Use these links to rapidly review the document
TABLE OF CONTENTS
Atlantic Power Corporation Index to Consolidated Financial Statements

Table of Contents

As filed with the Securities and Exchange Commission on April 12, 2010

File No. [      ]

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES
PURSUANT TO SECTION 12(b) OR 12(g) OF
THE SECURITIES EXCHANGE ACT OF 1934

Registrant's telephone number, including area code:
(617) 977-2400

Securities to be registered pursuant to Section 12(b) of the Act:

Securities to be registered pursuant to Section 12(g) of the Act:
None

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Table of Contents

TABLE OF CONTENTS

Table of Contents

GENERAL

        Certain capitalized terms used in this registration statement have the meaning set out under "Glossary of Terms." In this registration statement, references to "Cdn$" and "Canadian dollars" are to the lawful currency of Canada and references to "$" and "US$" and "U.S. dollars" are to the lawful currency of the United States. All dollar amounts herein are in U.S. dollars, unless otherwise indicated.

        Unless otherwise stated, or the context otherwise requires, references in this registration statement to "we," "us," "our" and "Atlantic Power" refer to Atlantic Power Corporation, those entities owned or controlled by Atlantic Power Corporation and predecessors of Atlantic Power Corporation.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        Certain statements in this registration statement, including documents incorporated by reference herein, constitute "forward-looking statements." Forward-looking statements generally can be identified by the use of forward-looking terminology such as "outlook," "objective," "may," "will," "expect," "intend," "estimate," "anticipate," "believe," "should," "plans," or "continue," or similar expressions suggesting future outcomes or events. Examples of such statements in this registration statement include, but are not limited to, statements with respect to the following:

•

expected opportunities for accretive acquisitions;



•

our planned application to have our common shares listed on the New York Stock Exchange;



•

the expectation that our cash on hand and projected future cash flows from existing projects will be adequate to meet the current level of cash distributions to shareholders into 2015 without additional acquisitions or organic growth;



•

the amount of distributions expected to be received from the projects for the full year 2010;



•

estimated net cash tax refund in 2010;



•

estimated levels of cash flow and estimated payout ratios for 2010, 2011 and 2012;



•

our forecast of expected annual cash distributions from the Lake and Auburndale projects through 2012; and



•

the expected resumption of distributions from our Chambers project in 2010 and our Selkirk project in 2011.

        Such forward-looking statements reflect our current expectations regarding future events and operating performance and speak only as of the date of this registration statement. Such forward-looking statements are based on a number of assumptions which may prove to be incorrect, including, but not limited to the assumption that the projects will operate and perform in accordance with our expectations. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements, including, but not limited to, the factors discussed under "Risk Factors." Our business is both competitive and subject to various risks.

        These risks include, without limitation:

•

a reduction in revenue upon expiration or termination of power purchase agreements;



•

the dependence of our projects on their electricity, thermal energy and transmission services customers;



•

exposure of certain of our projects to fluctuations in the price of electricity;

1

Table of Contents

•

projects not operating to plan;



•

the impact of significant environmental and other regulations on our projects;



•

increased competition, including for acquisitions; and



•

our limited control over the operation of certain minority-owned projects.

        Other factors, such as general economic conditions, including exchange rate fluctuations, also may have an effect on the results of our operations. Many of these risks and uncertainties can affect our actual results and could cause our actual results to differ materially from those expressed or implied in any forward-looking statement made by us or on our behalf. For a description of risks that could cause our actual results to materially differ from our current expectations, please see "Risk Factors" in this registration statement.

        Material factors or assumptions that were applied in drawing a conclusion or making an estimate set out in the forward-looking information include third party projections of regional fuel and electric capacity and energy prices or cash flows that are based on assumptions about future economic conditions and courses of action. Although the forward-looking statements contained in this registration statement are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. Certain statements included in this registration statement may be considered "financial outlook" for the purposes of applicable securities laws, and such financial outlook may not be appropriate for purposes other than this registration statement.

        These forward-looking statements are made as of the date of this annual information form and, except as expressly required by applicable law, we assume no obligation to update or revise them to reflect new events or circumstances.

2

Table of Contents

ITEM 1.    BUSINESS.

OVERVIEW

        Atlantic Power Corporation is a leading independent power producer, with power projects located in major markets in the United States. Our current portfolio consists of interests in 12 operational power generation projects across eight states, a 500 kilovolt 84-mile electric transmission line located in California, and six development projects in five states. Our power generation projects have an aggregate gross electric generation capacity of approximately 1,823 megawatts (or "MW") in which our ownership interest is approximately 808 MW.

        The following map shows the location of our projects, including joint venture interests, across the United States:

        We sell the capacity and power from our projects under power purchase agreements (or "PPAs") with a variety of utilities and other parties. Under the PPAs, which have expiration dates ranging from 2010 to 2037, we receive payments for electric energy sold to our customers (known as energy payments), in addition to payments for electric generation capacity (known as capacity payments). We also sell steam from a number of our projects under steam sales agreements to industrial purchasers. The transmission system rights (or "TSRs") we own in our power transmission project entitle us to payments indirectly from the utilities that make use of the transmission line.

        Our coal and natural gas-powered projects generally operate pursuant to long-term supply agreements, typically accompanied by fuel transportation arrangements. In most cases, the fuel supply and transportation arrangements correspond to the term of the relevant PPAs and most of the PPAs and steam sales agreements provide for the pass-through or indexing of fuel costs to our customers.

        We partner with recognized leaders in the independent power business to operate and maintain our projects, including Caithness Energy, LLC, Cogentrix Energy, Inc. and the Western Area Power Administration. Under these operation, maintenance and management agreements, the operator is typically responsible for operations, maintenance and repair services.

        Atlantic Power Corporation is organized under the laws of the Province of British Columbia. Our registered office is located at 355 Burrard Street, Suite 1900, Vancouver, British Columbia V6C 2G8

3

Table of Contents

and our headquarters are located at 200 Clarendon Street, Floor 25, Boston, Massachusetts, USA 02116. Our website is atlanticpower.com. Information contained on our website is not part of this registration statement.

        We completed our initial public offering on the Toronto Stock Exchange (TSX: ATP) in November 2004 and have applied to have our common shares listed on the New York Stock Exchange under the symbol ["            "].

OUR COMPETITIVE STRENGTHS

•

Diversified Projects.   Our power generation projects have an aggregate gross electric generation capacity of approximately 1,823 MW, and our net ownership interest in the electric generation capacity of these projects is approximately 808 MW. Our power generation projects are diversified by geographic location, electricity and steam customers, and project operators. These projects are diversified across most of the deregulated and more liquid electricity markets in New England, New York, Mid-Atlantic, California and Texas, or are located in regions of high electricity demand growth such as Florida and New Mexico.

The power transmission project, known as Path 15, is an 84-mile, 500-kilovolt transmission line built in order to alleviate north-south transmission congestion in California. It is a traditional rate-base asset whose revenues are regulated by the Federal Energy Regulatory Commission ("FERC") and is operated by the Western Area Power Administration, a U.S. Federal power agency.

•

Strong Customer Base.   Our customers are generally large utilities, and other parties with investment-grade credit ratings. The largest customers of our power generation projects are Progress Energy Florida, Inc. ("PEF"), Tampa Electric Company ("TECO"), and Atlantic City Electric ("ACE"), which purchase approximately 40%, 15% and 11%, respectively, of the net electric generation capacity of our projects. No other electric customer purchases more than 7% of the net electric generation capacity of our power generation projects.



•

Leading Third-Party Managers.   Our power generation projects rely on a number of different operators for their operation, which are generally recognized leaders in the independent power business. Affiliates of Caithness Energy, LLC, Cogentrix Energy, Inc. and Babcock and Wilcox Power Generation Group, Inc. operate projects representing approximately 49%, 21% and 9%, respectively, of the net electric generation capacity of our power generation projects. No other operator is responsible for the operation of projects representing more than 8% of the net electric generation capacity of our power generation projects.



•

Stability of Project Cash Flow.   Each of our power generation projects has been in operation for over ten years. Cash flows from each project are generally supported by energy sales contracts with investment-grade utilities and other sophisticated counterparties. We believe that each project's combination of PPA(s), fuel supply agreement(s) and/or commodity hedges help stabilize operating margins as fuel prices fluctuate.

OUR OBJECTIVES AND BUSINESS STRATEGY

        Our objectives include maintaining the stability and sustainability of dividends to shareholders and to maximize the value of our company. In order to achieve these objectives, we intend to focus on enhancing the operating and financial performance of the projects and on pursuing additional acquisitions primarily in the electric power industry in the U.S. and Canada.

4

Table of Contents

Organic Growth

        We intend to enhance the operation and financial performance of our projects through:

•

optimization of commercial arrangements such as PPAs, fuel supply and transportation contracts, steam sales agreements, and operations and maintenance agreements;



•

achievement of improved operating efficiencies;



•

upgrade or enhancement of existing equipment or plant configurations; and



•

expansion of existing projects.

        Successfully extending PPAs and fuel agreements may facilitate refinancings that provide capital to fund growth opportunities.

Extending PPAs Following Their Expiration

        PPAs in our portfolio have expiration dates ranging from 2010 to 2037. In each case, we plan for expirations by evaluating various options in the market for maximizing project cash flows. New arrangements may involve responses to utility solicitations for capacity and energy, direct negotiations with the original purchasing utility for PPA extensions, arrangements with creditworthy energy trading firms for tolling agreements, full service PPAs or the use of derivatives to lock in value. We do not assume that pricing under existing PPAs will necessarily be sustained after PPA expirations, since most original PPAs included capacity payments related to return of and return on original capital invested and counterparties or evolving regional electricity markets may or may not provide similar payments under new or extended PPAs.

Acquisition and Investment Strategy

        We believe that new electricity generation projects will be required in the United States and Canada over the next several years as a result of growth in electricity demand, transmission constraints and the retirement of older generation projects due to obsolescence or environmental concerns. There is also a very active secondary market for existing projects. We intend to expand our operations by making accretive acquisitions with a focus on power generation, transmission, distribution and related facilities in the United States and Canada. We may also invest in other forms of energy-related projects, utility projects and infrastructure projects, as well as additional investments in development stage projects or companies where the prospects for creating long-term predictable cash flows are attractive. Since the time of our initial public offering on the Toronto Stock Exchange in 2004, we have twice acquired the interest of another partner in one of our existing projects and will continue to look for such opportunities.

        Our senior management has significant experience in the independent power industry and we believe the experience, reputation and industry relationships of our management team will provide us with unique access to future acquisition opportunities.

Acquisition Guidelines

        We use the following general guidelines when reviewing and evaluating possible acquisitions:

•

each acquisition or investment should result in an increase in cash available for distribution to shareholders;



•

in the case of an acquisition of power generation facilities, facilities with long-term PPAs with major electrical utilities or other creditworthy customers will be preferred; and, for facilities without such agreements, market electricity price assumptions used in acquisition evaluations will be obtained from a recognized independent source; and

5

Table of Contents

•

in the case of an acquisition of a power generation facility, the expected useful life of the facility and associated structures will, with regular maintenance, be long enough to conform with our objective of providing stable long-term dividends to shareholders.

POWER INDUSTRY OVERVIEW

        Historically, the North American electricity industry was characterized by vertically-integrated monopolies. During the late 1980s, several jurisdictions began a process of restructuring by moving away from vertically integrated monopolies toward more competitive market models. Rapid growth in electricity demand, environmental concerns, increasing electricity rates, technological advances and other concerns prompted government policies to encourage the supply of electricity from independent power producers.

        In the independent power generation sector, electricity is generated from a number of sources, including natural gas, coal, water, waste products such as biomass (e.g., wood, wood waste, agricultural waste), landfill gas, geothermal, solar and wind. According to the North American Electric Reliability Council's Long-Term Reliability Assessment, published in December 2009, summer peak demand within the United States over the next ten years is projected to increase 14.8%, while winter peak demand in Canada is projected to increase 8.8%.

The Non-Utility Power Generation Industry

        Our 12 power generation projects are non-utility electric generating facilities that operate in the U.S. electric power generation industry. The electric power industry is one of the largest industries in the United States, generating sales in excess of $365 billion in 2008, based on information published by the Energy Information Administration. A growing portion of the power produced in the United States is generated by non-utility generators. According to the Energy Information Administration, there were approximately 8,287 non-utility generators representing approximately 471 gigawatts of capacity in 2008, the most recent year for which data is available, (equal to 47% of total generating plants and 43% of nameplate capacity). Non-utility generators sell the electricity that they generate to electric utilities and other load-serving entities (such as municipalities and electric cooperatives) by way of bilateral contracts or open power exchanges. The electric utilities and other load-serving entities, in turn, generally sell this electricity to industrial, commercial and residential customers.

        We believe that an active secondary market in the power generation sector will continue to provide us with meaningful acquisition and growth opportunities.

6

Table of Contents

7

Table of Contents

        Our projects are organized into the following six business segments:

Auburndale Segment

General Description

        The Auburndale Segment consists of a 155 MW dual-fired (natural gas and oil), combined-cycle, cogeneration plant located in Polk County, Florida, which commenced operations in July 1994. We own 100% of the Auburndale project, which is a "qualifying facility" (or "QF") under the rules promulgated by the Federal Energy Regulatory Commission (or "FERC"). We acquired Auburndale from ArcLight Energy Partners Fund I, L.P. and Calpine Corporation in a transaction that was completed on November 21, 2008.

        Auburndale is located on an 11-acre site in the City of Auburndale, Florida. Capacity and energy from the project is sold to Progress Energy Florida (or "PEF") under three PPAs expiring at the end of 2013. Auburndale typically operates as a mid-merit generator, which means that it is called upon by PEF to run during periods of peak electricity demand on most weekdays and occasionally during periods of lower electricity demand. Steam is supplied to Florida Distillers Company and Cutrale Citrus Juices USA, Inc. The Florida Distillers steam agreement is renewed annually, and the Cutrale Citrus Juices steam agreement expires in 2013.

        Auburndale has non-recourse debt outstanding which fully amortizes over the term of its PPAs expiring in 2013. Atlantic Power Corporation has provided letters of credit in the total amount of $13.4 million to support Auburndale's obligations: $5.5 million to support its debt service obligation, $4.4 million to support its PPA obligations, and $3.5 million to support its fuel supply agreement.

Power Purchase Agreement

        Auburndale sells electricity to PEF under three PPAs each expiring on December 31, 2013. Under the largest of the PPAs, Auburndale sells 114 MW of capacity and energy. An additional 17 MW of committed capacity is sold under two identical 8.5 MW agreements with PEF. Revenue from the sale of electricity under the three PPAs consists of capacity payments based on a fixed schedule of prices, and energy payments. Capacity payments under the largest PPA are dependent on the plant maintaining a minimum on-peak capacity factor of 92 percent on a rolling twelve-month average basis. On-peak capacity factor refers to the ratio of actual electricity generated during periods of peak demand to the capacity rating of the plant during such periods. The project has achieved the minimum on-peak capacity factor continuously since commercial operation. Capacity payments under the smaller two agreements are dependent on the project maintaining a minimum on-peak capacity factor of 70 percent. Energy payments under the largest PPA are comprised of a fuel component based on the delivered cost of coal at two PEF-owned coal-fired generating stations and a component intended to recover operating and maintenance costs. Energy payments under the smaller two agreements are based on the lesser of PEF's actual avoided energy cost or an energy price index based on the delivered fuel cost at a specific coal-fired power plant owned by PEF.

Steam Sales Agreement

        Auburndale provides steam to Florida Distillers Company and Cutrale Citrus Juices USA, Inc. under two separate steam purchase agreements. The Florida Distillers agreement automatically extends on an annual basis, and can be terminated by either party with 90 days notice. The Cutrale Citrus Juices agreement terminates on December 31, 2013 and contains automatic two-year renewal terms.

8

Table of Contents

Fuel Supply Arrangements

        Auburndale receives the majority of its required natural gas through a gas supply agreement with El Paso Merchant Energy, L.P. that expires on June 30, 2012. Under the agreement, El Paso provides a fixed amount of gas on a daily basis. The gas price is based on a fixed schedule of prices that escalate annually and is below current market prices. At historic utilization rates, the gas supplied under the El Paso contract has accounted for approximately 80% of the gas required by the project under its PPA commitments and the remaining required fuel is purchased at spot prices.

        The required natural gas for the project is delivered through firm gas transportation agreements with Central Florida Gas Company and Florida Gas Transmission Company ("FGT") and is transported through the gas distribution system owned by Peoples Gas Transmission, Inc. ("Peoples"). The gas transportation agreements are co-terminus with the PPAs, expiring on December 31, 2013.

