I'll ask this meeting to come to order. My name is Don Lowry, and I'm Chairman of the Board of Capital Power Corporation. In accordance with the company's bylaws, I'm pleased to act as Chair for this meeting. Welcome to Capital Power Corporation's 10th annual meeting of shareholders. Time has really moved quickly to stand here and say it's the 10th. I can recall when it was our first and second, but time moves quickly. With me today are Colleen Legge, Associate General Counsel and Corporate Secretary, who will act as Secretary of this meeting, and Brian Vaasjo, who's the President and Chief Executive Officer. As part of our commitment to our shareholders to reduce and contain costs in the challenging business and economic times, we've decided to hold a simplified formal meeting at which we seek the approval of the necessary corporate business.
Our directors and other executives will not be attending. However, following the meeting, there will be a presentation by Mr. Vaasjo, and you will have the opportunity to ask questions of myself and Mr. Vaasjo. In order to facilitate a smooth flow of the business matters we'll be dealing with today, Mr. Vaasjo and Ms. Legge will move and second formal motions. They will be called upon as needed. Computershare Trust Company of Canada is the company's registrar and transfer agent for its common shares. Today, Mrs. Elisa Rojo of Computershare has been appointed to act as scrutineer. She will report on the shareholders present in person or by proxy and compute the votes on any poll taken.
At this time, we want to thank all of you who have submitted your proxies in advance and remind you that only registered shareholders or duly appointed proxy holders may participate in the business of today's meeting. Under the notice and access system for communicating with shareholders, the company mailed a notice of the meeting together with a form of proxy or a voting instruction form commencing on March 20th, 2019. The notice informed shareholders about the time and place of our meeting, the business of the meeting, and stated that our management proxy circular was posted on our website at www.capitalpower.com/agm, as well as on SEDAR. The notice also stated that any shareholder could request a printed copy of the management proxy circular in advance of today's meeting. The Corporate Secretary has provided me with an affidavit of mailing prepared by Computershare Trust Company of Canada.
You will see that this affidavit is filed with the minutes of this meeting. The Corporate Secretary has received the report of the scrutineers and advises me that there is a quorum present today. On the basis of this report, I will now declare that the meeting has been regularly called and properly constituted for the transaction of business. The Corporate Secretary will also file the report of the scrutineers with the minutes of the meeting. The next item of business is the presentation to the meeting of the consolidated financial statements of Capital Power for the year ended December 31st, 2018, and the report of the auditors thereon. The annual report of the company, which contains the consolidated financial statements, together with the report of the auditors thereon, and the company's management discussion and analysis, was mailed to each shareholder who requested a copy.
The annual report is also available on the company's website, at the back of the room, there's copies there that you can pick them up if you haven't already at the registration table. On behalf of the directors, I now place before the meeting the consolidated financial statements and auditor's report thereon for the year ended December 31st, 2018. Ms. Ravin Roshdi, a partner of KPMG LLP, is in attendance today, Ravin will be able and available to answer any questions in respect of the auditor's report during the general question period. Any questions pertaining to the statements themselves will be responded to by Mr. Vaasjo. Are there any questions on the consolidated financial statements? Fair enough. I now declare that the consolidated financial statements and the auditor's report have been received. The next item of business is the election of directors.
In accordance with the bylaws of the company and pursuant to a resolution of the board of directors, a total of nine directors will be elected at today's meeting by the holders of common shares. Information regarding the nominees being proposed for election has been set out in our management proxy circular. As of 1:00 P.M. Wednesday, April 24th, 2019, which was the deadline for receipt of proxies, management had received proxies representing in excess of 51,900,000 shares and in excess of 50% of the company's common shares outstanding as of the record date for this meeting, who have voted in favor of each of management's nominees for the board of directors named in the management proxy circular. We will now proceed with the nomination and election of the nine directors to be elected by holders of common shares.
Only registered holders of common shares or their duly appointed proxy holders are entitled to nominate and vote for the election of these directors. Mr. Vaasjo, may I ask you for a nomination of each of the nine directors to be elected by holders of common shares?
Mr. Chairman, on behalf of the board of directors, I nominate each of the following nine persons as named in the management proxy circular for election as directors to hold office until the close of the next annual meeting or until their successors are duly elected or appointed. Donald Lowry, Brian Vaasjo, Doyle Beneby, Jill Gardiner, Kelly Huntington, Jane Peverett, Robert Phillips, Katharine Stevenson, and Keith Trent.
Thank you, Mr. Vaasjo. Ms. Legge, would you please second the nominations?
Mr. Chairman, I second the nominations.
