Investor Day in December. He said recent contracting agreements at MCV and Arlington Valley have delivered approximately CAD 170 million of contracted EBITDA upside to date.
Dey added that the company operates about 12 gigawatts across its North American portfolio, with roughly seven gigawatts targeted for contracting or recontracting, which he said provides a “long and visible runway” for incremental value creation.
Financial results and 2026 guidance reaffirmed
CFO Kevin MacIntosh said the quarter reflected “solid execution across the portfolio” and continued investment in sustaining capital. Adjusted EBITDA for Q1 2026 was CAD 404 million, up CAD 37 million year-over-year. MacIntosh attributed the increase primarily to contributions from the Hummel Station and Rolling Hills facilities acquired in 2025, partially offset by higher corporate expenses due to higher staffing costs tied to U.S. growth and higher equity-based compensation linked to share price performance.
AFFO for the quarter was CAD 154 million, down CAD 64 million year-over-year. MacIntosh said the decline was driven mainly by higher sustaining capital expenditures reflecting increased activity across the U.S. flexible generation portfolio, higher financing expense, and increased current income tax expense “mainly due to less tax depreciation,” partially offset by higher Adjusted EBITDA.
MacIntosh reaffirmed 2026 guidance ranges for Adjusted EBITDA, AFFO, and sustaining capital. He reiterated that sustaining capital expenditures in 2026 are expected to be CAD 290 million to CAD 330 million, reflecting a planned maintenance cycle that includes 493 outage days and 39 planned outages. He also said the outlook supports a 2% dividend increase in 2026, subject to board approval.
MacIntosh also revisited longer-term financial positioning, stating that approximately 75% of 2026 cash flow is secured through long-term contracts or hedges and that roughly 90% of power purchase agreements are with A-rated or higher counterparties. He said the company’s weighted average contract life has “consistently remained in the 9-11 years range.”
PJM, Alberta, and data centers: themes from analyst Q&A
In the Q&A, management addressed regulatory and market developments in PJM and Alberta, and how those could influence contracting, upgrades, and large-load opportunities such as data centers.
Asked about PJM reforms and timing for upgrades and expansions, management said that alongside the backstop option proposal, there was also an extension of the floor and cap on the BRA auction, which was reaffirmed with a FERC approval extending the BRA cap and floor through 2029–2030. Management said the PJM energy market remains attractive and that Capital Power would be willing to take on more exposure in PJM “given the diversification of our portfolio and the depth of the market to be able to hedge and contract into.” The company also said conversations around upgrades and potential expansions “have not stalled” and “have accelerated,” citing PJM’s proposed bilateral process to match load and supply in advance of any backstop auction.
On recontracting strategy more broadly, management said it evaluates each plant based on supply-demand outlook, current pricing, and CONE in each market, aiming to “maximize NPV per kW.” Management added it is not trying to time announcements on a set schedule, but noted it is seeing more active dialogue around recontracting opportunities than a year ago.
Several analysts asked about Alberta’s data center interconnection processes and forward pricing. Dey highlighted recent regulatory progress, including the Alberta-Canada MoU, elimination of the CER for Alberta, and progress on AESO Phase One and Two data center interconnection processes. He said those steps improve investment certainty. Dey also argued Alberta has structural advantages, including underutilized infrastructure and low-cost fuel, and said the addition of 1.5 gigawatts of load would result in about CAD 6 per month savings for the average residential customer due to transmission and distribution costs being spread across more load.
On hedging, management said its approach has not changed, describing it as “80, 65, 50” across year one, year two, and year three, and emphasized maintaining stable cash flows and investment-grade credit ratings. Management said greater diversification provides additional enterprise-level flexibility in optimizing merchant exposure across markets including PJM, Alberta, and CAISO.
Discussing Alberta forward power prices, management attributed muted back-end pricing in part to a lack of liquidity and limited incentive to transact far out on the curve, and said it expects tightening supply-demand dynamics over the next three years. Management said it sees “a return to higher pricing over that three-year period,” though it did not provide a specific price forecast for 2028.
On Genesee and export capacity, management said it continues testing related to exporting above the 466 MW grid export cap under the MSSC and is working with the ISO, adding it hopes to provide further updates as testing continues through the year.
Management also said it has multiple ongoing conversations in Alberta around data center offtake and co-location and described the Alberta MoU and CER repeal as “critical stage gates” for moving discussions forward. When asked about Island Generation, management said it is evaluating alternatives but did not provide an update on extending the facility’s contract with BC Hydro.
2030 targets reiterated
In closing remarks, Dey reiterated targets shared at Investor Day: by 2030, Capital Power is targeting 8%–10% annual AFFO per share growth, approximately 50% growth in U.S. total and U.S. owned capacity, 13%–15% total shareholder return, and 2%–4% annual dividend growth.
About Capital Power TSE: CPX
Capital Power TSX: CPX is a growth-oriented power producer with approximately 12 GW of power generation at 32 facilities, plus battery energy storage across North America. We prioritize safely delivering reliable and affordable power communities can depend on, building lower-carbon power systems, and creating balanced solutions for our energy future.
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