Capital Power Q3 2026 Results: Adjusted EBITDA Up 16%, AFFO Down 17%
Capital Power Corporation (TSX: CPX) reported third quarter 2026 results before the open on Monday, November 2, and its two headline figures are the least representative of the quarter. Revenues and other income fell 31.5% to $831 million and basic earnings per share fell 60.6% to $0.37. The measures the company manages against ran the other way. Adjusted EBITDA of $553 million rose 15.9%, the highest of the eight quarters in Capital Power’s own quarterly table, while adjusted funds from operations (AFFO) fell 17.1% to $306 million and AFFO per share fell 18.1% to $1.94. Figures are in Canadian dollars unless marked.
CPX traded at $62.93 at 10:00 a.m. ET on Monday, against Friday’s close of $63.04, a fall of 0.2%. That is a live price and not a close, from Yahoo Finance.
Two measures of the same quarter moved opposite ways
| Three months ended September 30 | Q3 2026 | Q3 2025 | Change (ours) |
|---|---|---|---|
| Electricity generation (GWh) | 14,485 | 13,374 | +8.3% |
| Revenues and other income ($M) | 831 | 1,213 | -31.5% |
| Basic earnings per share | 0.37 | 0.94 | -60.6% |
| Adjusted EBITDA ($M) | 553 | 477 | +15.9% |
| AFFO ($M) | 306 | 369 | -17.1% |
| AFFO per share | 1.94 | 2.37 | -18.1% |
| Net cash from operating activities ($M) | 381 | 404 | -5.7% |
Source: Capital Power’s third quarter 2026 results release and the 2026 Q3 Report, page 3. Changes are ours.
Reported earnings down 61% beside a non-GAAP measure up 16% is where a reader needs to know which number does what, and our guide to how to analyse a company’s financials covers non-GAAP reconciliation and what a company may adjust out.
Adjusted EBITDA and AFFO by quarter, in millions of Canadian dollars. Source: Capital Power 2026 Q3 Report, pages 36 and 37.
The revenue and earnings falls are mostly one non-cash line
Page 36 separates out the unrealized fair value line: unrealized changes in the fair value of commodity derivatives and emission credits were negative $296 million against positive $129 million a year earlier, a $425 million swing. Strip that line from both periods and revenues and other income were $1,127 million against $1,084 million, up 4.0% (ours, on the segment table). The release agrees: “Excluding these non-cash fair value changes, revenues and other income increased.”
Page 24 splits that line into two columns, of which the $296 million is the revenue side. Income before tax moved from positive $13 million to negative $89 million, and that $102 million swing is what page 20’s bridge carries, against a net income decline of $86 million. The non-cash mark is larger than the whole fall in earnings.
What stopped net income rising is the next line of that bridge. Depreciation and amortisation rose $50 million in the quarter and $134 million over nine months, which page 18 attributes to a full period of ownership of Hummel Station and Rolling Hills, the Ontario BESS projects and Halkirk 2 Wind reaching commercial operation, and the derecognition of previously capitalised costs. Unlike the derivative mark, that does not reverse.
Page 24 attributes those losses to increasing forward prices on net forward sale contracts at the company’s PJM and California facilities, partly offset by decreasing forward prices at its U.S. wind facilities and in Alberta. Footnote 2 says what happens next: “When a derivative instrument settles, the unrealized fair value changes recorded in prior periods for that instrument are reversed from this category. The gain or loss realized upon settlement is then reflected in adjusted EBITDA for the relevant facility category.” Read together, that is a fleet sold forward into a market that has moved up, with the result landing in adjusted EBITDA at settlement.
The company’s own bridge puts the cash decline on tax and sustaining capital
AFFO funds a power producer’s dividend, and it fell. Page 16 shows where. Operating cash flow was down only $23 million, and two lines beneath it did the damage. Current income tax swung from a $16 million recovery to a $35 million expense, a $51 million move the company attributes to lower tax depreciation. Sustaining capital expenditures doubled to $87 million from $44 million, reflecting “the heavy maintenance schedule for the Alberta fleet, rotor replacements at Rolling Hills and Harquahala”. Together that is $94 million against an AFFO decline of $63 million (our arithmetic). The decline sits below the operating cash flow line, in tax and maintenance capital, not in operating margins.
It is also flattered from above. Those two lines net to a $63 million fall only because the block of timing adjustments above them swung $52 million the company’s way, from negative $6 million to positive $46 million, mostly a smaller drag from non-cash working capital. That is the bridge’s largest single favourable item, and no more operating performance than the two lines it offsets.
AFFO bridge from the September 2025 quarter to the September 2026 quarter, in millions of Canadian dollars. Source: Capital Power 2026 Q3 Report, page 16.
Two details complete it. The share count rose 1.4% to 157.4 million, which is why AFFO per share fell further than AFFO. And part of the EBITDA gain was not cash: the release names straight-line recognition of Arlington Valley capacity payments, “which contributed favourably to adjusted EBITDA, and which did not affect AFFO”.
The earnings growth came from the U.S. fleet, not Alberta
| Adjusted EBITDA by segment ($M) | Q3 2026 | Q3 2025 |
|---|---|---|
| U.S. flexible generation | 351 | 307 |
| Canada flexible generation | 208 | 181 |
| Canada renewables | 21 | 18 |
| U.S. renewables | 15 | 15 |
| Corporate | (42) | (44) |
| Total | 553 | 477 |
Source: Capital Power 2026 Q3 Report, page 36.
U.S. flexible generation is now 59.0% of segment adjusted EBITDA before the corporate line (our arithmetic: 351 of 595) and produced 8,291 of the quarter’s 14,485 GWh. The company credits PJM pricing: its realized price there was US$47.59 per MWh against US$39.58 a year earlier (page 22).
