Capstone Infrastructure’s 2014 Annual Report

INSIDE THIS SECTION

Overview

Achievement Scorecard

Platforms and Performance Drivers
– Power
– Utilities
– Growth Prospects in Infrastructure

Strategic Overview

Achievement Scorecard

BUSINESS FUNCTION

2014 PRIORITIES

STATUS

2015 PRIORITIES

LONG-TERM GOALS

Power Generation

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Wind Solar Hydroelectric Biomass	Achieve consistently high availability Maintain or improve quality and performance of facilities through predictive maintenance Manage operating costs Operate safely with zero lost-time injuries Hire new manager at Whitecourt	Availability was high across the board (detailed statistics in Strategic Overview) Installed Turbine Pitch Optimization technology at Erie Shores to maximize output Facilities maintenance conducted at hydro sites, ensuring ongoing reliability Operating costs were kept in line with previous period Reached a 15-year fuel supply agreement at Whitecourt (signed in March 2015) One lost-time injury at Whitecourt (minor), amounting to one day Hired new manager at Whitecourt	Achieve consistently high availability Maintain or improve quality of facilities through predictive maintenance Manage operating costs Operate safely with zero lost-time injuries Make progress on Sechelt contract renewal	Enhance existing facility or add supplemental boiler to increase Whitecourt’s capacity to process wood waste from area forestry operations Secure new contract for Sechelt
Cardinal	Secure new contract for Cardinal Hire new plant manager	Signed 20-year non-utility generator contract with IESO, and new energy savings agreement with Ingredion Refurbishing, life extension and major maintenance work commenced to prepare plant to operate as cycling facility New plant manager hired for start in second half of 2015	Complete $30 million transition to prepare for cycling Finalize upgrade with one-month outage in spring of 2015 Manage operating costs	Optimize profitability by selling power into the system at peak times

Utilities – Heating

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Värmevärden

Manage fuel costs
Maintain strong customer relationships
Ensure high plant availability

Milder weather enabled the use of more cost-effective fuel sources
Successfully rolled out new pricing methodology
Improved availability in 2014 versus prior year by 2.8%

Manage fuel costs
Maintain strong customer relationships
Ensure high plant availability

Expand footprint in local markets

Utilities – Water

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Bristol Water

Provide safe, reliable drinking water for customers
Bring PR14 process to satisfactory regulatory conclusion
Execute $546M AMP5 capex program

Strong operational performance and quick response to service disruptions
Bristol Water Board of Directors rejected PR14 final determination and proceeding to CMA review
On track to complete the full AMP5 program within allotted time frame

Provide safe, reliable drinking water for customers
Secure an improved outcome for AMP6 period through CMA review
Identify areas for operational efficiencies

Maintain and expand the system to keep pace with expected future growth of the Bristol metropolitan area
Prepare for retail competition
Evaluate system optimization

Power Development

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Organic growth

Build out Skyway 8 and Saint-Philémon wind projects
Secure permits for medium-term projects

Skyway 8 reached COD in August 2014, on time and below budget
Saint-Philémon reached COD under budget in January 2015
REAs received for two projects in January 2015

Achieve commercial operations at Goulais wind farm
Secure permits for Ontario and Saskatchewan wind projects
Begin construction on projects in receipt of REA (Grey Highlands ZEP; Ganaraska)

As a qualified applicant under Ontario’s Large Renewable Procurement, evaluate and submit project proposals
Initiate thermal and wind energy development projects

Corporate

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Head office
M&A

Maximize shareholders’ risk-adjusted return
Increase scale by adding to existing pillars
Diversify portfolio mix with new pillars
Operate sustainably
Retain and attract talent

Uncertainty over Bristol Water affected share price; CMA review potentially improves outcomes for Bristol Water
Actively pursued P3s with in-house expert, developing relationships
Added to existing pillars with the commissioning of Skyway 8 and Saint-Philémon
Introduced enhanced sustainability measurement and reporting (see companion Capstone Sustainability Report)
Filled vacated positions with experienced professionals and attracted talented applicants to new roles

Work with Bristol Water to secure favourable outcome from the CMA review
Maintain financial flexibility
Pursue acquisition in targeted pillars
Add scale by completing accretive acquisition in our existing pillars
Continued enhancement of sustainable practices and reporting
Ensure talent pool is aligned with Capstone’s priorities

Maximize shareholders’ risk-adjusted total return
Bring new assets into the portfolio
Add additional relationships and capabilities