ATLANTIC POWER CORP (Form: 10-Q, Received: 05/03/2018 17:23:46)

Three Months Ended March 31,

Equity compensation

Convertible Debenture

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10‑Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2018
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

COMMISSION FILE NUMBER 001‑34691

ATLANTIC POWER CORPORATION

(Exact name of registrant as specified in its charter)


British Columbia, Canada (State or other jurisdiction of incorporation or organization)	55‑0886410 (I.R.S. Employer Identification No.)
3 Allied Drive, Suite 220 Dedham, MA (Address of principal executive offices)	02026 (Zip code)

(617) 977‑2400

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non‑accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act. (Check one):


Large accelerated filer ☐	Accelerated filer ☒	Non‑accelerated filer ☐ (Do not check if a smaller reporting company)	Smaller reporting company ☐
Emerging growth company ☐

If an emerging company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s Common Stock as of May 3, 2018 was 112,463,640.

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ATLANTIC POWER CORPORATION

FORM 10‑Q

THREE MONTHS ENDED MARCH 31, 2018

Index

	General :		3
		PART I—FINANCIAL INFORMATION
ITEM 1.		CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
		Consolidated Balance Sheets as of March 31, 2018 (unaudited) and December 31, 2017	4
		Consolidated Statements of Operations for the three months ended March 31, 2018 (unaudited) and March 31, 2017 (unaudited)	5
		Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2018 (unaudited) and March 31, 2017 (unaudited)	6
		Consolidated Statements of Cash Flows for the three months ended March 31, 2018 (unaudited) and March 31, 2017 (unaudited)	7
		Condensed Notes to Consolidated Financial Statements (unaudited)	8
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	31
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	47
ITEM 4.		CONTROLS AND PROCEDURES	48
		PART II—OTHER INFORMATION
ITEM 1A.		RISK FACTORS	48
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	48
ITEM 6.		EXHIBITS	50

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GENERAL

In this Quarterly Report on Form 10‑Q, references to “Cdn$” and “Canadian dollars” are to the lawful currency of Canada and references to “$”, “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 Quarterly Report on Form 10‑Q to “we,” “us,” “our,” “Atlantic Power” and the “Company” refer to Atlantic Power Corporation, those entities owned or controlled by Atlantic Power Corporation and predecessors of Atlantic Power Corporation.

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ATLANTIC POWER CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions of U.S. dollars)


	March 31,		December 31,
	2018		2017
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	82.6	$	78.7
Restricted cash		5.7		6.2
Accounts receivable		26.7		52.7
Current portion of derivative instruments asset (Notes 7 and 8)		4.8		2.7
Inventory		16.1		17.7
Prepayments		6.3		6.9
Income taxes receivable		0.8		1.0
Other current assets		3.8		3.1
Total current assets		146.8		169.0
Property, plant, and equipment, net		585.8		602.3
Equity investments in unconsolidated affiliates (Note 4)		169.4		163.7
Power purchase agreements and intangible assets, net		178.5		191.2
Goodwill		21.3		21.3
Derivative instruments asset (Notes 7 and 8)		3.4		2.8
Other assets		7.9		8.5
Total assets	$	1,113.1	$	1,158.8
Liabilities
Current liabilities:
Accounts payable	$	5.7	$	2.2
Accrued interest		3.7		0.3
Other accrued liabilities		16.4		25.5
Current portion of long-term debt (Note 5)		83.6		99.5
Current portion of derivative instruments liability (Notes 7 and 8)		6.4		4.4
Other current liabilities		0.3		1.0
Total current liabilities		116.1		132.9
Long-term debt, net of unamortized discount and deferred financing costs (Note 5)		597.1		616.3
Convertible debentures, net of discount and unamortized deferred financing costs (Note 6)		98.9		105.4
Derivative instruments liability (Notes 7 and 8)		18.0		19.9
Deferred income taxes		14.3		11.7
Power purchase and fuel supply agreement liabilities, net		23.3		24.1
Other long-term liabilities		50.8		51.7
Total liabilities		918.5		962.0
Equity
Common shares, no par value, unlimited authorized shares; 112,978,994 and 115,211,976 issued and outstanding at March 31, 2018 and December 31, 2017		1,269.0		1,274.8
Accumulated other comprehensive loss (Note 3)		(139.1)		(134.8)
Retained deficit		(1,142.6)		(1,158.4)
Total Atlantic Power Corporation shareholders’ equity		(12.7)		(18.4)
Preferred shares issued by a subsidiary company (Note 12)		207.3		215.2
Total equity		194.6		196.8
Total liabilities and equity	$	1,113.1	$	1,158.8

See accompanying notes to consolidated financial statements.

