Q1 2014 Investor Presentation May 2014 CONFIDENTIAL
Cautionary Note Regarding Forward-looking Statements To the extent any statements made in this presentation contain information that is not historical, these statements are forward-looking statements or forward-looking information, as applicable, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and under Canadian securities law (collectively “forward -looking statements”) . Forward-looking statements can generally be identified by the use of words such as “should,” “intend,” “may,” “expect,” “believe,” “anticipate,” “estimate,” “continue,” “plan,” “project,” “will,” “could,” “would,” “target,” “potential” and other similar expressions. In addition, any statements that refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. Although Atlantic Power Corporation (“AT”, “Atlantic Power” or the “Company”) believes that the expectations reflected in such forward- looking statements are reasonable, such statements involve risks and uncertainties and should not be read as guarantees of future performance or results, and undue reliance should not be placed on such statements. Please refer to the factors discussed under “Risk Factors” and “Forward -Looking Information” in the Company’s periodic reports as filed with the Securities and Exchange Commission from time to time for a detailed discussion of the risks and uncertainties affecting the Company. Although the forward-looking statements contained in this presentation are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this presentation and, except as expressly required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances. Disclaimer – Non-GAAP Measures Free Cash Flow, Cash Distributions from Projects and APLP Project Adjusted EBITDA are not measures recognized under GAAP and do not have standardized meanings prescribed by GAAP. Free Cash Flow is defined as cash flows from operating activities less capex; project-level debt repayments, including amortization of the new term loan; and distributions to noncontrolling interests, including preferred share dividends. Management believes that Free Cash Flow and Cash Distributions from Projects are relevant supplemental measures of the Company's ability to earn and distribute cash returns to investors. Reconciliations of Free Cash Flow to cash flows from operating activities and of Cash Distributions from Projects to project income (loss) are provided on slide 30 of this presentation. Investors are cautioned that the Company may calculate these measures in a manner that is different from other companies. Project Adjusted EBITDA is defined as project income (loss) plus interest, taxes, depreciation and amortization (including non-cash impairment charges) and changes in fair value of derivative instruments. Project Adjusted EBITDA is not a measure recognized under GAAP and is therefore unlikely to be comparable to similar measures presented by other companies and does not have a standardized meaning prescribed by GAAP. Management uses Project Adjusted EBITDA at the project level to provide comparative information about project performance and believes such information is helpful to investors. A reconciliation of Project Adjusted EBITDA to project income (loss) and a bridge to Cash Distributions from Projects are provided on slide 30 of this presentation. Investors are cautioned that the Company may calculate this measure in a manner that is different from other companies. The Company has not reconciled non-GAAP financial measures relating to individual projects or to the APLP projects to the directly comparable GAAP measures due to the difficulty in making the relevant adjustments on an individual project basis. The Company has not provided a reconciliation of forward-looking non-GAAP measures, because not all of the information necessary for a quantitative reconciliation is available to the Company without unreasonable efforts primarily as a result of the variability and difficulty in making accurate forecasts and projections. All amounts in this presentation are in US$ and approximate unless otherwise stated. 2
Agenda • Q1 2014 Highlights • Operations Update • Commercial Update • Financial Review 3
Q1 2014 Highlights: Progress on Financial Priorities • Comprehensive approach taken in first quarter - Took advantage of favorable bank financing conditions - Removed future uncertainty associated with refinancing • Increased financial flexibility and liquidity - Arranged new $210 million revolver with enhanced borrowing capacity ($150 million previously) - Greater flexibility; no requirement for a cash reserve ($75 million previously) - Liquidity at March 31 of $246 million ($184 million at December 31) • Addressed near-term debt maturities and extended debt maturity profile - Redeemed $415 million of debt maturing in 2014, 2015 and 2017 with proceeds from new term loan maturing in 2021 - Only one remaining maturity through March of 2017; intend to repay at October 2014 maturity using cash ($41 million) - New revolver matures in 2018 vs. 2015 previously - Repurchase of $140 million or 30% of 9.0% senior notes due in 2018 • Reduce debt and interest expense over time - Expect $86 million reduction in total debt this year - Term loan amortizes over time; expect approximately 75% to be repaid by maturity - Expect reduction in interest expense beginning in second half of 2014 and further reductions as term loan amortizes 4
Operating Issues Affected Q1 2014 Results • Extreme weather and forced Aggregate Power Generation Q1 2014 vs. Q1 2013 (thousands, Net MWh) outages affected results 2,086 - Availability factor of 93% vs. 1,882 96% was below our 11% expectations 1,093 942 - Forced outages at 556 504 438 436 16% 10% 0.3% Kapuskasing, Tunis, Piedmont, Williams Lake Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 Q1 2013 Q1 2014 and Canadian Hills East West Wind Total - Curtis Palmer generation levels (delayed melting) - Fuel sourcing challenges for • Generation increased 11%: Piedmont added in April 2013; biomass projects favorable performance of Idaho wind projects; increased dispatch at Chambers, Manchief and Frederickson • Business recap relative to budget: Weighted Average Availability - Wind: Idaho wind businesses more than offset Canadian Hills Q1 2014 Q1 2013 weather-related outage - Hydro: Below budget, but Curtis Palmer water volumes up 7% in East 94% 97% April; added 4 MW at Mamquam West 90% 92% - Thermal: Below budget due to outages; working to offset Q1 shortfall; Wind 93% 98% Ontario waste heat levels up in April - Piedmont boiler problem, warranty claim filed, initiated repair strategy Total 93% 96% 5
Major Maintenance and Optimization Initiatives • On track for $27 million of optimization investments in 2013 and 2014 - Investments with strong payback, more modest capital investment and shorter lag to cash returns than typical construction projects - Expect run-rate cash flow contribution in 2015 of at least $8 million o At least $4 million should be realized in 2014 • 2014 significant projects - Nipigon steam generator upgrade (fall outage scheduled) - Curtis Palmer Unit 4 & 5 repowering (completed ahead of schedule) - North Island capacity uprate (2.5 MW, completed in March) - Mamquam completed work to increase output by 4 MW - Calstock boiler re-rate complete, increasing output by 2 MW - Morris investment to boost output (expected completion in June and July) • Major maintenance and capex for 2014 expected to be approximately $40 million - Increase of $2 million from Q4 call due to repair work caused by Q1 outages - Includes approximately $18 million for optimization initiatives 6
Commercial Update • Delta-Person (sale agreement to PNM executed December 2012) - Working with buyer and regulators to resolve remaining open issues; expect to close later in 2014 - Still expect sale proceeds of approximately $9 million • Selkirk (65 net MW; 18% ownership; NY) – PPA and steam contracts expire August 2014 - No agreement on extension of steam contract yet, but discussions ongoing - ~ 23% of capacity already merchant and affected by lower market prices - Exploring all feasible options for sale of power, but expect post-PPA economics to be significantly less favorable Recently received Request for Information seeking to better understand Selkirk’s role in grid reliability - and capacity support in Zone F • Tunis (43 MW; 100% ownership; Ontario) – PPA expires December 2014 - Pending elections (June 12) in Ontario likely to put any discussions on hold - Two other NUGs have negotiated 20-year PPAs with the OPA, though at lower terms o Indicates OPA willingness to adhere to the requirements of the 2010 Ministerial directive - Expect any new contract would be on significantly less favorable terms than existing contract • Market developments - Q1 2014 load growth averaged 1.2% across U.S. (weather-normalized) - Supreme Court upheld Cross-State Air Pollution Rule (CSAPR) Uncertainty around IRS interpretation of “construction start” (renewable PTC eligibility) - 7
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