Thank you, Ms. Legge. In the absence of the receipt of notice of any further nominations, in accordance with bylaw number three of the company, I now declare the nominations closed. We will now proceed with the election of the nominated directors. The election of the directors will proceed by way of ballot. Votes will be cast in favor of or withheld or voting for each nominated director individually. The vote cast in favor of the election of a director nominee must represent a majority of the common shares voted at the meeting. If that is not the case, that director must tender his or her resignation for consideration by the ballot of the board. Whereupon the board must determine whether to accept or reject the resignations and must disclose any decision not to accept the resignation within 90 days of the annual meeting.
Only registered holders of common shares or their duly appointed proxy holders are entitled to vote on the election of these director nominees. Many shareholders present will have already filed their proxies. Unless they wish to withdraw their proxy, these shareholders should not complete a ballot, since their shares will be voted in accordance with the instructions contained in the proxies granted to their proxy holders. I request that the scrutineers hand out ballots to each registered holder of common shares and proxy holder who has not already voted by proxy or who has not completed a ballot. If you're a registered holder of common shares or a proxy holder, and you have not already voted that proxy or completed the ballot, would you please raise your hand now so that the scrutineers can see you. Right. We've got one.
Would you please vote on the ballot by marking X opposite the names of the nominees for whom you wish to vote. Please sign and print your name and indicate at the bottom of the ballot and return that to the scrutineers or the scrutineers will pick that up from you. Scrutineers will collect, count the ballots, and prepare the final scrutineers report reflecting the results of the proxies and ballot. A report on the voting results will be filed on SEDAR. In addition, we will publish the results of this voting in next year's management proxy circular. The scrutineers will continue to tabulate the ballot and prepare final report.
As there are nine directors to be elected by the holders of the common shares, and there are nine nominees, I do declare that Brian Vaasjo, Doyle Beneby, Jill Gardiner, Kelly Huntington, Jane Peverett, Robert Phillips, Katharine Stevenson, Keith Trent, and myself, Donald Lowry, to be duly elected directors of the company. Next on the agenda is the appointment of auditors, management holds proxies for common shares, representing approximately 58 million votes, which represents more than 56% of the total eligible votes for this motion. Ms. Legge, may I have a motion to appoint the auditors of the company, please?
Mr. Chairman, I move that KPMG LLP Chartered Accountants be appointed auditors of the company to hold office until the close of the next annual meeting of shareholders, with compensation to be fixed by the board on the recommendation of the audit committee.
Thank you, Ms. Legge. Mr. Vaasjo, will you second the motion?
Mr. Chairman, I second the motion.
Thank you, Mr. Vaasjo. All those in favor of the motion, please signify by raising your hands. Thank you. Contrary? I now declare that motion carries. Next on the agenda is the advisory vote on executive compensation, also known as the Shareholder Say on Pay. This is the eighth year that Capital Power Corporation has conducted an advisory vote with respect to executive compensation. Management holds proxies for common shares representing in excess of 53 million votes, which represents more than 52% of the total eligible votes for this motion. As Capital Power's approach to executive compensation has been well covered in the management proxy circular, I won't propose to reiterate the details now. Mr. Vaasjo, may I please have a motion regarding this matter?
Mr. Chairman, I move that it be resolved on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in Capital Power's management proxy circular delivered before its 2019 annual meeting of shareholders.
Thank you, Mr. Vaasjo. Ms. Legge, would you please second the motion?
Mr. Chairman, I second the motion.
Thank you, Ms. Legge. All those in favor of the motion, would you please signify by raising your hands. Contrary? Thank you. I declare this motion carried. Next on the agenda is a vote on continuing the company's shareholder rights plan as described in the management proxy circular. Hold proxies for common shares representing in excess of 56 million votes, which represents more than 55% of the total eligible votes for this motion. As a continuation of Capital Power's shareholder rights plan have been discussed in the management proxy circular, I will not cover or reiterate the details now. Colleen Legge, may I have a motion regarding this matter, please?
Mr. Chairman, I move that it be resolved as an ordinary resolution that the amended and restated shareholder rights plan agreement made as of April 22nd, 2016, between Capital Power Corporation and Computershare Trust Company of Canada as rights agent be approved, and any director or officer of Capital Power is authorized to do all things and execute all documents to give effect to this resolution.
Thank you, Colleen Legge. Mr. Vaasjo, would you please second the motion?
Mr. Chairman, I second the motion.