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ATLANTIC POWER CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions of U.S. dollars, except per share amounts)

(Unaudited)


	Three Months Ended March 31,
	2018		2017
Project revenue:
Energy sales (Note 2)	$	38.4	$	37.1
Energy capacity revenue (Note 2)		20.1		19.5
Other (Note 2)		21.5		41.8
		80.0		98.4
Project expenses:
Fuel		22.2		28.9
Operations and maintenance		21.2		20.4
Depreciation and amortization		23.8		29.5
		67.2		78.8
Project other income:
Change in fair value of derivative instruments (Notes 7 and 8)		3.8		(1.2)
Equity in earnings of unconsolidated affiliates (Note 4)		12.3		9.0
Interest, net		(0.6)		(2.2)
Other income, net		—		0.1
		15.5		5.7
Project income		28.3		25.3
Administrative and other expenses:
Administration		6.0		6.4
Interest expense, net		15.1		17.3
Foreign exchange (gain) loss		(8.2)		2.5
Other income, net (Note 8)		(2.0)		—
		10.9		26.2
Income (loss) from operations before income taxes		17.4		(0.9)
Income tax expense (benefit) (Note 9)		3.2		(0.3)
Net income (loss)		14.2		(0.6)
Net (loss) income attributable to preferred shares of a subsidiary company (Note 12)		(1.7)		2.1
Net income (loss) attributable to Atlantic Power Corporation	$	15.9	$	(2.7)
Net income (loss) per share attributable to Atlantic Power Corporation shareholders: (Note 11)
Basic	$	0.14	$	(0.02)
Diluted		0.12		(0.02)
Weighted average number of common shares outstanding: (Note 11)
Basic		114.8		114.8
Diluted		137.5		114.8

See accompanying notes to consolidated financial statements.

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ATLANTIC POWER CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in millions of U.S. dollars)

(Unaudited)


	Three Months Ended March 31,
	2018		2017
Net income (loss)	$	14.2	$	(0.6)
Other comprehensive (loss) income, net of tax:
Unrealized gain (loss) on hedging activities	$	0.2	$	(0.2)
Net amount reclassified to earnings		0.1		0.3
Net unrealized gain on derivatives		0.3		0.1
Defined benefit plan, net of tax		—		0.1
Foreign currency translation adjustments		(4.6)		2.0
Other comprehensive (loss) income, net of tax		(4.3)		2.2
Comprehensive income		9.9		1.6
Less: Comprehensive (loss) income attributable to preferred shares of a subsidiary company		(1.7)		2.1
Comprehensive income (loss) attributable to Atlantic Power Corporation	$	11.6	$	(0.5)

See accompanying notes to consolidated financial statements.

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ATLANTIC POWER CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of U.S. dollars)

(Unaudited)