Operations & Maintenance

        The Auburndale project is operated and maintained by an affiliate of Caithness Energy, LLC. In 2006, Auburndale entered into a maintenance agreement with Siemens Energy, Inc. for the long-term supply of certain parts, repair services and outage services related to the gas turbine. The term of the maintenance agreement is dependent on the number of maintenance inspections and is expected to expire in late 2012.

        Auburndale entered into an agreement with TECO to transmit electric energy from the project to PEF. The agreement expires in 2024, unless extended as provided for in the agreement. Auburndale's cost for these services is based on a contractual formula derived from TECO's cost of providing such services.

Factors Influencing Project Results

        Auburndale derives a significant portion of its revenue through capacity payments received under the PPAs with PEF. In the event the project's on-peak capacity factor falls below a specified level, capacity payments will be adjusted downward. Since it began commercial operation, the project has received full capacity payments.

        During the term of the gas supply agreement, approximately 80% of the natural gas required to fulfill the project's PPAs is purchased at fixed prices. The remainder of the natural gas is purchased on the spot market. As a result, the project's operating margin is exposed to changes in market natural gas prices because the PPA does not effectively pass through those price changes to PEF. In order to mitigate this risk, Auburndale has entered into a series of financial swaps that effectively fix the price of natural gas to be purchased.

        The following table summarizes the hedge position related to natural gas requirements to satisfy Auburndale's PPAs as of April 7, 2010:

        We will continue to periodically analyze whether to execute further hedge transactions intended to mitigate natural gas price exposure at Auburndale through the expiration of the PPAs with PEF.

9

Table of Contents

        The energy portion of Auburndale's revenue under the largest PPA with PEF is impacted by changes in the price of coal purchased by two power plants in Florida owned by PEF. Because these power plants purchase a significant portion of their coal through contracts of varying lengths, the price of coal burned at those plants is not directly correlated with changes in spot coal prices. Accordingly, changes in the price of coal procured by these two power plants will impact Auburndale's energy revenue.

Lake Segment

General Description

        The Lake Segment consists of a 121 MW dual-fuel, combined-cycle QF cogeneration plant located in Florida, which began commercial operation in July 1993. We own 100% of the Lake project. In late 2007, the existing combustion turbines at the facility were upgraded to increase their efficiency by approximately 4% and output from 110 MW to 121 MW.

        The Lake project is located on a 16-acre site at a citrus processing facility in Umatilla, Florida. Lake sells all of its capacity and electric energy to PEF under the terms of a PPA expiring in July 2013. The project is operated as a mid-merit facility typically running during 11 peak hours daily. Steam is sold to Citrus World, Inc. for use at its citrus processing facility and is also used to make distilled water in distillation units.

        The Lake project does not have any debt outstanding. Atlantic Power Corporation has provided a $4.3 million letter of credit in favor of PEF to support the Lake project's obligations under its PPA.

Power Purchase Agreement

        Electricity is sold to PEF pursuant to a PPA that expires on July 1, 2013. Revenues from the sale of electricity consist of a fixed capacity payment and an energy payment. Capacity payments are subject to the project maintaining a capacity factor of at least 90% during on-peak hours (11 hours daily), on a 12-month rolling average basis. Lake is subject to reductions in its capacity payment should it not achieve the 90% on-peak capacity factor. The project generally has achieved the minimum on-peak capacity factor continuously since commercial operation. Energy payments are comprised of a fuel component based on the cost of coal consumed at two PEF-owned coal-fired generating stations, a component intended to recover operations and maintenance costs, a voltage adjustment and an hourly performance adjustment. During off-peak hours, energy payments are made in accordance with a prescribed formula based on the price of natural gas, although Lake usually does not operate during off-peak hours.

Steam Sales Agreement

        The Lake project provides steam to Citrus World under a steam purchase agreement that expires in 2013. The project also supplies steam to an affiliate that uses steam to make distilled water, which is sold to unaffiliated third parties.

Fuel Supply Arrangements

        The natural gas requirements for the facility are provided by Iberdrola Renewables, Inc. and TECO Gas Services, Inc. ("TGS"). Both the Iberdrola and TGS agreements contain market index based prices, commenced on July 1, 2009 and expire on July 31, 2013.

        Natural gas is transported to the project from supply points in Texas, Louisiana and Mississippi to Florida under contracts with Peoples Gas System.

10

Table of Contents

Operations & Maintenance

        The Lake project is operated and maintained by an affiliate of Caithness Energy, LLC.

        Lake also has a contractual services agreement and a lease engine agreement in place with General Electric (or "GE"). The contractual services agreement provides for planned and unplanned maintenance on the two gas turbines at the plant. The lease engine agreement provides temporary replacement gas turbines to Lake to support operations when the Lake turbines require significant maintenance.

Factors Influencing Project Results

        The Lake project derives a significant portion of its operating margin through capacity revenues received under the PPA with PEF. In the event the facility's on-peak capacity factor falls below a specified level, capacity payments will be adjusted downward, although the project rarely experiences such reductions. During the term of the current gas supply agreement, effective July 1, 2009, Lake's operating margins are exposed to changes in natural gas prices through the end of the PEF PPA in 2013. As a result, we have entered into a series of financial swaps that effectively fix the price of natural gas supplied to Lake thereby reducing fuel price risk.

        The following table summarizes the volumes hedged relative to natural gas requirements under Lake's PPA as of April 7, 2010:

        We will continue to analyze whether to execute further hedge transactions to mitigate natural gas price exposure at Lake through expiration of the PPA with PEF.

        The energy portion of Lake's revenue under the PPA with PEF is impacted by changes in the price of coal used by two of their power plants in Florida. Because these power plants secure a significant portion of their coal through contracts of varying lengths, the price of coal burned at those plants does not move in tandem with changes in spot coal prices.

        The energy payment under the PPA includes a performance adjustment. For energy deliveries in excess of contracted capacity to PEF during on-peak periods in which the system price for energy exceeds the PPA energy rate, the project receives the then as-available energy rate, determined according to regulatory methodology. Conversely, when the project is not available and is dispatched by PEF, the project incurs negative performance adjustment charges corresponding to the difference between the then as-available energy rate and the PPA energy rate.

Pasco Segment

General Description

        The Pasco Segment consists of the 100% owned Pasco project, a 121 MW dual fuel, combined-cycle, cogeneration plant located in Dade City, Florida, which began commercial operations in 1993 as a QF. With the expiration of the original PPA with PEF in 2008, and the commencement of the tolling agreement with TECO in 2009, Pasco self-certified with the FERC as an exempt wholesale generator and was no longer required to maintain QF status. The project owns the 2.7 acre site approximately 45 miles north of Tampa, Florida.

11

Table of Contents

Power Purchase Agreement

        Electricity is sold to TECO pursuant to a tolling agreement that commenced on January 1, 2009 and expires on December 31, 2018. Under the tolling agreement, TECO purchases the project's capacity and conversion services. Pasco converts fuel supplied by a TECO affiliate into electricity. Revenues consist of capacity payments, start-up charges, variable payments based on the amount of electricity generated and heat rate bonus payments based on the actual efficiency of the plant versus the contract efficiency. Atlantic Power Corporation has provided a $10 million letter of credit in favor of TECO to support the project's obligations under the tolling agreement.

        In exchange for obtaining the right to sell any potential excess emissions allowances from the plant, TECO accepted financial responsibility for any costs associated with additional allowances required and changes to environmental laws, including state or federal carbon legislation.

Fuel Supply Arrangements

        Under the terms of the tolling agreement, TECO is responsible for the fuel supply and is financially responsible for fuel transportation to the project.

Operations & Maintenance

        The Pasco project is operated and maintained by an affiliate of Caithness Energy, LLC.

        Pasco also has a services agreement and a lease engine agreement in place with GE. The services agreement provides for discounts for planned and unplanned maintenance on the project's two natural gas turbines, and commits the project to use GE for gas turbine maintenance activities. Under the lease engine agreement, GE rapidly provides temporary replacement natural gas turbines to the project to support operations when the project's turbines are removed from the site for significant maintenance.

Factors Influencing Project Results

        The Pasco project derives the majority of its revenues under the tolling agreement with TECO through capacity payments. In the event the project does not maintain certain levels of availability, the capacity payments will be reduced. Based on historical performance, we expect the project to continue to exceed the availability requirement of 93% in the summer and 90% in the winter. A portion of the project's operating margin is based on three variable payments from TECO, consisting of a variable operation and maintenance charge, a start charge and a heat rate bonus. As a result, the project achieves a variable margin during periods of operation; and as a result, the level of variable margin is impacted by how often the plant is called on to produce electricity.

Chambers Segment

General Description

        The Chambers Segment consists of our 40% equity investment in the Chambers project, a 262 MW pulverized coal-fired cogeneration facility located at the E.I. du Pont de Nemours and Company Chambers Works chemical complex near Carney's Point, New Jersey, which began commercial operation in March 1994 as a QF. Affiliates of Goldman Sachs and Energy Investors Funds, an established private equity fund manager that invests in the U.S. energy and electric power sector, in the aggregate hold 60% of the general partner interests. Chambers sells electricity to Atlantic City Electric ("ACE") under two separate power purchase agreements, a "Base PPA" and a power sales agreement. Historically, the project has operated as a baseload plant, however, during periods of low energy market pricing, the facility has run at partial or minimum load. Steam and electricity are sold to DuPont pursuant to an energy services agreement. The project site is leased from DuPont. Under the

12

Table of Contents

terms of the ground lease, DuPont has a right to purchase the project within 60 days of the lease expiration in 2024, or upon earlier termination of the lease, at fair market value.

        Chambers financed the construction of the project with a combination of term debt due March 31, 2014 and New Jersey Economic Development Authority bonds due July 1, 2021. The term loan is expected to amortize over its remaining term, while the bonds are repayable at maturity. Both are non-recourse to Atlantic Power Corporation.

        Epsilon Power Partners, L.P., our wholly-owned subsidiary, directly owns our interest in Chambers. Epsilon has outstanding debt which fully amortizes by its final maturity in 2019 and is non-recourse to Atlantic Power Corporation.

Power Purchase Agreements

Base PPA

        The 30-year term of the Base PPA with ACE expires in 2024. ACE has agreed to purchase 184 MW of capacity and has dispatch rights for energy of up to 187.6 MW during the summer season (May 1 to October 31) and 173.2 MW during the winter season (November 1 to April 30). The project must be available to deliver power to ACE at 90% of the average availability rate of a specific group of mid-Atlantic generating stations. Capacity prices are determined using a fixed price with a capacity factor adjustment. The energy payment under the Base PPA is divided between on-peak and off-peak periods and linked to a coal index that is identical to the project's coal supply contract escalation provisions. Chambers is guaranteed a minimum energy payment equivalent to 3,500 hours of operation per contract year, whether or not it is run that way, provided the project is available for energy production for at least 3,500 hours during the course of the contract year.

DuPont Energy Services Agreement

        DuPont purchases all its electrical needs for its Chambers Works chemical complex from the Chambers project, subject to a peak requirement of 40 MW, under the energy services agreement. The initial term of the agreement expires in 2024 but will continue thereafter unless terminated by at least 36 months prior written notice. The electricity sold under the agreement contains a fixed price, which is adjusted quarterly by the lesser of either: (i) the price of coal delivered to the facility; and (ii) the change in ACE's average retail rate.

        In December 2008, Chambers filed suit against DuPont for breach of the energy services agreement related to unpaid amounts associated with disputed price change calculations for electricity. DuPont subsequently filed a counterclaim for an unspecified level of damages. In the event the dispute cannot be resolved through settlement, a trial is expected in mid-2010. We do not believe that the outcome of this litigation will have a material impact on Atlantic Power Corporation.

Power Sales Agreement

        Energy generated at the Chambers project in excess of amounts delivered to ACE under the Base PPA and to DuPont is sold to ACE under a separate power sales agreement. Under this agreement, energy that ACE does not find economically attractive at the Base PPA's energy rate, but which may be cost effective to sell into the spot market ("Undispatched Energy"), may be self-scheduled by the project to capture additional profits. Margins on Undispatched Energy sales are shared between ACE (40%) and the project (60%). Energy not committed to ACE under the Base PPA and not called upon by DuPont under the energy services agreement may also be sold into the market under a similar margin sharing arrangement with ACE (30% to ACE and 70% to Chambers). The agreement also provides for the sale by Chambers into the market of capacity not contracted under the Base PPA pursuant to the same margin sharing arrangement with ACE (30% to ACE and 70% to Chambers).

13

Table of Contents

        The power sales agreement expires in July 2010 and has historically been extended at each previous contract expiration date.

Steam Sales Agreement

        Some of the steam generated at the Chambers project is sold to DuPont under the energy services agreement, which expires in 2024, but will continue in effect thereafter unless terminated by either party on at least 36 months prior notice. The agreement requires steam to be provided to DuPont up to the peak steam requirement levels that vary throughout the year. DuPont may purchase steam in excess of the peak steam requirement from any third party, subject to Chambers' right of first refusal to provide steam at the same price. Subject to certain conditions, DuPont has the option to construct and operate its own steam generation facility after 2014. DuPont is required to purchase a minimum quantity of steam necessary for the project to maintain its status as a QF. The steam price is subject to quarterly adjustments based on the price of coal delivered to the project. DuPont has the option in certain circumstances to take over operation of the steam facility in the event of prolonged failure to deliver steam.

Fuel Supply Arrangements

        Coal is supplied to the Chambers project pursuant to a coal purchase agreement with Consol Energy Inc., which expires in 2014 and is subject to a five to ten-year renewal based on good faith negotiations. The agreement governs the sale of coal (including transportation) to the project and the disposal of related ash. Consol is obligated to supply the entire coal requirements for the project, which may include stockpiling. The price escalator under the Base PPA with ACE uses the same index as the coal supply agreement (average coal cost of 25 mid-Atlantic region coal power plants), effectively passing through changes in coal prices to ACE.

Operations & Maintenance

        Operations and maintenance of the Chambers project is performed pursuant to an agreement with Cogentrix Energy, Inc., which expires in April 2014. Thereafter, the agreement will be automatically renewed for periods of five years until terminated by either party on six months notice. Cogentrix is paid a base annual fee in addition to cost reimbursement. Cogentrix is also eligible for performance fees based on facility net availability, efficiency and excess energy optimization, and is eligible for an additional management performance bonus.

Regional Greenhouse Gas Initiative

        With New Jersey's implementation of the Regional Greenhouse Gas Initiative ("RGGI") on January 1, 2009, the Chambers project was required to obtain carbon dioxide ("CO ₂ ") allowances in an amount corresponding to the CO ₂ emissions of the facility. Previously in 2008, the State of New Jersey passed legislation that provided for the sale of CO ₂ allowances at the price of $2.00 per allowance to certain generating facilities which were certified by the New Jersey Department of Environmental Protection ("NJDEP"). Chambers received this certification from the NJDEP in late 2009. Earlier in 2009, the project purchased approximately 480,000 allowances through the quarterly RGGI auctions and broker purchases. In December 2009, Chambers purchased 2.1 million allowances from the NJDEP at the price of $2 per allowance. A portion of the NJDEP purchase, in combination with the previously purchased allowances, satisfies the project's RGGI compliance requirements for 2009. The remainder of the 2009 NJDEP allowance purchase will be used to meet the 2010 requirements along with 2010 NJDEP allowance purchases.

14

Table of Contents

Factors Influencing Project Results

        The Chambers project derives a significant portion of its operating margin through capacity revenues received under the Base PPA. In the event the facility does not maintain a minimum level of availability under the Base PPA, the project's capacity payments from ACE would be reduced, although it has never experienced such a reduction. Energy sales under the Base PPA are expected to generate positive margins due to the effective hedging of energy prices and coal costs through the use of identical indexing in the energy payment under the Base PPA and the coal prices under the contract supply contract. While the indexing is identical, adjustments to the energy price under the Base PPA occur annually, whereas coal price adjustments occur quarterly.

        During periods of low spot market electricity prices, energy sales margins may be negatively impacted due to the pricing structure under the Base PPA and power sales agreement. ACE will reduce purchases under the Base PPA to the minimum requirement when the spot electricity price is below the price under the Base PPA. When spot market prices drop below the Base PPA price, but exceed the project's variable production cost, ACE pays for energy based on the power sales agreement, under which a portion of the margin above the project's production cost is shared with ACE. In the unusual situation when the spot electricity price is in excess of the Base PPA but less than the project's variable production cost (which may occur during off-peak periods), Chambers is required to sell energy to ACE at below its production cost. In some cases, the project is further negatively impacted by the facility's reduced fuel efficiency while operating at partial load to minimize operating at a negative margin.