Thank you, Mr. Vaasjo. All those in favor of the motion, would you please signify by raising your hand. Contrary. Thank you. I do declare this motion carries. That now completes the formal business portion of this meeting. There being no further business from the agenda, I will ask Mr. Vaasjo for a motion to terminate. After the meeting has been terminated, an opportunity will be provided for you to ask your question.
Mr. Chairman, I move the meeting be terminated.
Thank you, Mr. Vaasjo. Colleen Legge, would you please second that motion?
Mr. Chairman, I second the motion.
Thank you, Colleen Legge. All those in favor of the motion? Thank you. Any contrary? I do declare that motion carries. With that, the formal business portion of today's meeting is terminated. Now we will shift to have Mr. Brian Vaasjo give a presentation regarding the company, and would welcome any questions that you may have following that presentation. Thank you.
Thank you, Mr. Chairman. Good afternoon, all. I appreciate you taking the time today to come in to our annual general meeting and to talk to us about Capital Power, as the chairman has indicated. Please ask whatever questions you like on the material that I'm presenting or anything else that, again, you may have a question on in regards to the company. As I think all of you know, being that you're all shareholders, that Capital Power is a growth-oriented North American utility-scale power producer. It might be easier if I just go through the slides before. As this map illustrates, which has both those facilities that we have in operation and those dots that are emptier are those areas or those opportunities that we have control of to build future facilities in both Canada and the United States.
Outside of Alberta, it's a very highly contracted portfolio, very stable, longer-term cash flow. Based on that cash flow, and particularly the growth that we've experienced over the last five years, we've started on a track of increasing our dividend by 7% a year through to 2018. In 2018, we gave further guidance that we'd be increasing the dividend by 7% a year through to 2021. Supporting that is a very strong pipeline of development opportunities, as well as acquisition markets that exist today in North America that should very much result in a significant growth for Capital Power in the future. One of the things that differentiates Capital Power from many of our competitors in both Canada and the United States is that we are investment-grade, and we're quite committed to maintaining that investment-grade credit rating for a number of reasons.
One, of course, is in terms of cost of borrowing. It certainly reduces our cost and our access to capital to grow. The other thing is that from your perspective, from a shareholder's perspective, the fact that we are investment-grade should give you some comfort and confidence that the dividend will be there on an ongoing basis. I'd like to now turn to talk about our execution in 2018. 2018 was a very strong year for Capital Power. We were able to secure a 12-year contract for our Cardinal Point Wind Project in Illinois, which is in construction right now. We acquired the Arlington Valley Natural Gas facility just west of Phoenix. We completed a New Frontier Wind project on time and on budget in North Dakota.
We have sold a part interest that we had in a wind farm in Ontario, the K2 Wind project, for a pretax gain of CAD 159 million. From an overall growth perspective, a very, very strong year for the company. We also brought together what have been our sustainability activity. We appointed Kate Chisholm our Chief Sustainability Officer. Again, trying to bring together all these initiatives that the company has had historically and currently to just demonstrate our perspective and our view of our responsibility towards the environment and other social initiatives. What we identified here is the increasing availability at our Genesee facility to burn natural gas, which, of course, has positive environmental implications. We've also, as you've seen, and you're hearing about, we've got a very strong build associated with renewable energy, non-emitting facilities.
In addition to that, we've also had a significant focus historically, and on an ongoing basis, on carbon capture and utilization, and that continues. On a number of fronts, we're demonstrating a very progressive path forward associated with keeping and driving towards a lower-emitting society. In terms of our financial performance in 2018, we generated adjusted funds from operations of CAD 397 million, which was pretty much at the top of our range of CAD 360 million to CAD 400 million target. As I said earlier, management announced last year that we would be extending our 7% dividend growth out through 2021. All in all, an extremely strong year for Capital Power. Later, I'll talk a little bit more about some of the detailed numbers that came out of 2018. Turning to look specifically at our AFFO or adjusted funds from operations.
We utilize that as our main measure in terms of financial performance, because at the end of the day, that's actually the cash that we've earned. After we've paid all of our expenses and costs, that's the cash that you have at the end of the day. Our two primary choices of utilization of that cash is to pay dividends, and the other one is to reinvest in the company. This shows a combination of the level of adjusted funds from operations from 2014 to 2019. As you can see, a 14% compounded annual growth rate. Very significant from that perspective. Again, that's also the basis for increasing the dividends year after year.
The other point on this chart is that, as you can see, it indicates that there's the cash that's left over or the discretionary cash flow that we've been using to build the business to fall back into Capital Power. Of note is, if you look at 2014, the level of cash that was available to put back into the business was CAD 129 million. In 2019, that number is CAD 295 million. That's compounding almost year after year that we've got growth in terms of the amount of cash again, that we can use to put back into the business and to create growth. As I said earlier, this very much supports our dividend growth. You can see the five years of dividend growth from 2013-2018. Again, a consistent 7% growth rate.