	Three months ended
	March 31,
	2018		2017
Cash provided by operating activities:
Net income (loss)	$	14.2	$	(0.6)
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization		23.8		29.5
Stock-based compensation		0.5		0.4
Equity in earnings from unconsolidated affiliates		(12.3)		(9.0)
Distributions from unconsolidated affiliates		6.6		3.7
Unrealized foreign exchange (gain) loss		(8.0)		2.5
Change in fair value of derivative instruments		(3.8)		1.2
Change in fair value of convertible debenture conversion option derivative		(2.1)		—
Amortization of debt discount and deferred financing costs		3.4		2.7
Change in deferred income taxes		2.2		(1.2)
Change in other operating balances
Accounts receivable		26.1		0.2
Inventory		1.6		(0.1)
Prepayments and other assets		0.8		(3.2)
Accounts payable		3.2		(0.4)
Accruals and other liabilities		(5.9)		8.4
Cash provided by operating activities		50.3		34.1
Cash used in investing activities:
Purchase of property, plant and equipment		(1.1)		(2.0)
Cash used in investing activities		(1.1)		(2.0)
Cash used in financing activities:
Proceeds from convertible debenture issuance		92.2		—
Repayment of convertible debentures		(88.1)		—
Common share repurchases		(6.4)		—
Preferred share repurchases		(4.0)		—
Repayment of corporate and project-level debt		(32.4)		(27.4)
Deferred financing costs		(4.8)		—
Dividends paid to preferred shareholders		(2.2)		(2.1)
Cash used in financing activities:		(45.7)		(29.5)
Net increase in cash and cash equivalents		3.5		2.6
Cash, restricted cash and cash equivalents at beginning of period		84.8		98.8
Cash, restricted cash and cash equivalents at end of period	$	88.3	$	101.4
Supplemental cash flow information
Interest paid	$	8.6	$	13.1
Income taxes paid, net	$	1.0	$	0.9
Accruals for construction in progress	$	0.3	$	—

See accompanying notes to consolidated financial statements.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

1. Nature of business

General

Atlantic Power is an independent power producer that owns power generation assets in nine states in the United States and two provinces in Canada. Our power generation projects, which are diversified by geography, fuel type, dispatch profile and offtaker, sell electricity to utilities and other large customers predominantly under long‑term power purchase agreements (“PPAs”), which seek to minimize exposure to changes in commodity prices. As of March 31, 2018, the Company’s portfolio consisted of twenty-two projects with an aggregate electric generating capacity of approximately 1,793 megawatts (“MW”) on a gross ownership basis and approximately 1,440 MW on a net ownership basis. Eighteen of the projects are majority‑owned and operated by the Company. At March 31, 2018, three of our Ontario projects were not in operation, two because of contract expirations at December 31, 2017, and the other, Tunis, has a forward-starting 15-year contractual agreement that will commence with commercial operation of the plant in the third quarter of 2018. In early February 2018, our three plants in San Diego, totaling 112 MW on a gross and net ownership basis, ceased operations . The sixteen projects in operation at March 31, 2018 have generating capacity of approximately 1,561 MW on a gross ownership basis and approximately 1,208 MW on a net ownership basis.

Atlantic Power is a corporation established under the laws of the Province of Ontario on June 18, 2004 and continued to the Province of British Columbia on July 8, 2005. Our shares trade on the Toronto Stock Exchange (“TSX”) under the symbol “ATP” and on the New York Stock Exchange (“NYSE”) under the symbol “AT.” Our registered office is located at 215-10451 Shellbridge Way, Richmond, British Columbia V6X 2W8 Canada and our headquarters is located at 3 Allied Drive, Suite 220, Dedham, Massachusetts 02026, USA. Our telephone number in Dedham is (617) 977‑2400 and the address of our website is www.atlanticpower.com. Information contained on Atlantic Power’s website or that can be accessed through its website is not incorporated into and does not constitute a part of this Quarterly Report on Form 10‑Q. We have included our website address only as an inactive textual reference and do not intend it to be an active link to our website. We make available on our website, free of charge, our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission (“SEC”). Additionally, we make available on our website our Canadian securities filings, which are not incorporated by reference into our Exchange Act filings.

Basis of presentation

The interim condensed consolidated financial statements included in this Quarterly Report on Form 10‑Q have been prepared in accordance with the SEC regulations for interim financial information and with the instructions to Form 10‑Q. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to our financial statements in our Annual Report on Form 10‑K for the year ended December 31, 2017. Interim results are not necessarily indicative of results for the full year.

