Capital Power extends its Arlington Valley tolling agreement to 2038 and increases its summer capacity by 35 MWs, enhancing reliability and long-term value

Press Release

January 07, 2026

Highlights

• Extends Arlington Valley (Arlington) tolling agreement with the current counterparty by 7 years through 2038, increasing the remaining contract life to 13 years
• Adds 35 MW of incremental capacity to meet Arizona’s growing peak power demand
• Delivers a total estimated annual Adjusted EBITDA uplift of ~US$70 million by 2032

EDMONTON, Alberta – Capital Power (TSX: CPX) today announced the extension of its summer tolling agreement for the Arlington facility with the current counterparty, an investment-grade utility. The agreement extends the existing 2031 agreement through October 2038 providing 13 years of contracted revenue and positioning Capital Power for continued growth and value creation in the U.S. southwest.

The 6-month contract structure enables the facility to capture increasing merchant value during the winter months, while retaining the stability of contracted summer revenues. The facility is expected to realize a full year adjusted EBITDA uplift of ~US$70 million annually by 2032, inclusive of the uprate. The uprate is expected to contribute ~US$8M per year adjusted EBITDA over the life of the asset, starting in 2027.

A long-term, trusted partnership to drive value creation

“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 CEO of Capital Power. “We are committed to securing long-term value from our assets and investing in the U.S. southwest.”

Arlington expansion adds 35 MW to support Arizona’s peak demand

Arlington is a 600 MW natural gas-fired combined cycle facility located west of Phoenix, Arizona. Acquired by Capital Power in 2018, it is a vital component of Arizona’s energy landscape, consistently providing dependable power and outstanding operational performance.

As part of this agreement, the facility will undergo a 35 MW capacity uprate to summer capacity; 10 MWs will be added in 2026 and an additional 25 MW in 2027. This investment will strengthen Arlington’s ability to provide reliable power during Arizona’s peak summer demand.

The Arlington toll structure continues to offer strategic benefits by maintaining flexibility during non-summer periods. It provides opportunities for incremental energy and, starting in 2027, capacity value in CAISO and the Desert Southwest. These will both be through trading and commercial optimization to serve evolving market needs.

As North America’s fifth-largest natural gas IPP, Capital Power continues to build on established relationships, reinforcing its long-term commitment to reliable energy solutions across the continent.

About Capital Power

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. We are Powering Change by Changing Power^TM.