Hello, and thank you for standing by. Welcome to Capital Power 2024 Guidance Conference Call. At this time, all participants are on a listen-only mode. I will now like to hand the conference over to Katherine Perron. You may begin.
Good afternoon, and thank you for joining us today to review Capital Power's 2024 guidance, including our corporate priorities, targets, and assumptions for the year. Our presentation for this conference call is posted on our website at capitalpower.com. Before we start, I would like to remind everyone that certain statements about future events made on the call are forward-looking in nature and are based on certain assumptions and analysis made by the company. Actual results could differ materially from the company's expectations due to various risks and uncertainties associated with our business. Please refer to the cautionary statement on forward-looking information on slide two or our regulatory filings available on SEDAR. In today's discussion, we will be referring to various non-GAAP financial measures and ratios.
These measures are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP and therefore are unlikely to be comparable to similar measures used by other enterprises. These measures are provided to complement the GAAP measures, which are provided in the analysis of the company's results from management's perspective. Reconciliations of these non-GAAP financial measures to their nearest GAAP measures can be found in our third quarter 2023 MD&A. I would like to acknowledge that Capital Power's head office in Edmonton is located within the traditional and contemporary home of many Indigenous peoples of the Treaty Six region and the Métis Nation of Alberta, Region Four.
We acknowledge the diverse Indigenous communities that are in these areas and whose presence continues to enrich the community and our lives as we learn more about the Indigenous history of the lands on which we live and work. Presenting this morning are Avik Dey, President and CEO, and Sandra Haskins, Senior Vice President, Finance and CFO. Before I turn it over to Avik, slide 6 provides the agenda for today's call. We'll start with an overview of our 2024 priorities, move into the 2024 operational and financial targets, followed with a discussion on the key assumptions that were used for our guidance, a review of our sources and uses of funds, and finally, we'll wrap up with the key takeaways from today's webcast. With that, I will turn it over to Avik for his remarks, starting on slide 7.
Thanks, Kat. We are currently experiencing some of the coldest temperatures on record in the last 50 years in Canada, resulting in record need for power. In addition, demand for electricity only continues to grow due to population growth and electrification, and we are transitioning to a net zero energy system, which is one of the most unprecedented transitions of our time. At Capital Power, we're driven to power change by changing power. As we move into 2024, we're proud to continue to grow and deliver reliable power through a commitment to operational excellence. We remain committed to our strategy of disciplined growth, maintaining balance sheet strength, and advancing towards a net zero future by 2045. Today, we're delivering 7,700 megawatts of power and growing. We are championing energy security and building scale across North America to drive long-term value creation for our shareholders.
Our strategic priorities for 2024 demonstrate our commitment to delivering reliable and affordable power today through the ownership and optimization of critical gas generation assets in key electricity markets, while positioning ourselves to decarbonize our power systems for tomorrow and invest in transformative net zero technologies. Delivering reliable generation remains a top priority for us in 2024. Despite the required outages needed to complete our Genesee Repowering Project, overall fleet availability will remain at best-in-class levels of 93%. In support of our long-standing history of fleet-wide reliability, we will execute seven major turnarounds at our current facilities, including additional work at Genesee, totaling CAD 37 million in CapEx spend and over 295 in total outage days.
We will also be focused on the integration of our newly acquired US facilities, which will increase our overall operating capacity by over 23%, while diversifying our cash flow from both a geographic and contracted basis, while mitigating the impacts to the Alberta portfolio stemming from the Genesee Repowering commissioning and lower power prices. A key priority for the year will be the completion of our CAD 1.35 billion Genesee Repowering project, which is the most transformative project in our history. The project will add an additional 512 MW by 2025, while reducing emissions intensity by 40%, reducing approximately CAD 200 million in carbon taxes in 2024.
Finally, we will continue to pursue decarbonized power solutions to meet our goal of net zero by 2045 through exploring the economic viability of carbon capture and sequestration at multiple locations, such as at Genesee and at our MCV facility, as well as the evaluation of small modular reactors in Alberta. I will now turn it over to Sandra to discuss our 2024 operational and financial targets.
Thank you, Avik.
These are our key operational and financial highlights for 2024. As mentioned by Avik, our facility availability is expected to be 93% for 2024, despite the outages required for the Genesee repowering project and six other facilities. Our sustaining capital expenditures remain at a similar run rate as in 2022 and 2023, which reflect the planned outages mentioned earlier, along with higher LTSA costs tied to general generation levels across the fleet. The target also includes the additional CapEx of about CAD 40 million related to our newly acquired U.S. facilities. From a financial perspective, the 2024 targets are shown in comparison to our guidance for 2023, within a range of ±CAD 5 million, pending finalization of 2023 results.
With the inclusion of our recent acquisitions, both Adjusted EBITDA and AFFO are on par with 2023, more than offsetting the impacts from the Genesee repowering transition and lower Alberta power prices. Our guidance range for 2024 has been widened to reflect the variability inherent in a project the size of repowering, and to recognize the impact a delay in financial close may have on our key financial metrics, where a delay of half a month is expected to have an impact of approximately CAD 10 million. Specific to Genesee repowering, here are the assumptions we have used in our 2024 guidance for the project. From a simple cycle perspective, our maximum capacity will be 411 megawatts at completion for both units. We expect Unit One to be complete in Q2, 2024, with Unit Two in Q3, 2024.