We've given guidance from 2019-2021 that that 7% growth would continue. The basis of that growth isn't our expectation of what business we can do, et cetera. Those dividend growth expectations were based on actual growth that we achieved in 2018, 2017, and 2016. Again, it's not speculation on future growth projects. It's actually growth that we have already in the can, so to speak. Moving to keeping that dividend growth and growth in adjusted funds from operations going is again our growth objectives. You can see again, here is a clearer picture of what we have in terms of growth opportunities in front of us in terms of building facilities. You can see significant amount of facilities throughout or potential facilities throughout Canada and the U.S. covering natural gas, wind, and solar.
We see a very, very significant future and growth for us being in the development of these kinds of projects. As you can also see, a significant amount of expenditures in the balance of Canada, but also a significant amount in the U.S. We have no real preference. There are certain areas we prefer to invest in and others that we would not invest in. A lot of where you'll see the growth in Capital Power is where those opportunities are for us. When there tends to be not a lot of opportunity in Canada or in Alberta, we'll be investing your capital elsewhere, particularly the U.S. To reiterate one point that we make year after year, do not expect to see us investing in Mexico or Venezuela or Asia.
We're very satisfied with our growth prospects in North America, we have got no intention of moving beyond the North American footprint. With this kind of pipeline, there's really no reason for us, again, to move outside of North America. I'd like to now turn again to some numbers, in particular around our 2018 performance. Our facility availability, our target was 95%. We came in at 95%. Just one of the nuances of that data is that some of our facilities are operated by others, and then there's facilities operated by us. The bulk of it is operated by us. Our facilities, we tended to overshoot the target. We beat our expectations. Facilities operated by others tended to come a little bit under expectation. It averaged out in the overall target, but we're very proud of what we were able to achieve.
In terms of sustaining CapEx, you can see actual comes in at CAD 79 million versus a target of CAD 85 million. To reiterate another point is that we ensure that we don't starve our plants for capital. What is needed, we spend. We try to spend as little as practical. Anything that our facilities need, we absolutely make those expenditures. Because at the end of the day, the long-term operating characteristics of those facilities, the efficiency, and their ability to generate revenue can only be there if they're properly maintained. Likewise, with the operating and maintenance expenses, CAD 238 million was our actual from our target of CAD 230 million to CAD 250 million. Well inside that range.
As I commented before, our main financial measure, adjusted funds from operations, was CAD 397 million, which was at the high end of the CAD 360 million to CAD 400 million range. Financially, an extremely successful year. Moving to 2019. In December of every year, we publish targets. We identify those measures in which we, as a company, expect to hit through the year. We did the same in 2019. We also have benefited in 2019 by some very significant growth, which I touched on before. The Arlington project, New Frontier coming into operation. That's why when you look at adjusted funds from operations, we go from our actual in 2018 of CAD 397 million, up to a range of CAD 460 million to CAD 510 million. Or an increase of 22%. Very substantial growth.
That growth is as a result, in large measure, of the growth projects we developed and acquired in 2019. As well as more constructive power markets that existed in 2019 versus 2018, or we expected about through 2019. All in all, a very positive outlook for our results in 2019. This year, we introduced it last year for the first time to be measured in terms of this year, is our earnings before interest and tax. The reason for that is that tends to be a bit of a universal number that analysts look at, the market looks at, many investors look at. We thought we'd start actually providing some guidance around that number, again, to help investors see clearly into our company and how we're performing.
As you can see, we're expecting a target in terms of the CAD 800 million to CAD 850 million, a 16% increase over last year's actual of CAD 713 million. Again, very strong growth. Very strong expectations, we do fully expect to meet those targets, pretty much as we've done year after year over the last time. In addition to our financial targets, we also have some growth expectations for 2019. We continue to construct the Whitla Wind Project, which is supposed to be complete at the end of this year. That's a project here in Alberta. As well, the Cardinal Point Wind Project we expect to be complete just early in 2020. Both of those projects are going along very well. We're very pleased with the progress from both a time perspective and from a dollar perspective.
The other element of our growth, I've mentioned a couple of times, is that we do acquire natural gas and wind assets when the opportunities are there that sit with us, make sense from a strategic perspective, and are contract. That is, they're under long-term contracts to generate stable cash flow. We have a target for 2019 of finding at least CAD 500 million worth of those kinds of contracted opportunities. Again, that's through Canada or the U.S. Just to draw a little focus on the term committed, that doesn't mean that we're going to spend the money in 2019. What that means is that we've signed a long-term PPA to build a wind farm that we build in 2020, 2021. We commit to it this year, so that reflects committed capital and not spent capital.