        The debt at our wholly-owned Epsilon holding company includes restrictions on the upstream distribution of our share of partner distributions from Chambers. Cash flow from Chambers may be held in a reserve account by Epsilon's lender to the extent certain debt service coverage ratios are not achieved. Upon meeting the coverage ratio requirements, funds are distributed to us.

Path 15 Segment

General Description

        The Path 15 Segment consists of our ownership of 72% of the transmission system rights ("TSRs") in the Path 15 project, an 84-mile, 500-kilovolt transmission line built along an existing transmission corridor in central California. The Path 15 project commenced commercial operations in 2004. The Path 15 project facilitates the movement of power from the Pacific Northwest to southern California in the summer months and from generators in southern California to northern California in the winter months. The TSRs entitle us to receive an annual revenue requirement that is regulated by the FERC The annual revenue requirement is collected from California utilities and remitted to owners of TSRs by the California Independent System Operator ("CAISO").

        The Path 15 project and right of way is owned and operated by the Western Area Power Administration, a U.S. Federal power agency that operates and maintains approximately 17,000 miles of transmission lines. The operation of the Path 15 project consists entirely of the transmission of electric power, which is not subject to the same operating risks of a power plant or the volatility that may arise from changes in the price of electricity or fuel.

        The CAISO is a not-for-profit corporation that acts as a clearinghouse to settle third-party transactions involving the purchase and sale of power in California. Owners of transmission assets must place their assets under the operational control of the CAISO by entering into a standard transmission control agreement with them. In general, the CAISO coordinates the dispatch of power generation and manages the reliability of, and provides open access to, the transmission grid.

15

Table of Contents

        Three of our wholly-owned subsidiaries have incurred non-recourse debt relating to our interest in the Path 15 project. We have provided letters of credit totaling $8.4 million to support these debt service obligations.

Annual Revenue Requirement—FERC Rate Case

        The revenue collected by Path 15 is regulated by the FERC on a cost-of-service rate base methodology. Path 15 files a rate case with the FERC every three years to establish its revenue requirement for the next three year period. The revenue requirement includes all prudently incurred operating costs, depreciation and amortization, taxes, and a return on capital.

        In December 2007, we filed a rate application with the FERC to establish Path 15's revenue requirement through 2010. In January 2008, several parties filed protests and interventions to become parties to the proceeding. In February 2008, the FERC issued an order summarily approving the requested return on equity and, allowing the requested rates to go into effect as of February 20, 2008, subject to refund. California Public Utilities Commission and Southern California Edison filed requests for rehearing of that order. In February 2009, we filed an unopposed motion requesting suspension of the trial schedule to allow the parties to the rate case to finalize a settlement. In March 2009, we filed a settlement offer with the FERC. The settlement was supported by all parties to the proceeding. In August 2009, the FERC issued an order approving the settlement offer. We believe that the settlement was reasonable and has not significantly impacted the expected cash flow from the project. On October 30, 2009, the Path 15 project issued refunds reflecting the difference between the rates collected as of February 2008 pursuant to the December 2007 filing and the rates provided for under the settlement.

Factors Influencing Project Results

        The primary factor influencing the Path 15 project results is its FERC-regulated revenue requirement. Under the FERC's cost of service methodology, all prudently incurred expenses are permitted to be recovered in the revenue requirement including costs of the rate case itself every three years. Cash distributions to us could be adversely impacted by factors such as which year is used to establish the revenue requirement for the next three years and whether the FERC approves a return on equity less than 13.5% in future rate cases.

Other Project Assets

Orlando Project

General Description

        The Orlando project, a 129 MW natural gas-fired combined-cycle cogeneration facility located in an industrial park near Orlando in Orange County, Florida, commenced commercial operation in 1993 as a QF. We own a 50% interest in the project and Northern Star Generation, LLC owns the remaining 50% interest. The project is situated on a four acre site located adjacent to an air separation facility owned by Air Products and Chemicals, Inc., which serves as the project's steam customer. Orlando sells all of its electricity to PEF and Reedy Creek Improvement District under long-term PPAs, and also sells chilled water produced using steam from the project to Air Products and Chemicals. The Orlando project typically operates as a baseload plant. Both we and Northern Star have provided letters of credit in the amount of $1.6 million each in support of the project's obligations under the PEF PPA.

16

Table of Contents

Power Purchase Agreements

Progress Energy Florida

        Orlando sells electrical capacity and energy to PEF under a PPA that expires on December 31, 2023. The project is obligated to sell and deliver a committed capacity of 79.2 MW and has committed to a 93% on-peak capacity factor. Orlando receives a monthly capacity payment based on achieving the on-peak capacity factor and a monthly energy payment based on the total amount of electric energy actually delivered to PEF. The capacity payment escalates at 5.1% annually and is reduced if the facility's on-peak capacity factor is below 93%, on a 12-month rolling average basis. Energy payments are comprised of a fuel component based on the cost of coal purchased at two PEF-owned coal-fired generating stations, an operations and maintenance component, a voltage adjustment and an hourly performance adjustment. Off-peak energy prices are based on the on-peak spot market energy price discounted by 10%.

        On August 4, 2009, PEF provided notice to Orlando that the committed capacity under its PPA would be increased to 115 MW upon expiration of the Reedy Creek PPA in 2013, upon meeting certain conditions.

Reedy Creek Improvement District

        Orlando sells electrical capacity and energy to the Reedy Creek Improvement District, a municipal district serving the Walt Disney World complex, under a PPA that expires in 2013. Orlando is obligated to sell and deliver 35 MW of electricity and has committed to a 93% average capacity factor. Orlando receives a monthly capacity payment based on the actual average capacity factor and a monthly energy payment based on the total amount of electric energy actually delivered to Reedy Creek. The PPA may be extended for an additional ten-year term upon the consent of both parties. The capacity payment is fixed at a rate that escalates at 4.5% annually and is based upon achieving a 93% average capacity factor, calculated on a three-year rolling average basis. The agreement provides both incentive and penalty provisions for performance above and below a 93% average capacity factor, respectively. Reedy Creek also reimburses Orlando for a portion of the reservation charges associated with the project's firm gas transportation agreement with Florida Gas. In 2005, Orlando executed an agreement with Reedy Creek for periodic sales of up to 15 MW of non-firm available energy at firm rates.

Excess Energy Sales

        In 2006, Orlando executed a master purchase and sale agreement with Rainbow Energy Marketing Corporation. Under the agreement, Rainbow markets up to 15 MW of non-firm energy at spot market rates subject to the profitability of such sales. The arrangements with Rainbow can be terminated by either party upon 30 days notice.

Steam Sales Agreement

        Orlando entered into an agreement with a subsidiary of Air Products and Chemicals, Inc. to supply chilled water produced using steam from the project to its cryogenic air separation facility. Orlando does not have any minimum steam delivery requirements beyond the thermal and efficiency requirements required to maintain its QF status. Orlando is required to purchase its nitrogen requirements from Air Products and Chemicals, but does not have a minimum purchase requirement. Both the purchase price of nitrogen and the sales price of chilled water are at fixed prices that adjust based on the percentage increase/decrease in the producer price index.

        Because of reduced demand for chilled water at Air Products and Chemicals during certain periods, and to ensure continued compliance with QF requirements, Orlando procured and installed

17

Table of Contents

water distiller units in 2009, and entered into contracts to provide the distilled water to unaffiliated third parties in the local area.

Fuel Supply Arrangements

        Orlando buys natural gas from Orlando Power Holdings, LLC, which is indirectly owned by Northern Star, under an agreement expiring on December 31, 2013. Orlando Power has a back-to-back agreement for the purchase and supply of natural gas from Vastar Gas Marketing, Inc., which is a wholly-owned subsidiary of BP Energy Company. Under the agreement, which expires on December 31, 2013, Vastar is obligated to provide Orlando Power with its entire daily natural gas requirement. Orlando's purchase price is tied to the same coal-based and fixed escalators used for calculating the energy payments under the PPAs. Orlando also has a gas supply agreement with TECO Gas, but is not currently purchasing any natural gas under this agreement.

        Orlando has two gas transportation agreements expiring on July 31, 2010 with Peoples Gas for the delivery of natural gas to the project. We expect that those will be renewed as they are simply based on published tariff rates. Peoples Gas has entered into co-terminus back-to-back agreements with Florida Gas for the delivery of natural gas to the project. Orlando has a contractual right to extend these agreements. Transportation costs under the agreements are determined by Florida Gas' rate schedule as filed with the FERC. These agreements provide for the transportation of up to 23,600 Mmbtu (million British thermal units) per day to the project.

Operations & Maintenance

        The Orlando project is operated and maintained by an affiliate of Northern Star under an operations and administrative services agreement expiring on December 31, 2023. The operator is compensated on a cost-reimbursement basis plus a fixed general and administrative charge. In addition, the operator is entitled to receive an incentive fee equal to a percentage of the excess of Orlando's operating cash flow after deducting originally anticipated maintenance capital and anticipated debt service. In 1997, Orlando also entered into a maintenance agreement with Alstom Power Inc. for the long-term supply of hot gas path gas turbine parts, under which Alstom receives a monthly fee from the partnership and additional fees in certain circumstances.

Factors Influencing Project Results

        The Orlando project receives a significant portion of its revenues through capacity payments received under the PPA with PEF. In the event the facility's on-peak capacity factor falls below a specified level, capacity payments will be adjusted downward. The energy payment under the PEF PPA largely consists of an energy component, which is adjusted based on the same coal index as used in the gas supply pricing.

        The energy payment under the PPA with PEF includes a performance adjustment. During on-peak periods in which the market price for energy exceeds the PPA energy rate, for energy deliveries in excess of PEF scheduled capacity, the project receives the then as-available energy rate, determined according to regulatory methodology. Conversely, during on-peak periods when the project delivers less than the scheduled capacity, the project incurs negative performance adjustment charges corresponding to the difference between the then as-available energy rate and the PPA energy rate.

        The Reedy Creek PPA also contains incentive and penalty provisions for performance above and below a specified capacity factor.

18

Table of Contents

Selkirk Project

General Description

        The Selkirk project is a 345 MW dual-fuel, combined-cycle cogeneration plant located in the Town of Bethlehem in Albany County, New York, and commenced commercial operation in 1994 as a QF. The project includes two units: Unit I (80 MW) sells electricity into the New York merchant market and Unit II (265 MW) sells electricity to Consolidated Edison, Inc. (or "Con Ed"). The Selkirk project is typically operated as a mid-merit plant. We own an 18.5% economic interest in the project's cash flow. The other partners include affiliates of Cogentrix, Energy Investors Funds, The McNair Group, and Fort Point Power LLC (an affiliate of Osaka Gas Energy America Corporation). Each of the partners has an interest in cash distributions by the project which changes when certain partners achieve a specified return on their equity contributions. The 15.7 acre project site is situated adjacent to a Saudi Arabia Basic Industries Corporation (or "SABIC") plastics manufacturing plant, which also purchases steam from the project. Selkirk leases the project site under a long-term lease from SABIC.

        The Selkirk project has 8.98% first mortgage bonds outstanding, which fully amortize over their remaining term ending in 2012.

Power Purchase Agreements

        Since the expiration of Selkirk's agreement to sell capacity and energy from Unit I to National Grid in July 2008, Selkirk has been selling energy from Unit 1 into the New York merchant market. Capacity and energy from Unit II is sold to Con Ed under a PPA that expires on September 1, 2014, subject to a ten-year extension at the option of Con Ed under certain conditions. The Unit II PPA provides for a capacity payment, a fuel payment, an operations and maintenance payment and a payment for transmission from the project to Con Ed. The capacity payment, a portion of the fuel payment, a portion of the operations and maintenance payment and the transmission payment are fixed charges to be paid on the basis of plant availability.

Steam Sales Agreement

        Selkirk sells steam generated at the project to the SABIC plastics manufacturing plant under an agreement that expires on September 1, 2014. Under the agreement, SABIC is not charged for steam in an amount up to the annual equivalent of 160,000 lbs/hr during each hour in which the SABIC plant is in production. SABIC pays the project a variable price for steam in excess of this amount. SABIC is required to purchase the minimum thermal output necessary for Selkirk to maintain its QF status.

Fuel Supply Arrangements

        Selkirk buys natural gas for Unit I at spot market prices under a contract with Coral Energy Canada expiring on October 31, 2012. Selkirk has gas supply agreements for Unit II with Imperial Oil Resources Limited, EnCana Corporation and Canadian Forest Oil Ltd., which expire on October 31, 2014.

        The project also has long-term contracts for the transportation of Units I and II natural gas volume on a firm 365-day per year basis in place with TransCanada Pipelines Limited, Iroquois Gas and Tennessee Gas. The Unit I and Unit II gas transportation contracts expire on November 1, 2012 and November 1, 2014, respectively.

        Natural gas that is not used by Selkirk to generate power under its gas supply arrangements may be remarketed. Under certain market conditions, additional income is generated from such re-sales of natural gas. Units I and II have the capability to operate on fuel oil subject to certain limitations under the project's air permit and are able to switch fuel sources from natural gas to fuel oil and back without interrupting the generation of electricity.

19

Table of Contents

Operations & Maintenance

        GE operates the Selkirk project under an agreement expiring on December 31, 2012. The agreement provides for a fixed fee, capital parts discounts, a pass-through of management costs and a performance bonus. Management services for Selkirk are provided by Cogentrix under an administrative services agreement that expires in September 2014. Cogentrix is entitled to compensation under the agreement which is subject to renegotiation every four years and provides for the full recovery of its actual costs and properly allocated overhead plus a reasonable fee which must be approved by all of the Selkirk partners.

Regional Greenhouse Gas Initiative

        In 2009, in order to comply with RGGI, the project commenced purchasing CO ₂ allowances in the quarterly RGGI auctions. At year-end, the project had purchased adequate allowances to cover the amount needed for RGGI compliance in 2009, except for approximately 184,000 allowances. Under the RGGI rules, a compliance period consists of three years, during which time the emitter is required to obtain allowances corresponding to its CO ₂ emissions during the same period. New York State allocates a limited number of free allowances to generators that have long-term contracts. A portion of the project's 2009 requirement will be met with these free allowances. The project expects to purchase additional allowances in 2010 in order to satisfy its 2009 requirement. In resolution, of a lawsuit brought in 2009 challenging New York's RGGI rules, a consent decree is being finalized under which ConEd will reimburse the Selkirk project for the cost of additional allowances needed in excess of the free allowances allocated by New York.

Factors Influencing Project Results

        Energy produced by Unit I is sold at market prices based on the project's bid into the NYISO market. The project is therefore exposed to fluctuations in market energy prices which may impact Unit I energy sales margins. Under the PPA with Con Ed, the Project receives significant capacity revenues based on meeting availability requirements and also receives an energy payment whenever Con Ed calls on Unit II to generate electricity. The energy payment is primarily dependent on the fuel price component, indexed predominantly to natural gas prices, but also has a small component based on oil prices.

        In periods when Unit I or Unit II is not generating electricity, substantial volumes of natural gas are available to be re-sold. Depending on market prices when reselling compared to contract prices when the gas was nominated at the beginning of each month, the excess gas can be resold at significant positive margins or occasionally at a loss.

Gregory Project

General Description

        The Gregory project is a 400 MW natural gas-fired combined cycle cogeneration QF located near Corpus Christi, Texas that commenced commercial operation in 2000. The Gregory project is owned by Gregory Power Partners, LP, a Texas limited partnership, and our ownership interest in Gregory Power is approximately 17%. The other owners are affiliates of JPMorgan Chase & Co. and John Hancock Life Insurance Company. Gregory currently sells approximately 345 MW of its capacity to Fortis Energy Marketing and Trading GP and sells up to 33 MW of electric energy and capacity to Sherwin Alumina Company, which is owned by Glencore International AG, with the remainder sold in the spot market. While not strictly a baseload facility, Gregory typically is operated at a high capacity factor. The project is located on a site adjacent to Sherwin Alumina's production facility, which also serves as the project's steam customer. Gregory leases the land on which the project is located from Sherwin under an operating lease which expires in August 2035.

20

Table of Contents

        The Gregory project was financed by ING Capital Corporation ("ING") and a consortium of other lenders. The loan matures in 2017 and is expected to be amortized over its remaining term.

        In November 2008, Gregory's managing partner, discovered that the state authorization of the project's Prevention of Significant Deterioration Air Permit had lapsed due to a discrepancy in the representation of the renewal date of the state authorization by a consultant in 2002. The issue was self-reported to the Texas Commission of Environmental Quality (or "TCEQ"). During the first quarter of 2009, Gregory submitted its initial draft permit application to the TCEQ, which deemed it administratively complete, and completed the technical aspects of the permitting process. In December 2009, the TCEQ provided Gregory Power a draft of a new permit, and on March 15, 2010, the TCEQ issued the new permit. We believe the new permit limits are achievable by the project and will not require the installation of additional emissions control equipment.