In our opinion, the accompanying unaudited interim condensed consolidated financial statements present fairly our consolidated financial position as of March 31, 2018, the results of operations and comprehensive income (loss) for the three months ended March 31, 2018 and 2017, and our cash flows for the three months ended March 31, 2018 and 2017 in accordance with U.S generally accepted accounting policies. In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation have been included.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

Use of estimates

The preparation of financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the year. Actual results could differ from those estimates. During the periods presented, we have made a number of estimates and valuation assumptions, including the useful lives and recoverability of property, plant and equipment, valuation of goodwill, intangible assets and liabilities related to PPAs and fuel supply agreements, the recoverability of equity investments, the recoverability of deferred tax assets, tax provisions, the fair value of financial instruments and derivatives, pension obligations, asset retirement obligations and equity-based compensation. In addition, estimates are used to test long-lived assets and goodwill for impairment and to determine the fair value of impaired assets. These estimates and valuation assumptions are based on present conditions and our planned course of action, as well as assumptions about future business and economic conditions. See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates ” in our Annual Report on Form 10-K for the year ended December 31, 2017. As better information becomes available or actual amounts are determinable, the recorded estimates are revised. Should the underlying valuation assumptions and estimates change, the recorded amounts could change by a material amount.

Recently issued accounting standards

Adopted

In May 2017, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance to address diversity in practice and cost and complexity of applying the guidance relating to stock compensation when there is a change to the terms or conditions of a share-based payment award. The guidance is effective for fiscal years beginning after December 15, 2017, with early adoption permitted. We adopted this guidance on January 1, 2018 and it did not have an impact on the consolidated financial statements.

In November 2016, the FASB issued authoritative guidance to address diversity in practice of presenting changes in restricted cash on the statement of cash flows. The new guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. We adopted this guidance on January 1, 2018 and it was applied retrospectively to cash flows provided by investing activities on the consolidated statements of cash flows for the three months ended March 31, 2017. As a result of adoption, cash flows used in investing activities was retrospectively decreased by $3.3 million for the three months ended March 31, 2017.

In October 2016, the FASB issued authoritative guidance, which amends existing guidance related to the recognition of current and deferred income taxes for intra-entity asset transfers. Under the new guidance, current and deferred income tax consequences of an intra-entity asset transfer, other than an intra-entity asset transfer of inventory, are now recognized when the transfer occurs. We adopted this guidance on January 1, 2018 and it did not have an impact on the consolidated financial statements.

In August 2016, the FASB issued authoritative guidance intended to clarify classification of specific cash flows that have aspects of more than one class of cash flows. As a result of this new guidance, entities should be applying specific GAAP in the following eight cash flow issues: Debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies; distributions received from equity method investees; beneficial interests in securitization transactions; and separately

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

identifiable cash flows and application of the predominance principle. We adopted this guidance on January 1, 2018 and it did not have an impact on the consolidated financial statements.

In May 2014, the FASB issued new recognition and disclosure requirements for revenue from contracts with customers, which supersedes the existing revenue recognition guidance. The new recognition requirements focus on when the customer obtains control of the goods or services, rather than the current risks and rewards model of recognition. The core principle of the new standard is that an entity recognizes revenue when it transfers goods or services to its customers in an amount that reflects the consideration an entity expects to be entitled to for those goods or services. We adopted this guidance on January 1, 2018 and it did not have an impact on the consolidated financial statements. Accordingly, we did not record a transition adjustment. The standard also requires new disclosures that include information intended to communicate the nature, amount, timing and any uncertainty of revenue and cash flows from applicable contracts, including any significant judgments and changes in judgments and assets recognized from the costs to obtain or fulfill a contract. These disclosures can be found in Note 2, Revenue.

Issued

In February 2016, the FASB issued authoritative guidance intended to increase transparency and comparability among organizations by recognizing lease assets and liabilities on the balance sheet and disclosing key information about leasing arrangements. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability, measured on a discounted basis, at the commencement date for all leases with terms greater than twelve months. Additionally, this guidance will require disclosures to help investors and other financial statement users to better understand the amount, timing, and uncertainty of cash flows arising from leases, including qualitative and quantitative requirements. The guidance should be applied under a modified retrospective transition approach for leases existing at the beginning of the earliest comparative period presented in the adoption-period financial statements. Any leases that expire before the initial application date will not require any accounting adjustment. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, with early adoption permitted. In January 2018, the FASB issued further authoritative guidance to provide an optional practical transition expedient to not evaluate existing or expired land easements that were not previously accounted for as leases under the current guidance. We expect to elect certain of the practical expedients permitted, including the expedient that permits us to retain our existing lease assessment and classification. We are currently working through an adoption plan which includes the evaluation of lease contracts compared to the new standard. While we are currently evaluating the impact the new guidance will have on our financial position and results of operations, we expect to recognize lease liabilities and right of use assets. The extent of the increase to assets and liabilities associated with these amounts remains to be determined pending our review of our existing lease contracts and PPAs currently accounted for as operating leases. As this review is still in process, it is currently not practicable to quantify the impact of adopting this guidance at this time.

