Capstone is committed to building a strong business while respecting the environment and communities where our businesses operate.



Workplace safety, and concern and respect for all employees and contractors, is a core value and objective of Capstone.

We strive to manage our business in the best interest of our shareholders while fostering a positive work environment for our employees and making a difference in the communities where our businesses operate. Integrating social and environmental considerations into our operations and culture improves the overall performance of our company by helping us to use resources more efficiently, enhance health and safety practices, increase capital efficiency, and nurture stakeholder relationships.


During 2012, we operated in compliance with all occupational health and safety and environmental regulations that pertain to our various businesses in Canada and abroad.




Health and Safety in the Workplace


Workplace safety, and concern and respect for all employees and contractors, is a core value and objective of Capstone. Our businesses have extensive health and safety practices as well as training programs to protect employees and encourage ongoing professional development.



Across our power businesses, employees received over 3,000 hours of safety training in 2012 on a range of topics, including handling and managing hazardous materials, working in confined spaces, first aid, fall protection, transportation of dangerous goods, vibration and relay training, and chemistry.


The power businesses also maintained a strong safety record, with Cardinal marking its 16th consecutive year without any lost-time injuries. While Whitecourt recorded one lost-time incident due to an employee’s repetitive strain injury, the facility is implementing a plan to minimize the potential for such injuries to occur in the future, including purchasing new tools and apparatus to more easily and safely lift heavy loads.


At our utilities businesses, employees received approximately 9,000 hours of training in various areas, including first aid, health and safety, and fire protection. In 2012, Bristol Water recorded six incidents of lost time due to an offsite traffic accident, three strain injuries, and two accidental falls. Bristol Water provided additional training to employees and promoted the company’s safety policies to improve skills and increase awareness of how to work safely. There were no incidents of lost time at Värmevärden.

Engaging with Our Communities


We strive to maintain strong relationships with each of our communities, including donating our time, skills, ideas and financial resources to help with many local initiatives.

Erie Shores offered financial aid and its employees volunteered at a fundraising event to support Port Burwell Public School’s breakfast program. Cardinal provided financial assistance to Cardinal in Bloom, an annual beautification program of flower baskets and gardens tended by volunteers that it initiated for the town of Cardinal. Cardinal also continued to provide the adjacent Benson Public School with free heat. Whitecourt donated funds to help implement a new local school program aimed at creating a positive classroom experience for students and encouraging them to stay in school.

Bristol Water distributed more than 35,000 water-saving items to help customers reduce water use, and worked with a local school to teach students and staff how to save water at home. Bristol Water also offers a number of leisure and recreational pursuits, including fishing, sailing and bird watching, at its lakes and reservoirs, enabling the local community to connect with and learn about nature.

At Capstone’s head office, corporate employees supported various local charities in 2012 by buying the right to dress casually every Friday.




Respect for the Environment


Our infrastructure businesses have an impact on resources such as water, energy and other raw materials. We endeavour to manage that impact responsibly and to enhance the local environment wherever possible.

Our renewable power businesses generate enough green electricity every year to power the equivalent of approximately 60,000 households.

The Sechelt hydro power facility maintains a salmon spawning channel at the facility by ensuring a constant supply of water and removal of debris. Similarly, the Wawatay facility features an engineered nursery channel and tailrace to support the river’s local fish populations. Notably, the Wawatay facility was the first hydro project partnership in Ontario with a First Nation community.

As a 167-year-old company, sustainability is embedded in Bristol Water’s culture and business strategy. Among other environmental initiatives, Bristol Water is working to reduce its carbon footprint by 50% by 2050, including encouraging its employees to cycle to work rather than drive, and minimizing business travel by using teleconferencing and web communication.

In addition, in 2012 Bristol Water outperformed the water industry average across a range of measures, including drinking water quality, leakage, supply interruptions, wildlife protection, waste management and pollution prevention.


Our Investment Process


We manage our environmental and social responsibilities throughout the investment process, which includes:

Review and evaluation of possible acquisitions
Our due diligence process includes a review of a business’s environmental as well as occupational health and safety (OH&S) risk management as part of our assessment of the broader risk management framework. This includes the use of independent experts to identify issues and obligations related to the investment.

Ongoing management

Each business maintains its own risk management system to manage its obligations and risks, which helps ensure compliance with regulatory requirements as well as timely identification and resolution of issues. Our ability to control or influence these frameworks depends on our level of ownership or control and the regulatory framework that governs specific environmental and OH&S risks.

Stakeholder reporting
Capstone reports annually to shareholders on how the company manages its environmental and social responsibilities.





















Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)
EBITDA is net income (loss), including that net income (loss) related to the non-controlling interest and interest income excluding interest expense, income taxes, depreciation and amortization. EBITDA represents Capstone’s continuing capacity to generate income from operations before taking into account management’s financing decisions and costs of consuming tangible capital assets and intangible assets, which vary according to their vintage, technological currency, and management’s estimate of their useful life.

Adjusted EBITDA is calculated as revenue less operating and administrative expenses plus interest income and dividends or distributions received from equity accounted investments. Amounts attributed to any non-controlling interest are deducted. Adjusted EBITDA for the investment in Bristol Water is included at Capstone’s proportionate ownership interest. Adjusted EBITDA is reconciled to EBITDA by removing equity accounted income, other gains and losses (net), foreign exchange gains and losses, and adding in dividends or distributions from equity accounted investments.

Adjusted Funds from Operations (AFFO)
Capstone’s definition of AFFO measures cash generated by its infrastructure business investments that is available for dividends and general corporate purposes. For wholly owned businesses, AFFO is equal to Adjusted EBITDA less interest paid, repayment of principal on debt, income, taxes paid and maintenance capital expenditures. For businesses that are not wholly owned, the cash generated by the business is only available to Capstone through periodic dividends. For these businesses, AFFO is equal to distributions received. Also deducted are corporate expenses and dividends on preferred shares.

Asset management plan, which is developed by water utilities in the United Kingdom every five years and approved by Ofwat.

Annual long-term average production
An average production figure based on the actual electricity production of a facility since the start of full operations.

Availability is the number of hours that a generating unit is able to provide service at full output, whether or not it is actually in service, as a percentage of total hours in the period.
Base load facility
A base load facility produces electricity at an essentially constant rate and runs continuously.
Capacity is the net amount of electricity generated by a generating unit as a percentage of the total possible generation over the period.

Cogeneration refers to the simultaneous production of electricity and thermal energy in the form of heat or steam from a single fuel source, a process that results in high efficiency and an effective use of energy.

Consumer Price Index (CPI)
The CPI is an indicator of inflation that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation.

A period during which a power facility continues to operate but at less than capacity.
Direct Customer Rate (DCR)
The Direct Customer Rate, which is set by the Ontario Electricity Financial Corporation, is calculated based on a three-year average of the total market cost of electricity to industrial customers.
Gigajoule (GJ)
One GJ is equivalent to the amount of energy available from 26.1 m3 of natural gas.

Gigawatt hour (GWh)
A unit of electrical energy equal to 1,000 megawatt hours.

Green metric tonne (GMT)
A unit of weight equal to 1,000 kilograms.
The effect of precipitation and evaporation upon the occurrence and distribution of water in streams, lakes and on or below the land surface.
K Factor
The regulated annual rate by which each licenced water company can increase its charges annually on top of inflation.

Kilowatt (kW)
This commercial unit of electrical power refers to 1,000 watts of electrical power. This is the total amount of power needed to light 10 light bulbs of 100 watts each.

Thousands of pounds of steam.
Megawatt (MW)
A megawatt is 1,000 kilowatts.

Megawatt hour (MWh)
This is a measure of energy production or consumption equal to one million watts produced or consumed in one hour (total amount of power required to light 10,000 100-watt light bulbs).

Millions of litres of water per day.

A unit of heat equal to one million British thermal units. A British thermal unit is the quantity of energy necessary to raise the temperature of one pound of water by one degree Fahrenheit.
The UK Water Services Regulation Authority.

A period of time when a power generation facility does not produce any electricity.
Payout ratio
Payout ratio measures the proportion of AFFO that is paid as dividends to common shareholders. The payout ratio is calculated as dividends declared divided by AFFO.

Peaking facility
A peaking power facility is reserved for operation during the hours of highest daily, weekly or seasonal loads.

Power Purchase Agreement (PPA)
A PPA is an agreement to purchase electricity at a specified rate for a defined period of time.

Public-Private Partnership (P3)
A partnership between the public and private sectors to deliver infrastructure projects.
The regulated capital value, or capital base, that is used by Ofwat to set the prices a water utility may charge its customers in each asset management plan period.

A renewable energy credit is a certificate issued by a government agency to a power company that uses environmentally-friendly methods to generate electricity. The RECs can in turn be sold and traded to third parties or on the open market.

The Retail Price Index is a measure of inflation in the United Kingdom. The rates Bristol Water may charge its customers increase by RPI each year.
Service Incentive Mechanism, a new incentive mechanism introduced by Ofwat to reward or penalize water companies’ service performance.

Solar photovoltaic (PV) power
The generation of electricity directly from sunlight.
Total return
The total return on an investment includes income from dividends, as well as share price appreciation or depreciation, over a given time period.
A watt is the scientific unit of electric power.
Yield refers to the amount of dividends paid per share over the course of a year divided by the trading price of the common shares.

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