Power Purchase Agreements

        Gregory sells 345 MW of its output to Fortis under a PPA that began on January 1, 2009 and expires December 31, 2013. Under the terms of the Fortis agreement, Fortis pays a fixed capacity payment and an energy payment that is based on the price of natural gas at Houston Ship Channel and a contract heat rate. (Heat rate refers to the amount of natural gas that is required to generate one MW of electricity.) Energy sales to Fortis consist of two tranches; a 234 MW "must-run" block and a 111 MW "dispatchable" block. The must-run block corresponds to the project's minimum energy output while satisfying Sherwin's electricity and steam requirements without the use of Gregory's auxiliary boilers. The dispatchable block is the portion of Gregory's output that can be scheduled at the option of Fortis as either energy, ancillary services or balancing energy. Credit support for the PPA consists of a $10 million letter of credit issued by ING which is backed by letters of credit from the project's partners, including a $1.7 million letter of credit provided by Atlantic Power Corporation.

Steam Sales Agreement

        Gregory sells steam to Sherwin under an agreement that expires in 2020. Under the terms of the agreement, Gregory is the exclusive source of steam to Sherwin's alumina plant, up to a maximum of 1,500,000 lbs/hr.

Fuel Supply Arrangements

        Gregory purchases natural gas under various short-term and long-term agreements. Gregory has the option of procuring 100% of its natural gas requirements from Kinder Morgan Tejas Pipeline, L.P., under a market-based gas supply agreement that expires in August 2010. Gregory Power has begun discussions with several gas suppliers for replacement supply when this contract expires.

        In March and June 2008, the project entered into pay fixed, receive floating, natural gas swap agreements with Sempra Energy Trading Corp. for the period January 2009 through December 2010. While Gregory has structured its power and steam sales agreements to mitigate the price risk between its fuel supply and electricity sales agreements, the project has some residual exposure to natural gas price risk due to the difference between the project's actual heat rate and the contractual heat rate under the Fortis PPA. The swap agreements partially mitigate this natural gas price risk.

Operations & Maintenance

        Babcock and Wilcox Power Generation Group, Inc. ("Babcock and Wilcox") is responsible for the operation and maintenance of the Gregory project under an agreement that terminates in July 2010. The project is evaluating whether to renew the contract with Babcock and Wilcox or contract with another nationally-recognized operations and maintenance provider. The operator receives a fee for

21

Table of Contents

management of the facility (subject to escalation) on a quarterly basis and reimbursement of certain costs.

Energy Management Services

        Gregory has entered into a contract with Tenaska Power Services, Co. to provide energy management services such as marketing excess power from the Project through the end of 2011. Tenaska will optimize Gregory's assets in the ancillary services market of the Electric Reliability Council of Texas, purchase natural gas for operations, provide scheduling services, provide back-office support and serve as Gregory's retail energy provider and qualified scheduling entity.

Factors Influencing Project Results

        The Gregory project derives a significant portion of its operating margin through energy revenues under its PPA with Fortis. Energy revenues are dependent on the price of natural gas at Houston Ship Channel and a contract heat rate. The project achieves a margin on its energy revenue due to the facility's actual heat rate being lower than the contract heat.

        Gregory also receives a capacity payment under the Fortis PPA which is dependent on maintaining certain minimum performance requirements. The project's capacity payments are subject to reduction if it fails to meet these requirements. Due to a forced outage in 2009, the project only received 98% of the full capacity revenue. However, historically the project has met all of the performance standards under the Fortis PPA.

Topsham Project

General Description

        The Topsham project is a 14 MW hydroelectric facility located on the Androscoggin River at the Pejepscot dam near Topsham, Maine and began commercial operation in 1987 as a QF. A 100% undivided interest in the Topsham project and a 100% undivided interest in the Topsham project site are owned by a financial institution, in its capacity as owner trustee for the benefit of Atlantic Power Corporation (50%) and DaimlerChrysler Services North America LLC (50%) as owner participants. Electricity is sold to the Central Maine Power Company (or "CMP") under a PPA that expires in 2011.

        The Topsham project is leased and operated by Topsham Hydro Partners Limited Partnership ("THP"), a Minnesota limited partnership. Pursuant to a sale and lease back transaction, THP leases both our interests in the project and in the project site until November 17, 2011. At the end of the lease term, THP has the option to renew the lease or acquire our share of the project and the project site. Lease payments made by THP are based on project's operating cash flows.

Power Purchase Agreement

        Electrical output from the Topsham project is sold to CMP under a PPA that contains a fixed price schedule and terminates on December 31, 2011.

Operations & Maintenance

        THP operates the project and provides all general and administrative services for the project under an agreement in effect until the earlier of December 31, 2027 or upon THP becoming the owner of 100% of the project and the project site.

22

Table of Contents

Badger Creek Project

General Description

        The Badger Creek project is a 46 MW simple-cycle, cogeneration facility located near Bakersfield, California which began commercial operation in 1991 as a QF. The Badger Creek project is owned by Badger Creek Limited, L.P. ("Badger"), a Texas limited partnership in which we own a 50% partnership interest. Juniper Generation, LLC, which is indirectly owned by affiliates of ArcLight Capital Partners, LLC, owns the other 50% partnership interest. Electricity is sold to Pacific Gas & Electric Corporation ("PG&E") under a PPA expiring in 2011. The project typically operates in a baseload configuration. Steam is sold to OXY USA Inc., an affiliate of Occidental Petroleum Corporation, under an agreement that expires in 2011. Badger leases the approximately 3.5 acre site for the Badger Creek project under a ground lease. The term of the lease expires in July 2021 and the parties may extend for up to 10 additional one-year periods.

Power Purchase Agreement

        Electricity generated by the Badger Creek project is purchased by PG&E under a PPA that expires in 2011. The PPA provides for monthly capacity and energy payments, and Badger is entitled to receive a performance bonus if the average on-peak capacity factor exceeds 85%. The energy price received under the PPA is linked to PG&E's interim "short-run avoided cost," as discussed below.

Steam Sales Agreement

        Steam from the Badger Creek project is sold to OXY under an agreement which expires in 2011. The agreement provides for successive renewal terms of one year unless either party gives advance notice of termination. OXY utilizes the steam in its enhanced oil recovery operations to allow for more effective and efficient extraction of heavy crude oil. Subject to certain conditions, OXY has an obligation to buy steam under this agreement in an amount not less than the minimum requirements necessary to maintain the project's status as a QF. Although OXY is not currently purchasing any power from the project, the steam agreement allows for up to 1 MW of electricity to be sold to OXY.

Fuel Supply Arrangements

        The Badger Creek Project is delivered via a private pipeline that connects with the Kern River-Mojave Pipeline. The pipeline was constructed by a joint venture in which the project owns approximately 21%. An affiliate of Juniper operates the pipeline. In October 2006, Badger entered into a gas supply agreement, including transportation, with Sempra Energy Trading Corporation. In March 2008, the gas agreement was extended to cover fuel procurements through April 30, 2011.

Operations & Maintenance

        Operations and maintenance for the Badger Creek project is performed by an affiliate of Juniper Generation, LLC under a fixed price operations and maintenance agreement. The agreement expires in 2011, but is terminable by either party upon six months' notice. The operator receives a base monthly fee, which is adjusted annually. In addition, the agreement provides for incentive fees and penalties based on the project's availability.

        An affiliate of Juniper also provides all day-to-day management services required by the project and is paid a semi-annual fee for such management services based on a percentage of gross cash receipts of the project.

23

Table of Contents

Factors Influencing Project Results

        The Badger Creek Project derives a portion of its operating margin through energy revenues under the PG&E PPA. Energy revenues are dependent on PG&E's short-run avoided costs ("SRAC"), which is generally defined as the cost of electricity that a utility avoids incurring by purchasing the power from an independent power producer versus constructing and operating additional generating resources on its own. PG&E's SRAC is determined by the California Public Utilities Commission ("CPUC") in conjunction with input from independent power producers, investor owned utilities and consumer groups through the state utility regulatory process. SRAC has been, and continues to be, a highly contested issue resulting in numerous CPUC proceedings and litigation. Until August 2009, SRAC was based on an administratively determined formula. In August 2009, the CPUC implemented a new SRAC methodology called the market index formula ("MIF"), which includes both a market-based component and an administratively determined component. Ultimately, the CPUC is moving toward a 100% market-based SRAC.

        In April 2009, California's Market Reform and Technology Update energy market ("MRTU") commenced operation. The MRTU is expected to provide a robustly traded day-ahead market for energy that reflects the avoided marginal energy costs of California's utilities. Upon the determination by the CPUC that the MRTU is functioning properly, MIF will no longer include the administratively determined component, which is expected to lower MIF pricing and create larger differences between peak and off-peak prices. Such a determination has not been made by the CPUC.

        Badger is a party to settlement negotiations among other QF facilities, California's major investor-owned utilities, and numerous consumer and independent power producer groups on a new energy pricing formula and possible extensions of firm capacity payments for project with existing contracts that will resolve many outstanding issues between the parties. Many of the SRAC and MIF related CPUC proceedings and litigation have been held in abeyance pending the outcome of the settlement negotiations.

        It is expected that the CPUC regulations applicable to Badger will be in a state of transition for the foreseeable future, and there can be no assurance that decisions by the CPUC will not have an adverse impact on Badger.

Rumford Project

General Description

        The Rumford Project is a 85 MW multi-fuel (coal, wood waste and tire-derived fuel) circulating fluidized bed boiler cogeneration facility located in the town of Rumford, Maine, which began commercial operation in 1990 as a QF. The Rumford project is owned by Rumford Cogeneration Company Limited Partnership, a Maine limited partnership in which we own an approximate 25% limited partnership interest. The project was constructed for the dual purpose of supplying steam and electricity to an adjacent paper mill, the Rumford Paper Company, owned by a subsidiary of NewPage Corporation ("NewPage") and electricity to the local utility. The project is situated on a site leased from the adjacent NewPage paper mill. The lease expires on December 31, 2020.

Power Purchase Agreement

        In February 2007, Rumford executed an Interim Financial Obligation Consolidation Agreement with Rumford Paper Company. The agreement consolidated the payment obligations of the various prior agreements between Rumford and Rumford Paper Company into a single payment obligation effective January 1, 2007. The effect of the agreement is similar to a lease wherein Rumford Paper Company assumes the risk of fuel and power price volatility as well as most operating costs. Payments under the agreement have been made quarterly to Rumford over a three year term ended

24

Table of Contents

December 31, 2009. During 2009, as a result of a dispute between NewPage and the limited partners regarding the making of the 2009 distributions and the economic viability of the project following the expiration of the agreement with Rumford Paper Company at the end of 2009, a settlement agreement was entered into which provided for the payment of the 2009 distributions to the partners. The settlement agreement further provided for the purchase by NewPage of the partners' interests in Rumford under certain conditions. If NewPage does purchase the partners' interests in Rumford, our share of the proceeds is expected to be approximately $2.5 million.

Koma Kulshan Project

General Description

        The Koma Kulshan project is a 13.3 MW run-of-the-river hydroelectric generation facility located on the slopes of Mount Baker, approximately 80 miles north of Seattle, Washington, and began commercial operation in 1990 as a QF. The Koma Kulshan project is owned by Koma Kulshan Associates, a California limited partnership in which we own a 49.75% economic interest, Mt. Baker Corporation owns a 0.25% economic interest and Covanta Energy Corporation owns the remaining 50%. The Koma Kulshan project was issued a 50-year hydro license from the FERC which expires in 2037. The project and its electrical output is sold to Puget Sound Energy, Inc. under a PPA expiring in 2037.

        Our and Mt. Baker Corporation's interests in the project are held through Concrete Hydro Partners, L.P. Under the Concrete partnership agreement, Mt. Baker Corporation is entitled to reimbursement of certain deferred costs associated with the original development of the project from a portion of the distributions from the project. The full repayment of these deferred costs is expected in 2010, following which distributions are projected to be made ratably to us and Mt. Baker Corporation.

Power Purchase Agreement

        Energy generated by the Koma Kulshan project is sold to Puget Sound Energy pursuant to a long-term PPA expiring in 2037. Power is sold at a per kilowatt hour rate that is adjusted annually. The term of the PPA is coterminous with the FERC license. Puget Sound Energy has the right to renew the PPA for a term equivalent to the term of any subsequent license or annual license granted by the FERC for the project.

Operations & Maintenance

        Covanta Energy Corporation performs the operations and maintenance of the facility pursuant to an operations and maintenance agreement which expires December 31, 2010. In addition to being reimbursed for actual costs incurred, Covanta receives an annual fee adjusted for inflation.

Delta-Person Project

General Description

        The Delta-Person Project is a 132 MW natural gas-fired peaking facility located near Albuquerque, New Mexico, is an exempt wholesale generator ("EWG") that commenced commercial operation in 2000. We own a 40% interest in Delta-Person and affiliates of Olympus Power, LLC and John Hancock Mutual Life Insurance Company own the remaining interests. The Delta-Person Project is situated on PNM's (formerly Public Service of New Mexico) retired Delta Generating Station site under a lease agreement which is co-terminus with the project's PPA. The project operates as a peaking facility, which means that it is called upon to generate electricity only during unusually high periods of demand. The Delta-Person project sells all of its electrical output to PNM under a long-term PPA that expires in 2020.

25

Table of Contents

        Construction of the Delta-Person project was financed through a $59.7 million construction loan that was converted to permanent project financing once commercial operation was achieved. The permanent project financing was divided into two term loans: (i) Tranche A due March 31, 2017; and (ii) Tranche B due March 31, 2019, both of which amortize over their remaining terms.

Power Purchase Agreement

        Electrical power generated by the Delta-Person project is purchased by PNM under a PPA that will expire in 2020. PNM has the unilateral right to extend the PPA for five years by giving written notice of such extension no later than two years prior to the end of the original term of the PPA. Subject to adjustments provided for in the PPA, PNM will purchase and accept the entire output of the project when PNM calls upon the capacity. Payments consist of: (i) the energy purchase price multiplied by the kilowatt hours delivered; (ii) the capacity purchase price multiplied by the dependable capacity; (iii) the project's cost of purchasing electric service from PNM for the operations and maintenance of the facility; and (iv) any other applicable charges. In order to earn full capacity payments, the project must maintain availability of at least 90%, which the project has historically achieved.

Fuel Supply Arrangements

        The project purchases fuel from PNM Gas Services, a division of PNM, with fuel costs passed through to PNM under the PPA. The project has access to an interruptible gas supply and transportation like other standard industrial customers on PNM Gas Services' system.

Operations & Maintenance

        As a simple cycle peaking facility, the project operations do not require extensive staffing and technical resources. Olympus Power provides asset management services, which include operational and contractual oversight of the facility, budget setting and environmental compliance.

Factors Influencing Project Results

        The Delta-Person project derives a significant portion of its operating margin through capacity payments under the PPA with PNM. The capacity payment is based on two components which adjust annually with changes in inflation and interest rates. The capacity payment may be reduced on a monthly basis if the project's availability falls below 97%. The project has rarely experienced such adjustment. Energy payments are based on a variable operations and maintenance component, a fuel component and an availability incentive. The fuel component consists of the actual price the project pays for fuel and a contract heat rate. The contract heat rate is slightly higher than the project's average operating heat rate which generates additional energy revenue; however the artificially higher heat rate adversely affects the dispatch of the project by PNM at current market conditions.

Biomass Development Projects

        Biomass-derived power is a well-established, conventional technology. In biomass power plants, the fuel is burned in a boiler to create steam that turns a turbine to generate electricity. In general, biomass power plants are designed to be operated as baseload units. While biomass encompasses a broad range of potential fuels, our activities are focused on "wood-residue" biomass. This feedstock includes virgin wood (from forests, wood processing facilities, etc.), agricultural residues, industrial and commercial waste, etc. Our facilities are eligible for renewable energy credits and may also qualify for certain federal tax benefits, depending on their construction schedule. We are pursuing six biomass projects with partners who bring specific skills to their development, as more fully described below.

26

Table of Contents

Rollcast Energy, Inc.

        Rollcast Energy, Inc. develops, owns and operates renewable power plants that use wood or biomass fuel. Rollcast, based in Charlotte, North Carolina, has five 50 MW biomass power plants in various stages of development in the southeastern U.S. In March 2009, we acquired a 40% equity interest in Rollcast and in March 2010, we acquired an additional 15% interest, increasing our total ownership to approximately 55%. The terms of our investment in Rollcast provide us the option, but not the obligation, to invest in Rollcast's first five biomass power plants. Two of the development projects have obtained 20-year PPAs with terms that allow for the pass-through of fuel costs to the utility customer. One of those projects has signed an agreement with two banks to co-arrange project-level debt financing, which is expected to close in the second quarter of 2010.