In August 2017, the FASB issued authoritative guidance to align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The guidance expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The guidance is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. We do not expect this to have a material impact to the consolidated financial statements upon adoption.

In February 2018, the FASB issued authoritative guidance to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The guidance is effective for fiscal years beginning after December 15, 2018. We do not expect this to have a material impact to the consolidated financial statements upon adoption.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

2. Revenue from contracts

Accounting policy

We recognize energy sales revenue on a gross basis when electricity and steam are delivered and capacity revenue when capacity is provided under the terms of the related contracts. PPAs, steam purchase arrangements and energy services agreements are long‑term contracts with performance obligations to provide electricity, steam and capacity on a predetermined basis.

For certain PPAs determined to be operating leases, we recognize lease income consistent with the recognition of energy sales and capacity revenue. When energy is delivered and capacity is provided, we recognize lease income as a component of energy sales and capacity revenue.

Nature of goods and services

We sell the majority of the capacity and energy from our power generation projects under PPAs to a variety of utilities and other parties. Under the PPAs, which have expiration dates ranging from September 30, 2018 to December 31, 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 to industrial purchasers under steam sales agreements. Sales of electricity are generally higher during the summer and winter months, when temperature extremes create demand for either summer cooling or winter heating.

The following is a description of principal activities from which we generate our revenue.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)


Products and services	Nature, timing of satisfaction of performance obligations, and significant payment terms
Energy	Energy revenue is recognized upon transmission to the customer. Physical transactions, or the sale of generated electricity to meet supply and demand, are recorded on a gross basis in our consolidated statements of operations. The price of energy could be contracted under PPAs at set prices or merchant sales based on market merchant price. Energy revenue is billed and paid on a monthly basis.
Energy capacity	Capacity revenues are recognized when contractually earned, and consist of revenues billed to a third party at a negotiated contract price under the applicable PPAs for making installed generation capacity available in order to satisfy reliability requirements. Energy capacity is billed and paid on a monthly basis.
Other revenue includes the following:
Steam energy and capacity	Steam revenue is recognized upon delivery to the customer. Steam revenue is billed and paid on a monthly basis. Steam capacity payments under the applicable PPAs are recognized as the amount billable under the respective PPA. Steam capacity is billed and paid on a monthly basis.
Waste heat	We recognize revenue from generated waste heat. Waste heat is billed and paid monthly.
Enhanced dispatch contracts	We also bill and are paid for curtailment of energy generation under certain contractual arrangements with our offtaker. This revenue is recognized monthly under the terms of those agreements.
Ancillary and transmission services	We provide ancillary and transmission services to our customers under PPAs. These services are billed and paid on a monthly basis.
Asset management and operation, operation and maintenance	We provide asset management and operation supervision to the Frederickson project, a facility that we jointly own with Puget Sound Energy. We also provide operation and maintenance services to several electric energy customers under the PPAs. All services are billed and paid on a monthly basis.

Disaggregation of revenue

We have four reportable segments: East U.S., West U.S., Canada and Un-Allocated Corporate. Each segment contains various power generation projects and performance obligations as described above. For more detailed information about reportable segments, see Note 13, Segments . Revenue, receivables and contract liabilities by segment consists of following:


	Three months ended March 31, 2018
							Un-Allocated		Consolidated
	East U.S.		West U.S.		Canada		Corporate		Total
Project revenue:
Energy sales	$	25.3	$	5.1	$	8.0	$	—	$	38.4
Energy capacity revenue		11.3		5.9		2.9		—		20.1
Steam energy and capacity revenue		3.6		2.8		—		—		6.4
Waste heat revenue		—		—		0.1		—		0.1
Enhanced dispatch contracts		—		—		9.1		—		9.1
Ancillary and transmission services		1.4		—		4.4		—		5.8
Asset management and operation		—		—		—		0.2		0.2
Miscellaneous revenue		—		(0.2)		0.1		—		(0.1)
		41.6		13.6		24.6		0.2		80.0