Alberta is the more interesting half. AESO spot power averaged $35.52 per MWh against $51.30, down 30.8%, which the MD&A attributes to “Higher available supply and significant renewables generation” (page 22). Capital Power’s realized Alberta price went the other way, up 5.7% to $76.83, its aggregate price across spot, contracted sales and portfolio optimization. Canada flexible generation still rose, on the Ontario BESS projects and Goreway, “offset by lower Alberta captured spark spreads”.
The AFFO definition changed in the second quarter and the nine-month comparison carries it
Page 5 records a change that does not show up in the headline numbers: “AFFO and AFFO per share now include Clean Technology ITCs associated with eligible Canadian renewables projects.” The company recognised $174 million of those credits, “representing approximately 30% of eligible Canadian renewables project costs”, and confirms that the amendment did not change previously reported AFFO, so the 2025 comparative holds none.
Our arithmetic, labelled as ours: nine-month AFFO of $788 million less that $174 million is $614 million against $822 million a year earlier, a 25.3% fall, where the reported fall is 4.1%. Neither reading is the underlying number. The credits are real cash, recognised when the filing is made rather than when cash is received, and page 5 adds that “actual receipts may differ”. The guidance range below is set on the amended definition, so $788 million is the figure the target is measured against. It does not touch the quarterly bridge above, where government grants were $50 million in both years.
Guidance moved, and the move was capital spending
The targets, in the release’s Revised 2026 Annual Guidance table and on page 13, are AFFO of $890 million to $1,010 million and adjusted EBITDA of $1,565 million to $1,765 million, against nine-month actuals of $788 million and $1,308 million. The fourth quarter therefore needs AFFO of $102 million to $222 million and adjusted EBITDA of $257 million to $457 million (our arithmetic). The December 2025 quarter delivered AFFO of $244 million and adjusted EBITDA of $414 million (page 37), so the whole AFFO range implies a fourth quarter below last year’s.
The revision was to sustaining capital expenditures, now $350 million to $370 million against an original $290 million to $330 million, with $270 million spent through nine months. That $270 million is the guidance basis, net of $10 million of partner contributions and including $38 million from equity-accounted investments; the AFFO reconciliation shows $232 million (pages 13 and 16). The company attributes the increase to “unplanned outage work, primarily for the U.S. flexible generation fleet” and a planned outage advanced from 2027 into the fourth quarter, and expects insurance recoveries and OEM concessions to “meaningfully offset the cash impact”.
The contract profile, and the deals behind it
These contract figures are management’s own, from the CEO message, and they are the counterweight to a noisy income statement. The company says approximately 75% of expected 2026 adjusted EBITDA is underpinned by long-term contracts, that 100% of its power purchase agreements are held with investment grade counterparties and “over 70% are utilities or system operators”, and that it has delivered about 2 GW of contracted capacity over the past 18 months at a weighted average contract life of approximately 15 years.
The July agreement with Meta is a long-term ESA for 250 MW supporting a data centre in Sturgeon County, Alberta, and page 19 is specific: “The load from the project is anticipated to be in service in the back half of 2028.” Meta’s completion of the data centre is a risk factor in the release, and the Alberta framework it depends on is still being drafted: the AESO pushed its Large Load Phase II process to this fall from August 2026. For a reader weighing how to own that build out from Canada, our ranking of Canadian AI stocks by measured AI exposure sets names like this against the domestic field.
After quarter end the 100 MW East Windsor expansion received approval to operate in the Ontario market, with completion now targeted for the fourth quarter rather than the third. The Arlington Valley tolling agreement was extended in January to October 2038, with an expected full year adjusted EBITDA uplift of approximately US$70 million annually by 2032.
The consensus figure on screens is not what the company reports
Yahoo Finance carried a third quarter consensus of $0.96 a share from seven analysts, ranging from $0.75 to $1.13. It is not the same measure as reported basic EPS, and the proof sits in the same data: Yahoo’s actual-EPS series shows $0.53 for the March 2026 quarter and $0.08 for June, against the company’s reported $0.04 and negative $0.33. In this report the company names only adjusted EBITDA, AFFO and AFFO per share as its non-GAAP measures, so setting $0.37 beside $0.96 is not a comparison.
What a shareholder is left with
Both halves of this quarter are real. The fleet generated more electricity and produced the highest adjusted EBITDA of the eight quarters the company tabulates, though U.S. flexible generation, the segment that drove it, ran at 91% availability against 93%, and nine-month fleet availability was 91% against 92% (page 21). The cash measure that funds distributions still fell, the sustaining capital bill was revised up, and the insurance and OEM recoveries management expects are not yet booked.
That tension lands on the dividend. Capital Power declared $0.7048 per common share, up 2.0%, in what the release calls the thirteenth consecutive year of increase. On the nine months the payout is 41.5%: dividends declared per common share of $2.0868 against AFFO per share of $5.03 (our arithmetic, page 3). Page 13 records board approval of “a 2% increase in the common share dividend for 2026 with a long-term targeted dividend growth guidance of 2-4% until 2030”, and our list of high dividend stocks on the TSX ranked by payout coverage applies the coverage test across the Canadian names bought for yield.
Disclaimer: The content on bestcanadianstocks.ca is for informational and entertainment purposes only and does not constitute financial advice. Past performance is not indicative of future results. Always consult a qualified financial advisor before making investment decisions. Company figures are Capital Power’s own, from its November 2, 2026 third quarter media release and the Capital Power 2026 Q3 Report, cited to the page throughout. Adjusted EBITDA, AFFO and AFFO per share are the company’s non-GAAP measures, defined in that report’s Non-GAAP Financial Measures and Ratios section. Analyst consensus and the share price are from Yahoo Finance; the quoted CPX price is a live price taken during the November 2, 2026 session and not a close.