Onondaga Renewables, LLC

        Onondaga Renewables, LLC is a 50/50 joint venture between us and Catalyst Renewables LLC formed in December 2008 to repower our decommissioned 91 MW gas-fired cogeneration facility located in Geddes, New York. Utilizing locally acquired biomass fuel, the proposed facility is expected to have a capacity of approximately 45 MW. Onondaga is currently in the process of obtaining a PPA for the full output of the facility.

ASSET MANAGEMENT

        Our asset management strategy is to partner with recognized leaders in the independent power business. Most of our projects are managed by Caithness Energy, LLC; Cogentrix Energy, Inc., a subsidiary of Goldman Sachs; and, in the case of Path 15, the Western Area Power Administration, a U.S. Federal power agency. On a case-by-case basis, Caithness, Cogentrix, and Western may provide: (i) day-to-day project-level management, such as operations and maintenance and asset management activities; (ii) partnership level management tasks, such as insurance renewals; and (iii) passive partnership level management, such as acting as limited partner. In some cases these project managers or the project partnerships may subcontract with other firms experienced in project operations, such as GE, to provide for day-to-day plant operations. In addition, employees of Atlantic Power Corporation with significant experience managing similar assets are involved in most decisions with the objective to choose value-creating transactions such as contract restructurings, asset-level refinancing, acquisitions and divestitures.

        Caithness Energy, LLC is one of the largest privately-held independent power producers in the United States. For over 25 years in the independent power business, Caithness, has been actively engaged in the development, acquisition and management of independent power facilities for its own account as well as in venture arrangements with other entities. Caithness operates our Auburndale, Lake and Pasco projects and provides other asset management services for our Orlando, Selkirk and Badger Creek projects.

        Cogentrix Energy, Inc develops, owns, and operates independent power plants, located primarily in the U.S. Cogentrix manages the operation of the Chambers and Selkirk projects. New York-based investment firm Goldman Sachs Group acquired Cogentrix in December 2003. In November 2007, Goldman Sachs sold 80% of its interest in a number of the Cogentrix independent power plants, including Chambers and Selkirk to Energy Investors Funds, an established private equity fund manager that invests in the U.S. energy and electric power sector. Cogentrix continues to manage the Chambers and Selkirk projects.

        The Western Area Power Administration ("Western") markets and delivers hydroelectric power and related services within a 15-state region of the central and western United States. Western is one of four power marketing administrations within the U.S. Department of Energy whose role is to market and transmit electricity from multi-use water projects. Western's transmission system carries electricity

27

Table of Contents

from 57 power plants operated by the Bureau of Reclamation, U.S. Army Corps of Engineers and the International Boundary and Water Commission. Together, these plants have an operating capacity of approximately 8,785 MW. Western owns and operates the Path 15 transmission line.

INDUSTRY REGULATION

Overview

        In the United States, the trend towards restructuring the electric power industry and the introduction of competition in electricity generation began with the passage and implementation of the Public Utility Regulatory Policies Act of 1978, as amended ("PURPA"). Among other things, PURPA, as implemented by the FERC, generally required that vertically integrated electric utilities purchase power from QFs at their avoided cost. The FERC defines avoided cost as the incremental cost to a utility of energy or capacity which, but for the purchase from QFs, the utility would itself generate or purchase from another source. This requirement was modified in 2005, as discussed below.

        Electric transmission assets, such as our Path 15 project, are regulated by the FERC on a traditional cost-of-service rate base methodology. This approach allows a transmission company to establish a revenue requirement which provides an opportunity to recover operating costs, depreciation and amortization, and a return on capital. The revenue requirement and calculation methodology is reviewed by the FERC in periodic rate cases. As determined by the FERC, all prudently incurred operating and maintenance costs, capital expenditures, debt costs and a return on equity may be collected in rates charged.

Carbon Emissions

        In the United States, government policy addressing carbon emissions continued to gain momentum over the last two years. Beginning in 2009, the RGGI was established in ten Northeast and Mid-Atlantic states as the first cap-and-trade program in the United States for CO ₂ emissions. The states have varied implementation plans and schedules. Two of these states, New York and New Jersey, also provide cost mitigation for independent power projects with certain types of power contracts. Other states and regions in the United Sates are developing similar regulations and it is expected that federal climate legislation will be established in the future.

        Federal bills to create both a cap-and-trade allowance system and a renewable/efficiency portfolio standard have been introduced in both the U.S. House and Senate, although passage of a bill with both elements has become less likely over the past year. Separately, the U.S. Environmental Protection Agency has asserted its right to regulate CO ₂ emissions and could press forward with an initiative independent of legislative efforts.

        Additionally, more than half of the U.S. states and most Canadian provinces have set mandates requiring certain levels of renewable energy production and/or energy efficiency during target timeframes. This includes generation from wind, solar and biomass. In order to meet CO ₂ reduction goals, changes in the generation fuel mix are forecasted to include a reduction in existing coal resources, higher reliance on nuclear, natural gas, and renewable energy resources and an increase in demand-side resources. Investments in new or upgraded transmission lines will be required to move increasing renewable generation from more remote locations to load centers.

Regulation—Generating Projects

        Ten of our power generating projects are qualified facilities under PURPA and related FERC regulations. The Delta-Person and Pasco projects are not QFs but are both EWGs under the Public Utility Holding Company Act of 2005, as amended ("PUHCA"). The generating projects with QF status and which are currently party to a power purchase agreement with a utility or have been granted

28

Table of Contents

authority to charge market-based rates are exempt from FERC rate-making authority. The FERC has granted seven of the projects the authority to charge market-based rates based primarily on a finding that the project lacks market power. These projects are thus not subject to FERC rate-making. The generating projects are exempt from regulation under PUHCA and the projects with QF status are also exempt from state regulation respecting the rates of electric utilities and the financial or organizational regulation of electric utilities.

        A QF falls into one or both of two primary classes, both of which would facilitate more efficient use of fossil fuels to generate electricity than typical utility plants. The first class of QFs includes energy producers that generate power using renewable energy sources such as wind, solar, geothermal, hydro, biomass or waste fuels. The second class of QFs includes cogeneration facilities, which must meet specific fossil fuel efficiency requirements by producing both electricity and steam versus electricity only. With the exception of QFs, generation, transmission and distribution of electricity remained largely owned by vertically integrated electric utilities until the enactment of the Energy Policy Act of 1992 (the "EP Act of 1992") and subsequent orders in 1996, along with electric industry restructuring initiated at the state level. Among other things, the EP Act of 1992 enhanced the FERC's power to order open access to power transmission systems, contributing to significant growth in the independent power generation industry.

        In August 2005, the Energy Policy Act of 2005 (the "EP Act of 2005") was enacted, which removed certain regulatory constraints on investment in utility power producers. The EP Act of 2005 also limited the requirement from PURPA that electric utilities buy electricity from QFs to certain markets that lack competitive characteristics. Finally, the EP Act of 2005 amended and expanded the reach of the FERC's corporate merger approval authority under Section 203 of the Federal Power Act.

        All of our projects are subject to reliability standards developed and enforced by the North American Electric Reliability Corporation ("NERC"). NERC is a self-regulatory organization that is a non-governmental entity which has statutory responsibility to regulate bulk power system users, generation and transmission owners and operators through the adoption and enforcement of standards for fair, ethical and efficient practices.

        In March 2007, the FERC issued an order approving mandatory reliability standards proposed by NERC in response to the August 2003 northeastern U.S. blackouts. As the result, users, owners and operators of the bulk power system can be penalized significantly for failing to comply with the FERC-approved reliability standards. We have designated our Senior Director for Asset Management as our FERC Compliance Officer responsible for meeting the FERC and NERC requirements and an outside law firm specializing in this area advises us on FERC and NERC compliance, including annual compliance training for relevant employees.

Regulation—Transmission Project

        The revenues received by the Path 15 project are regulated by the FERC through a rate review process every three years that sets an annual revenue requirement. Under terms of the initial rate case settlement, the project must go through the FERC review every three years.

        The Path 15 project's initial three-year rate period's revenue requirement expired at the end of 2007. On December 21, 2007, the Project submitted to the FERC its revenue requirement for the 2008 through 2010 period. In an order issued February 2008, the FERC allowed the rates as filed in December 2007 to go into effect subject to refund pending the outcome of the regulatory proceedings. The FERC also accepted several of the project's key methodological approaches, including use of a 13.5% return on equity. A number of parties requested rehearing on such issues. On March 23, 2009, the Path 15 project filed an uncontested settlement offer with the FERC, for rehearing in the Path 15 project's rate case proceeding. We believe that the settlement was reasonable and will not significantly impact the expected cash flow from the project. On August 3, 2009, the FERC issued an order

29

Table of Contents

approving the settlement. Thereafter, on October 30, 2009 the Path 15 project issued refunds reflecting the difference between the rates collected as of February 2008 pursuant to the December 2007 filing and the rates provided for under the settlement. Since May 2009, the Path 15 project has been receiving revenues based on the revenue requirement established by the settlement. Pursuant to the terms of the settlement, Path 15 is required to submit its revenue requirement for the 2011 through 2013 rate period to the FERC in February 2011. The preparation of this new rate filing will commence in the third quarter of 2010.

COMPETITION

        The power generation industry is characterized by intense competition, and our projects compete against utilities, industrial companies and other independent power producers. In recent years, there has been increasing competition among generators in an effort to obtain power sales agreements, and this competition has contributed to a reduction in electricity prices in certain markets where supply has surpassed demand plus appropriate reserve margins. In addition, many states are implementing or considering regulatory initiatives designed to increase competition in the U.S. power industry.

        The U.S. power industry is continuing to undergo consolidation and may offer attractive acquisition and investment opportunities, although we believe that we will continue to confront significant competition for those opportunities and, to the extent that any opportunities are identified, we may be unable to effect acquisitions or investments on attractive terms. We compete for acquisition opportunities with numerous private equity funds, Canadian and U.S. independent power firms, utility genco subsidiaries and other strategic and financial players. Our competitive advantages include industry knowledge, experience and contacts to better access, analyze and execute acquisition opportunities and potential partners; reputation of the firm and its executive officers; capital availability and cost; knowledge, experience and contacts in finance to flexibly access and structure advantageous leverage options. We have similar strength in asset management and optimization.

EMPLOYEES

        As of March 29, 2010, we had 13 full-time employees. None of our employees is represented by any collective bargaining unit or a party to any collective bargaining agreement.

ITEM 1A.    RISK FACTORS.

Risks Related to Our Business and Our Projects

         Our revenue may be reduced upon the expiration or termination of our power purchase agreements

        Power generated by our projects, in most cases, is sold under power purchase agreements (or "PPAs") that expire at various times. In addition, these PPAs may be subject to termination in certain circumstances, including default by the project. When a PPA expires or is terminated, it is possible that the price received by the project for power under subsequent arrangements may be reduced significantly. It is possible that subsequent PPAs may not be available at prices that permit the operation of the project on a profitable basis. If this occurs, the affected project may temporarily or permanently cease operations.

         Our projects depend on their electricity, thermal energy and transmission services customers

        Each of our projects rely on one or more PPAs, steam sales agreements or other agreements with one or more utilities or other customers for a substantial portion of its revenue. The largest customers of our power generation projects, including projects recorded under equity method of accounting, are Progress Energy Florida, Inc. ("PEF"), Tampa Electric Company ("TECO"), and Atlantic City Electric ("ACE"), which purchase approximately 40%, 15% and 11%, respectively, of the net electric generation capacity of our projects. The amount of cash available for distribution to shareholders is highly dependent upon customers under such agreements fulfilling their contractual obligations. There is no assurance that these customers will perform their obligations or make required payments.

30

Table of Contents

         Certain of our projects are exposed to fluctuations in the price of electricity

        Those of our projects with no PPA or a PPAs based on spot market pricing will be exposed to fluctuations in the wholesale price of electricity. In addition, should any of the long-term PPAs expire or terminate, the relevant project will be required to either negotiate a new PPA or sell into the electricity wholesale market, in which case the prices for electricity will depend on market conditions at the time.

         Our projects may not operate as planned

        The revenue generated by our projects is dependent, in whole or in part, on the amount of electric energy and steam generated by them. The ability of our projects to generate the required amount of power to be sold to customers under the PPAs is a primary determinant of the amount of cash that will be distributed from the project to us, and that will in turn be available for dividends paid to our shareholders. There is a risk of equipment failure due to wear and tear, latent defect, design error or operator error, among other things, which could adversely affect revenues and cash flow. To the extent that our projects' equipment requires more frequent and/or longer than forecast down times for maintenance and repair, or suffers disruptions of power generation for other reasons, the amount of cash available for dividends may be adversely affected.

        In general, our projects transmit electric power to the transmission grid for purchase under the PPAs through a single step up transformer. As a result, the transformer represents a single point of vulnerability and may exhibit no abnormal behavior in advance of a catastrophic failure that could cause a temporary shutdown of the facility until a spare transformer can be found or a replacement manufactured. If the reason for a shutdown is outside of the control of the operator, a project may be able to make a force majeure claim for temporary relief of its obligations under the project contracts such as the PPA, fuel supply, steam sales agreement, a project-level debt agreement or otherwise mitigate impacts through business interruption insurance policies. If successful, such a claim may prevent a default or reduce monetary losses under such contracts. However, a force majeure claim may be challenged by the contract counterparty and, to the extent the challenge is successful, the outage may still have a materially adverse effect on the project.

         Our projects depend on suppliers under fuel supply agreements and increases in fuel costs may adversely affect the profitability of the projects

        Revenues earned by our projects may be affected by the availability, or lack of availability, of a stable supply of fuel at reasonable or predictable prices. To the extent possible, the projects attempt to match fuel cost setting mechanisms in supply agreements to energy payments formulas in the PPA. To the extent that fuel costs are not matched well to PPA energy payments, increases in fuel costs may adversely affect the profitability of the projects.

        The amount of energy generated at the projects is highly dependent on suppliers under certain fuel supply agreements fulfilling their contractual obligations. The loss of significant fuel supply agreements or an inability or failure by any supplier to meet its contractual commitments may adversely affect dividends to our shareholders.

        Upon the expiration or termination of existing fuel supply agreements, we or our project operators will have to renegotiate these agreements or may need to source fuel from other suppliers. There can be no assurance that we or our project operators will be able to renegotiate these agreements or enter into new agreements on similar terms. Furthermore, there can be no assurance as to availability of the supply or pricing of fuel under new arrangements and it can be very difficult to accurately predict the future prices of fuel.

31

Table of Contents

        The amount of energy generated at the projects is dependent upon the availability of natural gas, coal, oil or biomass. There can be no assurance that the long-term availability of such resources will remain unchanged.

         Our projects depend on a favorable regulatory regime

        The profitability of our projects is in part dependent upon the continuation of a favorable regulatory climate with respect to the continuing operations and the future growth and development of the independent power industry. Should the regulatory regime in an applicable jurisdiction be modified in a manner which adversely affects the projects, including increases in taxes and permit fees, dividends to shareholders may be adversely affected. The failure to obtain all necessary licenses or permits, including renewals thereof or modifications thereto, may also adversely affect cash available for distribution.

         Our operations are subject to the provisions of various energy laws and regulations

        Generally, in the United States, our projects are subject to regulation by the Federal Energy Regulatory Commission, or "FERC", regarding the terms and conditions of wholesale service and rates, as well as by state agencies regarding PPAs entered into by qualifying facility projects and the siting of the generation facilities. The majority of our generation is sold by qualifying facility projects under PPAs that required approval by state authorities.

        In August 2005, the Energy Policy Act of 2005 was enacted, which removed certain regulatory constraints on investment in utility power producers. The Energy Policy Act of 2005 also limited the requirement that electric utilities buy electricity from qualifying facilities to certain markets that lack competitive characteristics, potentially making it more difficult for our current and future projects to negotiate favorable PPAs with these utilities. Finally, the Energy Policy Act of 2005 amended and expanded the reach of the FERC's merger approval authority.

        If any project that is a qualifying facility were to lose its status as a qualifying facility, then such project may no longer be entitled to exemption from provisions of the Public Utility Holding Company Act of 2005 or from provisions of the Federal Power Act and state law and regulations. Such project may be able to obtain exempt wholesale generator status to maintain its exemption from the provisions of the Public Utility Holding Company Act of 2005, however there can be no assurance provided that our projects will be able to obtain such exemptions. Loss of qualifying facility status could trigger defaults under covenants to maintain qualifying facility status in the PPAs, steam sales agreements and project-level debt agreements and if not cured within allowed cure periods, could result in termination of agreements, penalties or acceleration of indebtedness under such agreements, plus interest.