From an acquisition perspective, obviously, you acquire it in a year, you pay for it in a year. Just wanted to make sure that that term committed was clear from an investor perspective. In talking about 2018 and our results there, talking about where we expect to be going in 2019, that somewhat covers the slides that I had today. We'll open it up for questions. Again, feel free to ask me any questions on any element around the company, I'll do my best to answer them or get back to you with an answer when I talk to people who may be more familiar with a particular question that you ask.
You have done questions, too. Good presentation, Brian.
Solomon. Today, I'm an unregistered shareholder. Happy to say I'm a shareholder. Our new Premier says he's going to take away the carbon tax, I'm trying to get my head around how does that affect Capital Power's bottom line? Is there a quick definition to capacity market that you're switching to?
Okay. Maybe just touch on the carbon tax as it relates to Capital Power and actually to our industry. The Premier Designate has indicated, party has indicated, that they will move to where it's called SGER, which was essentially the carbon tax that was in place prior to the NDP taking power, the last government taking power. That had been in place since 2007. That's going to apply to all the large emitters other than power. For power, what they're doing is they're going to stay with the existing methodology, which is we pay carbon tax based on intensity. For example, with our Genesee 3, we pay carbon tax on 60% of our emissions, and we pay CAD 30 a ton or credits associated with carbon, where you surrender them instead of paying the CAD 30 a ton. That's what exists today.
That methodology is going to stay the same. The only difference, there may be some nuances that change. At a high level, things should be relatively the same except we'll only be paying CAD 20 a ton. That has a positive impact, obviously, on the bottom line. On the other hand, what's good for Albertans is the fact that because the carbon levy is associated with your variable cost in a power plant, what happens is it gets bid in and the effect is that because you've got lower carbon tax, power prices will go down. Because power prices go down, that'll offset some of the benefit of our carbon tax going down. Overall, we don't expect in the short term for there to be a significant positive impact on Capital Power's bottom line.
The other thing, which is maybe a bit different with us, is as I think many of you are aware, we've done a lot of work and have risk-managed ourselves through the carbon tax regime by developing a very significant portfolio of carbon credits. We'll continue to be utilizing those. Not a big cash impact, but definitely that buffers us from any sort of price variation taking place. We're well-positioned, pretty much a positive upside, but not an overly significant one. The question that you asked in regards to what's a quick definition of a capacity market and just to maybe fill in a little bit, what the Premier Designate and the party has said is that they'll review whether we keep moving towards a capacity market or whether we stay in the energy-only market.
Capacity market, essentially what it does is it takes the overall economics of power generation and splits it into two pieces. One, what we have today, where we're bidding into the market and we're setting the price on a daily basis. A capacity component where on an ongoing annual basis, power generators would be getting paid so much a kilowatt month for the capacity that they have. In other words, a fixed charge or a fixed payment. In theory, the economics should be generally the same for a power producer who's got a broad portfolio. There is a fair amount of commentary out there that, in fact, if you go to a capacity market, it would significantly increase costs to consumers. We've long been a supporter of the energy-only market.
Our preference would be if we actually stopped moving towards a capacity market and stayed with the energy-only market. That, again, provides a bit of a positive perspective from Capital Power.
Thank you.
I think, Martin, another beneficial shareholder. Gentlemen took my original question, well answered. As a follow-on to that, also with the UCP government or the Premier Designate's intention to extend the coal decommissioning. Is that going to have any effect on the growth and bottom line and amortization and depreciation, all the things that you guys have to reach in your toolbox for?
There's been items in the press through the last number of months about the continuation of coal generation in province. In fact, I think this morning there was a comment about reviewing spending on coal or the coal agreement. Our understanding is that statement was taken out of context. What they were meaning was they'll be reviewing that with the minister to understand what's in the agreements, not to potentially interrupt the agreement. We think from a coal standpoint and the agreements that we signed with the government that in 2030 and beyond, there'll be no coal emissions coming from our facilities. We think that those will absolutely stay in place. We do not believe the government will alter them in any way, shape, or form. Which means from a depreciation, et cetera, standpoint, they'll stay as is.
Yeah.
Any other questions, comments, concerns this year? Well.
I think you've done a good job, sir.
Appreciate you very much coming out today, There's some light snacks at the back and coffee and water. Please help yourselves.
Thank you.
Look forward to seeing you next year.
Good job.
Thank you.