Capital Power extends Arlington contract to 2038

Executive Summary

• Capital Power Corp. has extended its summer tolling agreement for the Arlington Valley facility with an investment-grade utility counterparty through October 2038, securing 13 years of contracted revenue.
• The agreement includes a 35 MW capacity uprate to meet Arizona's growing peak power demand, with 10 MW added in 2026 and 25 MW in 2027.
• The transaction is expected to deliver a total estimated annual adjusted EBITDA uplift of approximately $70 million (U.S.) by 2032, including the uprate, with the uprate itself contributing approximately $8 million (U.S.) per year starting in 2027.

Key Details

• Contract Extension: The existing tolling agreement, originally set to expire in 2031, is extended by seven years through October 2038.
• Counterparty: The agreement is with the current counterparty, described as an investment-grade utility.
• Capacity Uprate: The facility will undergo a 35 MW capacity increase for summer operations:
  • 10 MW added in 2026.
  • 25 MW added in 2027.
• Financial Impact:
  • Total estimated annual adjusted EBITDA uplift of ~$70 million (U.S.) by 2032 (inclusive of uprate).
  • The uprate component contributes ~$8 million (U.S.) per year in adjusted EBITDA over the life of the asset, starting in 2027.
• Operational Structure: The six-month contract structure allows the facility to capture increasing merchant value during winter months while retaining stability of contracted summer revenues.
• Additional Revenue Opportunities: Starting in 2027, the facility will have opportunities for incremental energy and capacity value in CAISO and the Desert Southwest through trading and commercial optimization.
• Asset Details: Arlington is a 600 MW natural gas-fired combined cycle facility located west of Phoenix, Arizona, acquired by Capital Power in 2018.

Notable Quotes

• "We are proud to continue our long-term partnership with this agreement, which highlights the essential role Arlington plays as a vital pillar of grid reliability for the region," said Avik Dey, president and chief executive officer of Capital Power. "We are committed to securing long-term value from our assets and investing in the U.S. Southwest."