        Our projects would also have to file with the FERC for market-based rates or file for acceptance for filing of the rates set forth in the applicable PPA, and our projects' rates would then be subject to initial and potentially subsequent reviews by the FERC under the Federal Power Act, which could result in reductions to the rates.

        Our projects require licenses, permits and approvals which can be in addition to any required environmental permits. No assurance can be provided that we will be able to obtain, comply with and renew, as required, all necessary licenses, permits and approvals for these facilities. If we cannot comply with and renew as required all applicable regulations, our business, results of operations and financial condition could be adversely affected.

        The Energy Policy Act of 2005 provides incentives for various forms of electric generation technologies, which may subsidize our competitors. In addition, pursuant to the Energy Policy Act of 2005, the FERC selected an electric reliability organization which imposes mandatory reliability rules

32

Table of Contents

and standards. Among other things, the FERC's rules implementing these provisions allow such reliability organizations to impose sanctions on generators that violate their new reliability rules.

        We cannot provide assurance that the introductions of new laws, or other future regulatory developments, will not have a material adverse impact on our business, operations or financial condition.

         Future Federal Energy Regulation Commission rate determinations could negatively impact Path 15's cash flows

        The stability of Path 15's cash flows will continue to be subject to the risk of the FERC's adjusting the expected formulation of revenues upon its rate review every three years. The cost-of-service methodology currently applied by the FERC is well established and transparent; however, certain inputs in the FERC's determination of rates are subject to its discretion, including in response to protests from interveners in such rate cases, which include return on equity and the recovery of certain extraordinary expenses. Unfavorable decisions on these matters could adversely affect the cash flow, financial position and results of operations of us and Path 15, and could adversely affect our cash available for dividends.

         Noncompliance with regulations and standards may subject us and our projects to penalties

        North American Electric Reliability Corporation ("NERC") is a self-regulatory organization that is a non-governmental entity which has statutory responsibility to regulate bulk power system users, generation and transmission owners and operators. NERC groups the users, owners, and operators of the bulk power system into 17 categories, known as functional entities—i.e., Generator Owner, Generator Operator, Purchasing—Selling Entity, etc.—according to the tasks they perform. The NERC Compliance Registry lists the entities responsible for complying with the mandatory reliability standards and the FERC, NERC, or a regional reliability organization may assess penalties against any responsible entity found to be in noncompliance. Violations may be discovered through self-certification, compliance audits, spot checking, self-reporting, compliance investigations by NERC (or a regional reliability organization) and the FERC, periodic data submittals, exception reporting, and complaints. NERC and the FERC have assigned a Violation Risk Factor of High, Medium, or Lower to each requirement of the mandatory reliability standards corresponding to the risk to the bulk power system associated with a violation of that requirement. The penalty that might be imposed for violating the requirements of the standards is a function of the Violation Risk Factor. Penalties for the most severe violations can reach as high as $1 million per violation, per day.

         Predicting project cash flows over the long term is difficult

        Due to the many uncertainties described in this risk factors section that could materially affect our future revenues or expenses, it can be difficult to make accurate long term projections of our cash flows..

         Our projects are subject to significant environmental and other regulations

        Our projects are subject to numerous and significant federal, state and local laws, including statutes, regulations, by-laws, guidelines, policies, directives and other requirements governing or relating to, among other things: air emissions; discharges into water; ash disposal; the storage, handling, use, transportation and distribution of dangerous goods and hazardous and residual materials, such as chemicals; the prevention of releases of hazardous materials into the environment; the prevention, presence and remediation of hazardous materials in soil and groundwater, both on and off site; land use and zoning matters; and workers' health and safety matters. As such, the operation of our projects carries an inherent risk of environmental, health and safety liabilities (including potential civil actions,

33

Table of Contents

compliance or remediation orders, fines and other penalties), and may result in the projects being involved from time to time in administrative and judicial proceedings relating to such matters.

        Environmental laws and regulations have generally become more stringent over time, and this trend may continue. In particular, the Environmental Protection Agency has promulgated regulations under the federal Clean Air Interstate Rule ("CAIR") requiring additional reductions in nitrogen oxides, or "NO _X ", and sulphur dioxide, or "SO ₂ ", emissions, beginning in 2009 and 2010 respectively, and has also promulgated regulations requiring reductions in mercury emissions from coal-fired electric generating units, beginning in 2010 with more substantial reductions in 2018. Moreover, certain of the states in which we operate have promulgated air pollution control regulations which are more stringent than existing and proposed federal regulations. While CAIR was set aside by a court decision last year, the Environmental Protection Agency is currently working on reinstatement of the program. Also,, regulations are under consideration that would modify the CAIR program: distribution of NO _X allocations at no cost to generators, to an auction based program for all allocations.

        Ongoing public concerns about emissions of CO ₂ and other greenhouse gases from power plants have resulted in proposed laws and regulations at the federal, state and regional levels that, if they were to take effect substantially as proposed, would likely apply to project operations. For example, the multi-state CO ₂ cap-and-trade program known as the RGGI would apply to our fossil fuel facilities in the Northeast region. The RGGI program went into effect on January 1, 2009. CO ₂ allocations are now a tradeable commodity, currently averaging in the $2.05 to $3.20/ton range. The State of Florida has conducted stakeholder meetings as part of the process of developing GHG emissions regulations, the most recent of which was in January 2009. Discussions indicate favoring a program similar to that of RGGI.

        In 2006, the State of California passed legislation initiating two programs to control/reduce the creation of GHG. The two laws, more commonly known as AB 32 and SB 1368, are currently in the regulatory rulemaking phase which will involve public comment and negotiations over specific provisions. Development towards the implementation of this program continues.

        Under AB 32 (the California Global Warming Act of 2006) the California Air Resources Board ("CARB") is required to adopt a GHG emissions cap on all major sources (not limited to the electric sector). In order to do so, it must adopt regulations for the mandatory reporting and verification of GHG emissions and to reduce state-wide emissions of GHG to 1990 levels by 2020. This will most likely require that electric generating facilities reduce their emissions of GHG or pay for the right to emit by the implementation date of January 1, 2012. The program has yet to be finalized and the decision as to whether allocations will be distributed or auctioned will be determined in the rulemaking process that is currently underway. Discussion to date favors an auction-based allocation program.

        SB 1368 added the requirement that the California Energy Commission, in consultation with the CPUC and the CARB establish GHG emission performance standards and implement regulations for power purchase agreements that exceed five years entered into prospectively by publicly-owned electric utilities. The legislation directs the CEC to establish the performance standard as one not exceeding the rate of GHG emitted per megawatt-hour associated with combined-cycle, gas turbine baseload generation, such as our Badger Creek project. Provisions are under consideration in the rulemaking to allow facilities that have higher CO ₂ emissions to be able to negotiate PPA's for up to a five-year period or sell power to entities not subject to SB 1368.

        In addition to the regional initiatives, legislation for the regulation of GHG has been introduced at the federal level and if passed, may eventually override the regional efforts with a national cap and trade program. Federal bills to create both a cap-and-trade allowance system and a renewable/efficiency portfolio standard have been introduced in both the house and senate, although passage of a bill with both elements has become less likely over the past year. Separately, the U.S. Environmental Protection

34

Table of Contents

Agency has asserted its right to regulate CO ₂ emissions and could press forward with an initiative independent of legislative efforts.

        Significant expenditures may be required for either capital expenditures or the purchase of allowances under any or all of these programs to keep the projects' facilities compliant with environmental laws and regulations. The projects' PPAs do not allow for the pass through of emissions allowance or emission reduction capital expenditure costs, with the exception of Pasco. If it is not economical to make those expenditures it may be necessary to retire or mothball facilities, or restrict or modify our operations to comply with more stringent standards.

        Our projects have obtained environmental permits and other approvals that are required for their operations. Compliance with applicable laws and future changes to them is material to our businesses. Although we believe the operations of the projects are currently in material compliance with applicable environmental laws, licenses, permits and other authorizations required for the operation of the projects and although there are environmental monitoring and reporting systems in place with respect to all the projects, there is no guarantee that more stringent laws will not be imposed, that there will not be more stringent enforcement of applicable laws or that such systems may not fail, which may result in material expenditures. Failure by the projects to comply with any environmental, health or safety requirements, or increases in the cost of such compliance, including as a result of unanticipated liabilities or expenditures for investigation, assessment, remediation or prevention, could result in additional expense, capital expenditures, restrictions and delays in the projects' activities, the extent of which cannot be predicted.

         Increasing competition could adversely affect our performance and the performance of our projects

        The power generation industry is characterized by intense competition, and our projects encounter competition from utilities, industrial companies and other independent power producers, in particular with respect to un-contracted output. In recent years, there has been increasing competition among generators for power sales agreements, and this has contributed to a reduction in electricity prices in certain markets where supply has surpassed demand plus appropriate reserve margins. In addition, many states have implemented or are considering regulatory initiatives designed to increase competition in the U.S. power industry.

         We have limited control over management decisions at certain projects

        In many cases, our projects are not wholly-owned by us, and in some cases we have limited control over the operation of the projects. Third-party operators manage the operations of many of the projects. As such, we must rely on the technical and management expertise of these third-party operators, although typically we are represented on a management or operating committee if we do not own 100% of a project. To the extent that such third party operators do not fulfill their obligations to manage the operations of the projects or are not effective in doing so, the amount of cash available for distribution may be adversely affected.

         Sufficient capital may not be available to fund acquisitions, investments, expansions or capital expenditures

        Future acquisitions, investments, expansions and other capital expenditures by us will be financed by cash generated from operations, sales of additional securities and borrowings. There can be no assurance that sufficient capital will be available on acceptable terms to fund acquisitions, investments, capital expenditures or expansion projects.

35

Table of Contents

         We may face significant competition for acquisitions and may not successfully integrate acquisitions

        Our business plan includes growth through identifying suitable acquisition opportunities, pursuing such opportunities, consummating acquisitions and effectively integrating them with our business. There can be no assurance that we will be able to identify attractive acquisition candidates in the power industry in the future, that we will be able to make acquisitions on an accretive basis or that acquisitions will be successfully integrated into our existing operations.

        Although electricity demand will grow creating the need for more generation and the U.S. power industry is continuing to undergo consolidation and may offer attractive acquisition opportunities, we are likely to confront significant competition for those opportunities and, to the extent that any opportunities are identified, we may be unable to effect acquisitions or investments.

        Any acquisition or investment may involve potential risks, including an increase in indebtedness, the inability to successfully integrate operations, the potential disruption of our ongoing business, the diversion of management's attention from other business concerns and the possibility that we pay more than the acquired company or interest is worth. There may also be liabilities that we fail to discover, or are unable to discover, in our due diligence prior to the consummation of an acquisition, and we may not be indemnified for some or all these liabilities. In addition, our funding requirements associated with acquisitions and integration costs may reduce the funds available to us to make dividend payments.

         Operations are subject to a number of natural and inherent risks

        The occurrence of a significant event which disrupts the ability of the projects to produce or sell power for an extended period, including events which preclude existing customers from purchasing power, could have a material adverse effect on the amount of cash that will be available for distribution to holders of our common shares. A certain portion of such event or events may, however, be mitigated by the projects' insurance programs.

         Insurance may not be sufficient to cover all losses

        While we believe that the projects' insurance coverage addresses all material insurable risks, provides coverage that is similar to what would be maintained by a prudent owner/operator of similar facilities, and are subject to deductibles, limits and exclusions which are customary or reasonable given the cost of procuring insurance, current operating conditions and insurance market conditions, there can be no assurance that such insurance will continue to be offered on an economically feasible basis, nor that all events that could give rise to a loss or liability are insurable, nor that the amounts of insurance will at all times be sufficient to cover each and every loss or claim that may occur involving our assets or operations of our projects.

         Financing arrangements could impact our business

        Our current or future borrowings could increase the level of financial risk to us and, to the extent that the interest rates are not fixed and rise; or that borrowings are refinanced at higher rates, then cash available for dividends could be adversely affected. Covenants in those borrowings may also adversely affect cash available for dividends. In addition, most of the projects currently have term loan or other financing arrangements in place with various lenders. These financing arrangements are typically secured by all of the project assets and contracts as well as the equity interests in the project operator (including those owned by us). The terms of these financing arrangements generally impose many covenants and obligations on the part of the project operator and other borrowers and guarantors. For example, some agreements contain requirements to maintain specified debt service coverage ratios before cash may be distributed from the relevant project to us. In many cases, a default by any party under other project operating agreements (such as a PPA or a fuel supply agreement) will

36

Table of Contents

also constitute a default under the project's term loan or other financing arrangement. Failure to comply with the terms of these term loans or other financing arrangements, or events of default thereunder, may prevent cash distributions by the project to us and may entitle the lenders to demand repayment and enforce their security against project assets and an ownership interest.

        Our failure to refinance or repay any indebtedness when due could constitute a default under such indebtedness. Under such circumstances, it is expected that dividends to our shareholders would not be permitted until such indebtedness was refinanced or repaid and we may be required to sell assets or take other actions, including the initiation of bankruptcy proceedings or the commencement of an out-of-court debt restructuring.

         Our equity interests in our projects may be subject to transfer restrictions

        The partnership or other agreements governing some of the projects may limit a partner's ability to sell its interest. Specifically, these agreements may prohibit any sale, pledge, transfer, assignment or other conveyance of the interest in a project without the consent of the other partners. In some cases, other partners may have rights of first offer or rights of first refusal in the event of a proposed sale or transfer of our interest. These restrictions may limit or prevent us from managing our interests in the projects in the manner we see fit, and may have an adverse effect on our ability to sell our interests in these projects.

         The projects' operations are subject to operating and legal risks

        The projects' operations are subject to all operating hazards and risks normally incidental to the generation of electricity. As a result, at any given time, the projects, project operators and other entities associated with the operation of the projects may be defendants in various legal proceedings and litigation arising in the ordinary course of business. The projects maintain insurance policies with insurers in amounts and with coverages and deductibles that we believe to be reasonable and prudent. However, there can be no assurance that this insurance will be adequate to protect the projects from all material expenses related to potential future claims for loss or damage or that these levels of insurance will be available in the future at economical prices. A significant judgment against any project or project operator, the loss of a significant permit or other approval or the imposition of a significant fine or penalty could have a material adverse effect on our business, financial condition and future prospects and could adversely affect dividends to our shareholders.

         The projects are exposed to risks inherent in the use of derivative instruments

        We and the projects may use derivative instruments, including futures, forwards, options and swaps, to manage commodity and financial market risks. In the future, the project operators could recognize financial losses on these arrangements as a result of volatility in the market values of the underlying commodities or if a counterparty fails to perform under a contract. If actively quoted market prices and pricing information from external sources are available, the valuation of these contracts would involve judgment or use of estimates. As a result, changes in the underlying assumptions or use of alternative valuation methods could affect the reported fair value of these contracts.

Risks related to our structure

         We are dependent on our projects for virtually all cash available for dividends

        We are dependent on the operations and assets of the projects through our indirect ownership of interests in the projects. The actual amount of cash available for dividends to our shareholders depends upon numerous factors, including profitability, changes in revenues, fluctuations in working capital, availability under existing credit facilities, capital expenditure levels, applicable laws, compliance with contracts and contractual restrictive covenants contained in any debt documentation.

37

Table of Contents

         Distribution of available cash may restrict our potential growth

        A payout of a significant portion of substantially all of our operating cash flow will make additional capital and operating expenditures dependent on increased cash flow or additional financing in the future. Lack of these funds could limit our future growth and cash flow. In addition, we may be precluded from pursuing otherwise attractive acquisitions or investments because they may not be accretive to us on a short-term basis.

         Future dividends are not guaranteed

        Our board of directors may, in their discretion, amend or repeal the existing distribution policy relating to equity distributions. Future dividends, if any, will depend on, among other things, the results of operations, working capital requirements, financial condition, restrictive covenants, business opportunities, provisions of applicable law and other factors that our board of directors may deem relevant. Our board of directors may decrease the level of or entirely discontinue payment of dividends.

         Exchange rate fluctuations may impact our amount of cash available for dividends

        Our payments to shareholders and convertible debenture holders are denominated in Canadian dollars. Conversely, all of our projects' revenues and expenses are denominated in U.S. dollars. As a result, we are exposed to currency exchange rate risks. Despite our hedges against this risk through 2013, there can be no assurance that any arrangements to mitigate this exchange rate risk will be sufficient to fully protect against this risk. If hedging transactions do not fully protect against this risk, changes in the currency exchange rate between U.S. and Canadian dollars could adversely affect our cash dividends.

