Going All-In on Alberta: Value Opportunity Supplemented by Tethering Upside

Research evidence excerpt

Going All-In on Alberta: Value Opportunity Supplemented by Tethering Upside

ability and deliverability criteria. This tethering would

enable a potential VPPA, direct PPA, co-location, or tolling arrangement if backed by a commercial Exhibit 1 - IPP FCF Yields

commitment to a data center project. There are still details to iron out: would AB prescribe tethering 16%

2027 2028 2029

on an asset-by-asset basis or in the context of broader portfolios is a key question to answer. TA's 14%

portfolio currently has multiple mothballed units (Sundance 6 and Sheerness 1 at 400 MW each with 12%

less than 5% utilization in 2025), so deployment opportunities are highly visible. 10%

8%

We continue to prefer TA to CPX given diverging FCF yields. We measure a 280bps gap in 6%

FY29 FCF yield between TA and CPX, which we think is improper in the context of a potentially 4%

steepening forward AB power price curve, to which TA has more direct leverage. Bears (more so 2%

CPX bulls, as most investors we speak to assume the performance of both will correlate) point to .Source: JefferiesNRG LLC,TLNCompanyVSTreports, Bloomberg,TA-CA CPX-CAFactset

said torque relating to lower-quality assets (older with higher heat rates generally) and less relative

contractedness. This is fair and perhaps indicative of why TA effected the CO asset deal, but we

think balancing pure price upside against lower quality assets is a wash to FCF yield, implying

uplift. AB recently saw major validation with the Meta co-location announcement: we prefer these

fundamentals to uncertainty in US RTOs.

2Q26 preview: in line EBITDA, Phase 2 affirmation expected. We see expectations properly

dialed for 2Q26 with $285Mn adj. EBITDA vs. $281Mn Consensus. Watch mgmt. commentary on