During the commissioning phase, unit dispatch will be driven by project needs rather than economic dispatch, so output will vary between 0-411 MW. Our existing dual fuel units will run in parallel during this period and will decommission once each respective unit reaches completion. For combined cycle, we expect both units to be completed in Q4, 2024, with an assumed gross capacity of 466 MW. As with simple cycle commissioning, dispatch will once again be driven by project needs, which means output will vary between 0-466 MW, including a period of 22 days of zero output on each unit, while tie-in and integration work is completed on the units. In total, this means we have assumed approximately 1,000 GWh of commissioning volume in our results during simple cycle and combined cycle commissioning.
It is important to note, as mentioned earlier, with a project the size of repowering, completion dates may vary within a spectrum of outcomes that has been factored into our guidance range. While we will continue to update the AESO in compliance with regulatory requirements, we do not plan to provide updates on the dates discussed today, unless there is a material shift in schedule as presented. I'll now touch on our Alberta power and natural gas hedge positions, which are shown as of November 10, 2023. Since the end of the third quarter, our power hedge volumes for 2024 and 2025 have once again increased. For 2024, it has gone up from 9,500 to 10,500 GWh, and from 8,500 to 9,000 GWh for 2025. For 2026, the hedge volumes remain unchanged at 7,500 GWh.
The weighted average hedge prices are now in the high 70 dollars per MWh for 2024, and then mid-70 per MWh in 2025 and 2026. The hedge positions include long duration origination contracts as another mechanism to manage price risk. The graph on the left shows the relative magnitude of hedges that are long duration. Our natural gas hedge volumes remain unchanged from Q3 for 2024 and 2026, with a slight increase in 2025, moving from 55,000 TJs to 60,000 TJs. Natural gas volumes have been hedged at favorable prices compared to current forwards. Moving from the Alberta market, we reached financial close of our Frederickson acquisition on December 28, 2023, and will therefore have a full year of Adjusted EBITDA in 2024, which is expected to be approximately CAD 18 million.
Our recent acquisition of the La Paloma and Harquahala facilities is expected to close in February 2024, which would add another CAD 243 million in adjusted EBITDA, bringing the total contributions from acquisitions to over CAD 260 million in 2024, filling the gap from lower Alberta portfolio results. The next slide shows a graphical bridge between our 2023 adjusted EBITDA guidance and our 2024 guidance. The first significant driver is the end of the coal compensation amortization, which, for accounting recognition purposes, is aligned with the end of mining operations in 2023. Although coal compensation ends for adjusted EBITDA, the annual CAD 50 million government cash payments continue to be reflected in AFFO until 2030. This step down in adjusted EBITDA would take the guidance midpoint anchor down to CAD 1.33 billion on a normalized basis when comparing to 2024.
Building from that point, our recent acquisitions contribute a combined total of CAD 260 million to Adjusted EBITDA, before we see a reduction in the Alberta commercial segment of CAD 125 million. This decrease is driven by several factors, including reduced year-over-year generation from both the Genesee repowering transition and lower spark spreads. In addition to lower volumes, power prices have declined from an average of CAD 134 per MWh in 2023 to our guidance price of CAD 90 per MWh, based on forwards on November 10, 2023. Genesee transition costs in 2024 also contribute to the year-over-year decrease. Variances in all other segments total approximately CAD 10 million, leading to a 2024 guidance midpoint of CAD 1.455 billion.
On a combined basis, this represents an increase of over 9% compared to the normalized 2023 midpoint. This slide shows a visual comparison of Adjusted EBITDA moving from the 2023 guidance to 2024 guidance before acquisitions, and then finally, 2024 guidance with our acquisitions included. From a fuel mix perspective, on the existing assets, we see a shift from dual fuel to gas in 2024 as we move off coal with the Genesee repowering project, to a further concentration of Adjusted EBITDA from gas after the acquisitions. From a geographic perspective, the shift is much more dramatic, where in 2023, 76% of all Adjusted EBITDA originates in Canada to just 62% after the acquisitions, which further diversify our cash flows.
In summary, the financial outlook for 2024 provides funding for financial obligations and growth CapEx from AFFO, continuation of the DRIP turned on in Q3 of 2023, and complemented with issuances from debt capital markets. We expect to issue CAD 200 million in hybrid bonds as part of the La Paloma Harquahala acquisitions and refinance the CAD 450 million debt maturity in September 2024 via the debt capital markets. The available capacity on our credit facilities allows for flexibility in timing to put permanent financing in place should we continue to see volatility in the capital markets. I will now turn it over to Avik to summarize the key takeaways from today's discussions.
Thanks, Sandra. 2024 promises to be a dynamic and exciting year for Capital Power. We will once again have very strong financial performance, with an increase of over 9% on adjusted EBITDA over 2023 on a normalized basis, excluding the step down related to the end of coal compensation amortization. We will complete the Genesee Repowering Project, which when finished, will be the most efficient combined-cycle plant in Canada. This will enable the organization to reduce approximately CAD 200 million in carbon tax at 2024 TIER prices. The integration of our newly acquired US facilities provides an uplift of CAD 260 million in adjusted EBITDA, while providing significant diversification of cash flow from both a geographic and contracted perspective. Finally, this combined performance means our credit metrics will be maintained within target ranges.
This continued balance sheet strength means our guidance for a 6% annual dividend increase through to 2025 is maintained. With that, I'll now turn the call back over to Kat.
Thanks, Avik. We will now conclude our conference call. Thanks again for joining us and for your interest in Capital Power. Today's presentation and webcast will be made available on capitalpower.com. Have a great day.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.