         Our indebtedness could negatively impact our business and our projects

        The degree to which we are leveraged on a consolidated basis could increase and have important consequences to our shareholders, including:

•

our ability in the future to obtain additional financing for working capital, capital expenditures, acquisitions or other purposes may be limited;



•

we may be unable to refinance indebtedness on terms acceptable to us or at all; and



•

we may be limited in our ability to withstand competitive pressures.

         Changes in our creditworthiness may affect the value of our common shares

        Changes to our perceived creditworthiness may affect the market price or value and the liquidity of our common shares. The interest rate we pay on our credit facility increase if certain credit ratios deteriorate.

         Future issuances of our common shares could result in dilution

        Our articles of incorporation authorize the issuance of an unlimited number of common shares for such consideration and on such terms and conditions as are established by our board of directors without the approval of any of our shareholders. We may issue additional common shares in connection with a future financing or acquisition. The issuance of additional common shares may dilute an investor's investment in us and reduce distributable cash per common share.

         Investment eligibility

        There can be no assurance that our common shares will continue to be qualified investments under relevant U.S. and Canadian tax laws for trusts governed by registered retirement savings plans,

38

Table of Contents

registered retirement income funds, deferred profit sharing plans and registered education savings plans.

         We are subject to Canadian tax

        As a Canadian corporation, we are generally subject to Canadian federal, provincial and other taxes, and dividends paid by us are generally subject to Canadian withholding tax if paid to a shareholder that is not a resident of Canada. Furthermore, in connection with our conversion from an IPS structure to a traditional common share structure and the related reorganization of our organizational structure, we received a note from our primary U.S. holding company (the "Intercompany Note"). We are required to include in computing our taxable income interest on the Intercompany Note. We expect that our existing tax attributes initially will be available to offset this income inclusion such that it will not result in an immediate material increase to our liability for Canadian taxes. However, once we fully utilize our existing tax attributes (or if, for any reason, these attributes were not available to us), our Canadian tax liability would materially increase. Although we intend to explore potential opportunities in the future to preserve the tax efficiency of our structure, no assurances can be given that our Canadian tax liability will not materially increase at that time.

         Other Canadian federal income tax risks

        There can be no assurance that Canadian federal income tax laws and Canada Revenue Agency administrative policies respecting the Canadian federal income tax consequences generally applicable to us, to our subsidiaries, or to a holder of common shares will not be changed in a manner which adversely affects holders of our common shares. See "Certain Canadian Federal Income Tax Considerations" in this registration statement for more details.

         Our U.S. subsidiaries are subject to U.S. tax

        Our subsidiaries that are incorporated in the United States are subject to U.S. federal income tax on their income at regular corporate rates (currently as high as 35%, plus state and local taxes). Our U.S. holding company will claim interest deductions with respect to the Intercompany Note in computing its income for U.S. federal income tax purposes. To the extent this interest expense is disallowed or is otherwise not deductible, the U.S. federal income tax liability of our U.S. holding company will increase, which could materially affect the after-tax cash available to distribute to us. While we received advice from our U.S. tax counsel, based on certain representations by us and our U.S. holding company and determinations made by our independent advisors, that the Intercompany Note should be treated as debt for U.S. federal income tax purposes, it is possible that the Internal Revenue Service ("IRS") could successfully challenge that position and assert that the Intercompany Note should be treated as equity rather than debt for U.S. federal income tax purposes. In this case, the otherwise deductible interest on the Intercompany Note would be treated as non-deductible distributions and would be subject to U.S. withholding tax to the extent our U.S. holding company had current or accumulated earnings and profits. The determination of whether the U.S. holding company's indebtedness to us is debt or equity for U.S. federal income tax purposes is based on an analysis of the facts and circumstances. There is no clear statutory definition of debt for U.S. federal income tax purposes, and its characterization is governed by principals developed in case law, which analyzes numerous factors that are intended to identify the economic substance of the purported creditor's interest in the borrower. Furthermore, not all courts have applied this analysis in the same manner, and some courts have placed more emphasis on certain factors than other courts have. Alternatively, the IRS could argue that the interest on the Intercompany Note exceeds an arm's length rate, in which case only the portion of the interest expense that does not exceed an arm's length rate may be deductible and the remainder would be subject to U.S. withholding tax to the extent our U.S. holding company had current or accumulated earnings and profits. We have received advice from independent

39

Table of Contents

advisors that the interest rate on such indebtedness is commercially reasonable in the circumstances, but the advice is not binding on the IRS.

        Furthermore, our U.S. holding company's deductions attributable to the interest expense on the intercompany note may be limited by the amount by which its net interest expense (the interest paid by our U.S. holding company on all debt, including the Intercompany Note, less its interest income) exceeds 50% of its adjusted taxable income (generally, U.S. federal taxable income before net interest expense, depreciation, amortization and taxes). Any disallowed interest expense may currently be carried forward to future years. Moreover, proposed legislation has been introduced, though not enacted, several times in recent years that would further limit the 50% of adjusted taxable income cap described above to 25% of adjusted taxable income, although recent proposals in the Fiscal Year Budget for 2010 would only apply the revised rules to certain foreign corporations that were expatriated. Furthermore, other limitations on the deductibility of interest under U.S. federal income tax laws, potentially including limitations applicable to certain high-yield debt obligations, could apply under certain circumstances to defer and/or eliminate all or a portion of the interest deduction that our U.S. holding company would otherwise be entitled to with respect to the Intercompany Note.

         Other U.S. federal income tax risks

        There can be no assurance that U.S. federal income tax laws and IRS administrative policies respecting the U.S. federal income tax consequences generally applicable to us, to our U.S. subsidiaries, or to a holder of common shares will not be changed in a manner which adversely affects U.S. and non-U.S. holders of our common shares. See "Certain United States Federal Income Tax Considerations" in this registration statement for more details.

         The market price for our common shares may be volatile

        Factors such as variations in our financial results, announcements by us, the projects of others, developments affecting our business or the projects, general interest rate levels, the market price of our common shares and general market volatility could cause the market price of our common shares to fluctuate significantly.

        In addition, future sales or the availability for sale of substantial amounts of our common shares in the public market could adversely affect the prevailing market price of our common shares and could impair our ability to raise capital through future sales of our common shares or any other securities.

40

Table of Contents

ITEM 2.    FINANCIAL INFORMATION.

SELECTED FINANCIAL DATA

        You should read the following selected consolidated financial data along with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and the accompanying notes, which is included in this registration statement. The following table sets forth our selected historical consolidated financial information for each of the periods indicated. The annual historical information has been derived from our audited consolidated financial statements for each of the years in the three-year period ended December 31, 2009.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         The following management's discussion and analysis of financial condition and results of operations should be read in conjunction with our audited consolidated financial statements included elsewhere in this registration statement. All dollar amounts discussed below are in thousands of U.S. dollars, unless otherwise stated. The financial statements have been prepared in accordance with accepted accounting principles generally accepted in the United States of America ("GAAP").

         This report contains, in addition to historical information, forward-looking statements that involve risks and uncertainties. These forward-looking statements reflect our current views about future events and financial performance. Investors should not rely on forward-looking statements because they are subject to a variety of factors that could cause actual results to differ materially from our expectations. Factors that could cause, or contribute to such differences include, without limitation, the factors described under Item 1A "Risk Factors." In view of these uncertainties, investors are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

General Development of Our Business

        We completed our initial public offering on the Toronto Stock Exchange in November 2004. At the time of the IPO, our public security was an Income Participating Security ("IPS"). Each IPS was comprised of one common share and Cdn$5.767 principal value of 11% subordinated notes due 2016. In the fourth quarter of 2009, we converted to a traditional common share company through a

41

Table of Contents

shareholder approved plan of arrangement. Under the old IPS structure, we paid a monthly cash distribution to IPS holders that consisted of a dividend on the common share portion of the IPS and interest on the subordinated note portion of the IPS. After the common share conversion, we are continuing to pay cash distributions to our shareholders. The cash distributions are now in the form of a common share dividend and amount to Cdn$1.094 per year, the same rate paid to IPS holders before the common share conversion.

        Our new common shares were listed and posted for trading on the Toronto Stock Exchange commencing on December 2, 2009 and trade under the symbol "ATP", and the former IPSs, which traded under the symbol "ATP.UN", were delisted at that time.

        The following timeline illustrates significant events in the development of our business since the IPO. Further details about these events are included below:

        We used the proceeds from our IPO to acquire a 58% interest in Atlantic Power Holdings, LLC (now Atlantic Power Holdings, Inc., which we refer to herein as "Atlantic Holdings") from two private equity funds managed by ArcLight Capital Partners, LLC and from Caithness Energy. Until December 31, 2009, we were externally managed by Atlantic Power Management, LLC, an affiliate of ArcLight.

        In August 2005, we acquired Epsilon Power Partners, LLC, which owns a 40% interest in the Chambers project, for approximately $63 million in cash and the assumption of $43 million in non-recourse debt.

        In October 2005, we issued 7,500,000 IPSs to a Canadian pension fund and 39,500 IPSs to Barry Welch, our President and Chief Executive Officer, and to our then-current managing director pursuant to a private placement. Net proceeds of the private placement were used to increase our interest in Atlantic Holdings to 70%.

        In September 2006, we acquired 100% of the equity interests in Trans-Elect NTD Holdings Path 15, LLC, which has since been renamed Atlantic Path 15 Holdings, LLC, which indirectly owns approximately 72% of the transmission system rights in the transmission line upgrade along the Path 15 transmission corridor located in central California. The purchase price was approximately $78.4 million.

42

Table of Contents

        In October 2006, we completed a follow-on public offering in Canada of IPSs and convertible debentures for gross proceeds of Cdn$150 million. The offering consisted of 8,531,000 IPSs sold at a price of Cdn$10.55 per IPS for gross proceeds of Cdn$90 million and Cdn$60 million aggregate principal amount of 6.25% convertible subordinated debentures. The net proceeds of the offering were used to partially repay $37 million of the credit facility arranged in connection with our acquisition of an interest in the Path 15 project and to increase our ownership in Atlantic Holdings from 70% to approximately 86%.

        In December 2006, we completed a private placement of 8,600,000 IPSs and Cdn$3.0 million principal amount of separate subordinated notes to three institutional investors. In February 2007, we used the net proceeds of the private placement to increase our ownership in Atlantic Holdings to 100%.

        In December 2007, we increased our ownership interest in the Pasco project from 50% to 100%.

        In November 2008, we acquired a 100% ownership interest in Auburndale Power Partners, L.P, which owns the Auburndale project for a purchase price of $139.9 million, subject to customary adjustments for working capital. The acquisition was funded with cash on hand, a $55 million borrowing under our credit facility and non-recourse acquisition debt of $35 million. The non-recourse acquisition debt associated with this transaction amortizes fully over the remaining term of the project's power purchase agreement.

        In the first quarter of 2009, we transferred our remaining net interest in Onondaga Cogeneration Limited Partnership, at net book value, into a 50% owned joint venture, Onondaga Renewables, LLC, which is engaged in the redevelopment of the Onondaga project into a 40 MW biomass power plant.

        In March 2009, we acquired a 40% equity interest in Rollcast Energy, Inc., a North Carolina corporation. Rollcast is a developer of biomass power plants in the southeastern U.S. with five, 50 MW projects in various stages of development. In March 2010, we agreed to invest an additional $2.0 million to increase our ownership interest in Rollcast to 60%. Under the terms of the agreement, $1.2 million of the investment was made in March 2010 and the remaining $0.8 million will be payable if Rollcast achieves certain milestones on its first biomass development project. As a result of this additional investment, we expect to begin consolidating our investment in Rollcast beginning in the first quarter of 2010. In March 2010, Rollcast signed an agreement with two banks to co-arrange project-level debt financing for its first biomass project, which is expected to close in the second quarter of 2010.

        In October 2009, we agreed to pay ArcLight an aggregate of $15 million to terminate its management agreement with us, satisfied by a payment of $6 million on the termination date of December 31, 2009, and additional payments of $5 million, $3 million and $1 million on the respective first, second and third anniversaries of the termination date. In connection with the termination of the management agreements, we hired all of the then-current employees of the ArcLight managing entity and entered into employment agreements with its officers.

        In December 2009, we also completed a public offering of 6.25% convertible unsecured subordinated debentures due March 15, 2017 for total gross proceeds of Cdn$86.25 million. The debentures are listed on the Toronto Stock Exchange under the symbol ATP.DB.A. We used Cdn$42.9 million of the net proceeds from the offering to redeem all of our remaining 11% separate subordinated notes at 105% of the principal amount. The remainder of the net proceeds remains available to fund growth opportunities, which may include previously disclosed biomass development projects that are expected to begin construction in 2010, as well as potential asset or business acquisitions that we are currently evaluating, or for general corporate purposes.

        During the years ended December 31, 2009 and 2008, we acquired 481,600 and 558,620 IPSs at an average price of Cdn$8.42 and Cdn$8.78, respectively, under the terms of the normal course issuer bid.

43

Table of Contents

As of December 31, 2009, we had acquired a cumulative total of 1,040,220 IPSs at an average price of Cdn$8.61 since the inception of the issuer bid in July 2008. We paid the market price at the time of acquisition for any IPSs purchased through the facilities of the Toronto Stock Exchange and all IPSs acquired under the bid have been cancelled. The issuer bid expired on July 24, 2009. We do not anticipate additional share repurchases at this time.

Other Recent Developments

        During the third quarter of 2009, we reviewed the recoverability of our investment in the Rumford project. The review was undertaken as a result of not receiving distributions from this project through the first nine months of 2009 and our view about the long-term economic viability of the plant when the current PPA expires on December 31, 2009. Based on this review, we determined that the carrying value of the Rumford project was impaired and recorded a pre-tax long-lived asset impairment of $5.5 million in the third quarter of 2009.

        In the fourth quarter of 2009, we and the other limited partners in the Rumford project settled a dispute with the general partner related to its failure to pay distributions to the limited partners in 2009. Under the terms of the settlement, we received $2.9 million in distributions from Rumford in the fourth quarter of 2009. In addition, the general partner has agreed to purchase the interests of all the limited partners in 2010. However, the general partner is relieved of this obligation if certain conditions are met before June 30, 2010. If the general partner does purchase the limited partners' interests, our share of the proceeds will be approximately $2.5 million.

        The FERC issued its initial order regarding Path 15's 2008-2010 rates on February 19, 2008. That order granted approval of our proposed rates and set certain other matters for hearing. On March 23, 2009, Path 15, the FERC staff and the intervenors in the project's rate case filed an uncontested settlement with the FERC. The FERC issued an order approving the settlement on August 3, 2009. The terms of the settlement allow Path 15 to continue making distributions to us that are consistent with our expectations. In October 2009, Path 15 paid a refund of approximately $1.4 million, comprising the amount collected above the settlement rates since the initial order in February 2008. Independently, the final landowner litigation over right-of-way issues was resolved earlier in 2009, which resulted in approximately $6 million being released to us from a construction reserve account.

        In July 2009, we signed a purchase and sale agreement to sell our 50% interest in a 55 MW cogeneration facility located in Stockton, California for a nominal cash payment. The project required additional significant capital investment in order to use as much biomass fuel as possible. The sale was finalized on November 30, 2009. During the year ended December 31, 2009, we recorded a loss on the sale of $2.0 million.

        In August 2009, we signed a purchase and sale agreement to sell our 50% interest in the Mid-Georgia project for cash. Mid-Georgia is a 308 MW dual-fueled, combined-cycle, cogeneration plant located in Kathleen, Georgia. The sale was finalized in November 2009 with cash proceeds of $29.1 million. During the year ended December 31, 2009 we recorded a gain on sale of $15.8 million.

Critical Accounting Policies and Estimates

        Accounting standards require information in financial statements about the risks and uncertainties inherent in significant estimates, and the application of generally accepted accounting principles involves the exercise of varying degrees of judgment. Certain amounts included in or affecting our consolidated financial statements and related disclosures must be estimated, requiring us to make certain assumptions with respect to values or conditions that cannot be known with certainty at the time our financial statements are prepared. These estimates and assumptions affect the amounts we report for our assets and liabilities, our revenues and expenses during the reporting period, and our disclosure of contingent assets and liabilities at the date of our financial statements. We routinely

44

Table of Contents

evaluate these estimates utilizing historical experience, consultation with experts and other methods we consider reasonable in the particular circumstances. Nevertheless, actual results may differ significantly from our estimates and any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known.

        In preparing our consolidated financial statements and related disclosures, examples of certain areas that require more judgment relative to others include our use of estimates in determining fair values of acquired assets, the useful lives and recoverability of property, plant and equipment and PPAs, the recoverability of equity investments, the recoverability of deferred tax assets and the fair value of derivatives.

        For a summary of our significant accounting policies, see Note 2 to our consolidated financial statements included elsewhere in this registration statement. We believe that certain accounting policies are of more significance in our consolidated financial statement preparation process than others, which policies are discussed as follows.

Impairment of long-lived assets and equity investments

        Long-lived assets, which include property, plant and equipment, transmission system rights and other intangible assets subject to depreciation and amortization, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets by factoring in the probability weighting of different courses of action available. Generally, fair value will be determined using valuation techniques such as the present value of expected future cash flows. We discount the estimated future cash flows associated with the asset using a single interest rate representative of the risk involved with such an investment or employ an expected present value method that probability-weights a range of possible outcomes. We also consider quoted market prices in active markets to the extent they are available. In the absence of such information, we may consider prices of similar assets, consult with brokers or employ other valuation techniques. We use our best estimates in making these evaluations. However, actual results could vary from the assumptions used in our estimates and the impact of such variations could be material.

        Investments in and the operating results of 50%-or-less owned entities not required to be consolidated are included in the consolidated financial statements on the basis of the equity method of accounting. We review our investments in unconsolidated entities for impairment whenever events or changes in business circumstances indicate that the carrying amount of the investments may not be fully recoverable. Evidence of a loss in value that is other than temporary might include the absence of an ability to recover the carrying amount of the investment, the inability of the investee to sustain an earnings capacity which would justify the carrying amount of the investment, failure of cash flow coverage ratio tests included in project-level, non-recourse debt or, where applicable, estimated sales proceeds which are insufficient to recover the carrying amount of the investment. Our assessment as to whether any decline in value is other than temporary is based on our ability and intent to hold the investment and whether evidence indicating the carrying value of the investment is recoverable within a reasonable period of time outweighs evidence to the contrary.

        When we determine that an impairment test is required, the future projected cash flows from the equity investment are the most significant factor in determining whether impairment exists and, if so, the amount of the impairment charges. We use our best estimates of market prices of power and fuel and our knowledge of the operations of the project and our related contracts when developing these cash flow estimates. In addition, when determining fair value using discounted cash flows, the discount rate used can have a material impact on the fair value determination. Discount rates are based on our

45

Table of Contents

risk of the cash flows in the estimate, including when applicable, the credit risk of the counterparty that is contractually obligated to purchase electricity or steam from the project.

        We generally consider our investments in our equity method investees to be strategic long-term investments that comprise a significant portion of our core operating business. Therefore, we complete our assessments with a long-term view. If the fair value of the investment is determined to be less than the carrying value and the decline in value is considered to be other than temporary, an appropriate write-down is recorded based on the excess of the carrying value over the best estimate of fair value of the investment. The use of these methods involves the same inherent uncertainty of future cash flows as previously discussed with respect to undiscounted cash flows. Actual future market prices and project costs could vary from those used in our estimates and the impact of such variations could be material.

Fair Value of Derivatives

        We utilize derivative contracts to mitigate our exposure to fluctuations in fuel commodity prices, foreign currency and to balance our exposure to variable interest rates. We believe that these derivatives are generally effective in realizing these objectives.

        In determining fair value for our derivative assets and liabilities, we generally use the market approach and incorporate assumptions that market participants would use in pricing the asset or liability, including assumptions about market risk and/or the risks inherent in the inputs to the valuation techniques.

        A fair value hierarchy exists for inputs used in measuring fair value that maximizes the use of observable inputs (Level 1 or Level 2) and minimizes the use of unobservable inputs (Level 3) by requiring that the observable inputs be used when available. Our derivative instruments are classified as Level 2. The fair value measurements of these derivative assets and liabilities are based largely on quoted prices from independent brokers in active markets who regularly facilitate our transactions. An active market is considered to have transactions with sufficient frequency and volume to provide pricing information on an ongoing basis.

        Derivative assets are discounted for credit risk using credit spreads representative of the counterparty's probability of default. For derivative liabilities, fair value measurement reflects the nonperformance risk related to that liability, which is our own credit risk. We derive our nonperformance risk by applying credit spreads approximating our estimate of corporate credit rating against the respective derivative liability.

        Certain derivative instruments qualify for a scope exception to fair value accounting, as they are considered normal purchases or normal sales. The availability of this exception is based upon the assumption that we have the ability and it is probable to deliver or take delivery of the underlying physical commodity. Derivatives that are considered to be normal purchases and normal sales are exempt from derivative accounting treatment and are recorded as executory contracts.

Income Taxes and Valuation Allowance for Deferred Tax Assets

        As of December 31, 2009, we had recorded a valuation allowance of $67.1 million. This amount is comprised primarily of provisions against available Canadian and U.S net operating loss carryforwards. In assessing the recoverability of our deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon projected future taxable income in the United States and in Canada and available tax planning strategies.

46

Table of Contents

Non-GAAP Financial Measures

        Cash Flow Available for Distribution is not a measure recognized under GAAP, does not have a standardized meaning prescribed by GAAP and therefore may not be comparable to similar measures presented by other issuers. We believe Cash Flow Available for Distribution is a relevant supplemental measure of our ability to pay dividends to our shareholders. A reconciliation of net cash provided by operating activities to Cash Flow Available for Distribution is set out below under "Cash Flow Available for Distribution". Investors are cautioned that we may calculate this measure in a manner that is different from other companies.

        Project Adjusted EBITDA is defined as project income less interest, taxes, depreciation and amortization (including non-cash impairment charges) and changes in fair value of derivative instruments. Project Adjusted EBITDA is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP and is therefore unlikely to be comparable to similar measures presented by other companies. We use unaudited Project Adjusted EBITDA to provide comparative information about project performance without considering how projects are capitalized or whether they contain derivative contracts that are required to be recorded at fair value. A reconciliation of project income to Project Adjusted EBITDA is set out below under "Project Adjusted EBITDA". Investors are cautioned that we may calculate this measure in a manner that is different from other companies.

47

Table of Contents

48

Table of Contents

Consolidated Overview

        We have six reportable segments: Auburndale, Chambers Lake, Pasco, Path 15 and Other Project Assets. The results of operations are discussed below by reportable segment.

        Project income is the primary GAAP measure of our operating results and is discussed in "Project Operations Performance" below. In addition, an analysis of non-project expenses impacting our results is set out in "Administrative and Other Expenses (Income)" below.

        Significant non-cash items, which are subject to potentially significant fluctuations, include: (1) the change in fair value of certain derivative financial instruments that are required by GAAP to be revalued at each balance sheet date (see "Quantitative and Qualitative Disclosures About Market Risk" for additional information); (2) the non-cash impact of foreign exchange fluctuations from period to period on the U.S. dollar equivalent of our Canadian dollar-denominated obligations and (3); the related deferred income tax expense (benefit) associated with these non-cash items.

        Cash flow available for distribution was $66.9 million, $97.3 million and $69.9 million for the years ended December 31, 2009, 2008 and 2007, respectively. See "Cash Flow Available for Distribution" on page 58 for additional information.

        Income (loss) from operations before income taxes for years ended December 31, 2009, 2008 and 2007 was $(54.2) million, $34.5 million and $(13.5) million, respectively. See "Project Income" below for additional information.

Year ended December 31, 2009 vs. Year Ended December 31, 2008

Project Income

Auburndale Segment

        Project income for our Auburndale segment increased $8.4 million to $10.5 million in 2009 from $2.1 million in 2008. The increase in project income for the twelve months ended December 31, 2009 is attributable to the fact that 2009 was the first full year of ownership of the project. The Auburndale project was acquired in November 2008.

Lake Segment

        Project income for our Lake segment decreased $11.5 million, or 53%, to $10.2 million in 2009 from $21.7 million in 2008. The decrease is primarily attributable to higher fuel expense at Lake due to the expiration of its natural gas supply agreement as of June 30, 2009. A new gas supply agreement at higher prices was effective for the second half of 2009. In addition, non-cash losses associated with natural gas swaps were recorded in the change in fair value of derivative instruments during 2009 of $5.1 million. These swaps were executed to financially hedge the project's exposure to the changes in market prices of natural gas. See "Quantitative and Qualitative Disclosures About Market Risk" below for additional details about our derivative instruments and other financial instruments.

Pasco Segment

        Project income for our Pasco segment decreased $6.1 million, or 95%, to $0.3 million in 2009 from $6.4 million in 2008. The decrease in project income at Pasco is attributable to lower revenues from the project's new ten-year tolling agreement effective January 1, 2009 at lower rates than the power purchase agreement that expired December 31, 2008, partially offset by lower fuel expense, since the new agreement requires the utility to provide the natural gas needed to generate electricity at the plant.

49

Table of Contents

Path 15 Segment

        Project income at Path 15 for the year ended December 31, 2009 did not change significantly from 2008.

Chambers Segment

        Project income for our Chambers segment, which is recorded under the equity method of accounting, decreased $9.7 million, or 59%, to $6.6 million in 2009 from $16.3 million in 2008 as a result of a planned major maintenance outage in the second quarter of 2009 and lower electricity sales volumes and prices throughout 2009.

Other Project Assets Segment

        Project income (loss) for our Other Project Assets segment increased $26.5 million, to $13.3 million in 2009 compared to a $(13.2) million loss in 2008, primarily due to the following:

•

the gain on the sale of Mid-Georgia of $15.8 million in 2009;



•

an impairment charge of $18.5 million at Stockton in 2008;



•

the absence of revenue at Onondaga in 2009 as the contract that provided substantially all of the project's cash flow expired in the second quarter 2008;



•

reduced expense at Selkirk in 2009 associated with the change in fair value of derivative instruments;



•

an impairment of our equity investment in Rumford of $5.5 million in 2009.

Administrative and Other Expenses (Income)

        Management fees and administration includes the costs of operating as a public company, as well as the fees and costs associated with our management by Atlantic Power Management, LLC (the "Manager"). Effective December 31, 2009, the Manager no longer provides management and administrative services for our company. The Manager is indirectly owned by the ArcLight Funds and received compensation in the form of an annual base fee that was indexed to inflation and an incentive fee that was equal to 25% of the cash distributions to shareholders in excess of Cdn$1.00 per year per IPS. We also reimbursed the Manager for reasonable costs incurred to manage our company. Management fees and administration increased $16 million, or 160%, to $26 million in 2009 from $10.0 million in 2008. The increase is primarily attributable to a $14.1 million charge associated with the termination of the management agreements at the end of 2009. In addition, employee and director share-based compensation plan expense increased in 2009. The expense associated with these plans varies, in part, with the market price of our common shares, which increased significantly during 2009 compared to a decrease during the twelve months of 2008, resulting in higher expense in the 2009 period.

        Interest expense primarily relates to required interest costs associated with the subordinated notes and the debentures. Interest expense increased $12.4 million, or 29%, to $55.7 million in 2009 from $43.3 million in 2008. This increase is primarily due to the write off of unamortized subordinated note deferred finance costs of $7.5 million, the write off of the unamortized subordinated note premium of $0.9 million and transaction costs of $4.7 million upon closing of our conversion to a common share structure. A charge of $3.1 million was also recorded when we redeemed the remaining subordinated notes in December 2009. This charge was comprised of a premium paid on the redemption of $1.9 million and the write-off of unamortized subordinated note deferred finance costs of $1.2 million. In addition, there were amounts outstanding on our revolving credit facility for a portion of the year

50

Table of Contents

ended December 31, 2009 related to the temporary financing of the acquisition of the Auburndale project in late 2008.

        Foreign exchange loss (gain) primarily reflects the unrealized impact of changes in foreign exchange rates on the U.S. dollar equivalent of our Canadian dollar-denominated obligations to holders of subordinated notes and debentures. In addition, unrealized and realized gains and losses on our forward contracts for the purchase of Canadian dollars to satisfy these obligations are included in foreign exchange loss (gain). Foreign exchange loss (gain) increased $67.7 million to $20.5 million loss in 2009 compared to a $(47.2 million) gain in 2008. The U.S. dollar to Canadian dollar exchange rate decreased by 15.9% during the year ended December 31, 2009. During the year ended December 31, 2008, the rate increased by 18.6%. See "Quantitative and Qualitative Disclosures About Market Risk" below for additional details about our management of foreign currency risk and the components of the foreign exchange loss (gain) recognized during the year ended December 31, 2009 compared to the foreign exchange loss (gain) in 2008.

Year Ended December 31, 2008 vs. December 31, 2007

Project Income

Auburndale Segment

        The Auburndale project was acquired in November 2008 and had no results of operations for the year ended December 31, 2007.

Lake Segment

        Project income for our Lake segment increased $13.5 million, or 164%, to $21.7 million in 2008 from $8.2 million in 2007 primarily due to higher dispatch in 2008, a 5% increase in capacity payments under the PPA and the non-recurrence of costs associated with a planned outage for a gas turbine upgrade during the fourth quarter of 2007.

Pasco Segment

        Project income for our Pasco segment increased $0.2 million to $6.4 million in 2008 from $6.2 million in 2007 due to an increase in ownership of the project from 50% in 2007 to 100% in 2008, offset by higher fuel costs related to gas swap payments and an overhaul of the steam turbine during the fourth quarter of 2008.

Path 15 Segment

        Project income for our Path 15 segment decreased $4 million, or 34%, to $7.7 million in 2008 from $11.7 million in 2007 as a result of lower revenues associated with the 2008-2010 rate case and a provision for rate case refund.

Chambers Segment

        Project income for our Chambers segment decreased $0.3 million, or 2%, to $16.3 million in 2008 from $16.6 million in 2007 primarily due to timing differences of coal prices between the PPA and project fuel agreement.

Other Project Assets Segment

        Project income (loss) for our Other Project Assets segment decreased $40.7 million, or 148%, to a $(13.2) million loss in 2008 compared to $27.5 million income in 2007, primarily due to the following:

•

an impairment charge at Stockton in 2008 in the amount of $18.5 million;

51

Table of Contents

•

lower income at Selkirk attributable to a decrease in the fair value of its long-term gas supply agreement, which is recorded as a derivative instrument;



•

the absence of revenue at Onondaga for the second half of 2008 as the contract that provided substantially all of the project's cash flow expired in June 2008.

Administrative and Other Expenses

        Management fees and administration increased $1.8 million, or 22%, to $10.0 million in 2008 from $8.2 million in 2007. The increase is primarily attributable to costs associated with pursuing acquisitions that were not completed in 2008, as well as personnel additions and expense recognized related to awards under our long-term incentive plan that were granted in March 2008 and March 2007.

        Interest expense decreased $1.0 million, or 2%, to $43.3 million in 2008 from $44.3 million in 2007. Interest expense primarily relates to required interest payments to holders of the subordinated notes and the debentures. In addition, there were amounts outstanding on the revolving credit facility during the first half of 2007 related to the temporary financing of the acquisition of the Path 15 project, as well as amounts outstanding as of December 31, 2008 on the revolving credit facility due to the acquisition of Auburndale.

        Foreign exchange loss (gain) increased $77.3 million to a $(47.2 million) gain in 2008 compared to a $30.1 million loss in 2007. The increase in exchange is due primarily to an increase in the U.S. dollar to Canadian dollar exchange rate of approximately 18.6% during the year ended December 31, 2008. The rate decreased by 17% during the year ended December 31, 2007. See "Quantitative and Qualitative Disclosures About Market Risk" for additional information for additional details of our management of foreign currency risk and the components of the foreign exchange gains recognized during the year ended December 31, 2008 compared to the foreign exchange losses in the prior year periods.

Supplementary Financial Information

        The key measure we use to evaluate the results of our projects is Cash Flow Available for Distribution. See "Cash Flow Available for Distribution" below for additional details and for a reconciliation of Cash Flow Available for Distribution to its nearest GAAP measure, cash flows from operating activities.

        The primary factor influencing Cash Flow Available for Distribution is cash distributions received from the projects. These distributions received are generally funded from Project Adjusted EBITDA generated by the projects, reduced by project-level debt service and capital expenditures, and adjusted for changes in project-level working capital and cash reserves. Please read "Non-GAAP Financial Measures" above for important disclosures with respect to Cash Flow Available for Distribution and Project Adjusted EBITDA.

        Because Project Adjusted EBITDA and project distributions are key drivers of both the performance of our projects and Cash Flow Available for Distribution, please see the following supplementary unaudited non-GAAP information that summarizes Project Adjusted EBITDA by project and a reconciliation of Project Adjusted EBITDA by project to project distributions actually received by us.

52

Table of Contents

Project Adjusted EBITDA ⁽¹⁾ (in thousands of U.S. dollars)

53

Table of Contents

Reconciliation of Project Distributions (in thousands of U.S. dollars)
For the twelve months ended December 31, 2009