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)


	Three months ended March 31, 2017
								Un-Allocated		Consolidated
		East U.S.		West U.S.		Canada		Corporate		Total
Project revenue:
Energy sales	$	21.8	$	8.5	$	6.8	$	—	$	37.1
Energy capacity revenue		10.1		6.7		2.7		—		19.5
Steam energy and capacity revenue		3.2		8.5		—		—		11.7
Waste heat revenue		—		—		0.1		—		0.1
Enhanced dispatch contracts		—		—		24.2		—		24.2
Ancillary and transmission services		1.0		—		4.8		—		5.8
Asset management and operation		—		—		—		0.2		0.2
Miscellaneous revenue		—		(0.3)		0.1		—		(0.2)
		36.1		23.4		38.7		0.2		98.4

Contract balances

The following table provides information about receivables, contract assets and contract liabilities from contracts with customers.


	March 31,		December 31,
	2018		2017
Accounts receivables	$	26.7	$	52.7
Contract assets		—		—
Contract liabilities		0.3		1.0

Contract liabilities as of March 31, 2018 include a water license fee at Mamquam, which is a pass-through cost. Contract liabilities as of December 31, 2017 include recoverable wood fuel costs under the PPA and property tax at Williams Lake, which is proportionally estimated, pending receipt of an actual tax bill. The total $1.0 million was recognized as revenues from ancillary and transmission services in the three months ended March 31, 2018.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

3. Changes in accumulated other comprehensive loss by component

The changes in accumulated other comprehensive loss by component were as follows:


	Three Months Ended March 31,
	2018		2017
Foreign currency translation
Balance at beginning of period	$	(134.3)	$	(148.3)
Other comprehensive loss:
Foreign currency translation adjustments (1)		(4.6)		2.0
Balance at end of period	$	(138.9)	$	(146.3)
Pension
Balance at beginning of period	$	(1.6)	$	(0.9)
Other comprehensive loss:
Curtailment gain		—		0.1
Tax benefit (expense)		—		—
Total Other comprehensive income before reclassifications, net of tax		—		0.1
Total amount reclassified from accumulated other comprehensive loss, net of tax		—		—
Total other comprehensive income		—		0.1
Balance at end of period	$	(1.6)	$	(0.8)
Cash flow hedges
Balance at beginning of period	$	1.1	$	0.7
Other comprehensive income (loss):
Net change from periodic revaluations		0.3		(0.3)
Tax (expense) benefit		(0.1)		0.1
Total Other comprehensive income (loss) before reclassifications, net of tax		0.2		(0.2)
Net amount reclassified to earnings:
Interest rate swaps (2)		0.1		0.5
Tax expense		—		(0.2)
Total amount reclassified from accumulated other comprehensive loss, net of tax		0.1		0.3
Total other comprehensive income		0.3		0.1
Balance at end of period	$	1.4	$	0.8

⁽¹⁾

In all periods presented, there were no tax impacts related to rate changes and no amounts were reclassified to earnings (loss).

⁽²⁾

This amount was included in interest expense, net on the accompanying consolidated statements of operations.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

4. Equity method investments in unconsolidated affiliates

The following summarizes the operating results for the three months ended March 31, 2018 and 2017, respectively, for our proportional ownership interest in equity method investments:


	Three Months Ended March 31,
Operating results	2018		2017
Revenue
Frederickson	$	5.1	$	5.3
Orlando Cogen, LP		14.4		13.2
Koma Kulshan Associates		0.2		0.3
Chambers Cogen, LP		13.2		12.3
Selkirk Cogen Partners, LP (1)		—		0.7
		32.9		31.8
Project expenses
Frederickson		3.2		4.3
Orlando Cogen, LP		7.1		7.1
Koma Kulshan Associates		0.3		0.3
Chambers Cogen, LP		9.6		9.2
Selkirk Cogen Partners, LP (1)		—		1.4
		20.2		22.3
Project other expense
Frederickson		—		—
Orlando Cogen, LP		—		—
Koma Kulshan Associates		—		—
Chambers Cogen, LP		(0.4)		(0.5)
Selkirk Cogen Partners, LP (1)		—		—
		(0.4)		(0.5)
Project income (loss)
Frederickson		1.9		1.0
Orlando Cogen, LP		7.3		6.1
Koma Kulshan Associates		(0.1)		—
Chambers Cogen, LP		3.2		2.6
Selkirk Cogen Partners, LP (1)		—		(0.7)
Equity in earnings of unconsolidated affiliates	$	12.3	$	9.0

Distributions from equity method investments		(6.6)		(3.7)
Surplus of earnings of equity method investments, net of distributions	$	5.7	$	5.3

⁽¹⁾

In November 2017, we sold our 17.7% interest in Selkirk.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

5. Long‑term debt

Long‑term debt consists of the following:


	March 31,		December 31,
	2018		2017		Interest Rate
Recourse Debt:
Senior secured term loan facility, due 2023 (1)	$	510.0	$	540.0	LIBOR (2)	plus	3.50	%
Senior unsecured notes, due June 2036 (Cdn$210.0)		162.9		167.4			5.95	%
Non-Recourse Debt:
Epsilon Power Partners term facility, due 2019		5.6		7.2	LIBOR	plus	3.125	%
Cadillac term loan, due 2025 (3)		23.3		24.0	LIBOR	plus	1.49	%
Other long-term debt		—		0.1	5.50	% -	6.70	%
Less: unamortized discount		(11.8)		(12.8)
Less: unamortized deferred financing costs		(9.3)		(10.1)
Less: current maturities		(83.6)		(99.5)
Total long-term debt	$	597.1	$	616.3

Current maturities consist of the following:


	March 31,		December 31,
	2018		2017		Interest Rate
Current Maturities:
Senior secured term loan facility, due 2023 (1)	$	75.0	$	90.0	LIBOR (2)	plus	3.50	%
Epsilon Power Partners term facility, due 2019		5.6		6.5	LIBOR	plus	3.125	%
Cadillac term loan, due 2025 (3)		3.0		3.0	LIBOR	plus	1.49	%
Total current maturities	$	83.6	$	99.5

⁽¹⁾

On a quarterly basis, we make a cash sweep payment to fund the principal balance, based on terms as defined in the term loan credit agreement. The portion of the senior secured term loan facility classified as current is based on principal payments required to reduce the aggregate principal amount of senior secured term loan outstanding to achieve a target principal amount that declines quarterly based on a pre-determined specified schedule.

⁽²⁾

London Interbank Offered Rate (“LIBOR”) cannot be less than 1.00%. We have entered into interest rate swap agreements to mitigate the exposure to changes in LIBOR for $357.6 million of the $510 million outstanding aggregate borrowings under our senior secured term loan facility at March 31, 2018. See Note 8, Accounting for derivative instruments and hedging activities for further details. On April 19, 2018, the repricing of the $510 million senior secured term loan facility became effective. As a result of the repricing, the interest rate margin on the term loan and revolver was reduced by 0.50% to LIBOR plus 3.00%.

⁽³⁾

We have entered into interest rate swap agreements to economically fix our exposure to changes in interest rates for this non-recourse debt. See Note 8, Accounting for derivative instruments and hedging activities , for further details.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

6. Convertible debentures

Convertible debentures consist of the following:


	March 31,		December 31,
	2018		2017
6.00% Debentures due January 2025 (Series E) (Cdn $115.0 million)		89.2		—
5.75% Debentures due June 2019 (Series C)		—		42.5
6.00% Debentures due December 2019 (Series D) (Cdn $24.7 million)		19.2		64.5
Less: Unamortized deferred financing costs		(4.9)		(1.6)
Less: Unamortized discount		(4.6)		—
Total convertible debentures	$	98.9	$	105.4

On January 29, 2018, we closed the sale of our offering (the “Series E Debenture Offering”) of Cdn$100 million aggregate principal amount of 6.00% Series E convertible unsecured subordinated debentures (the “Series E Debentures”). We also granted the underwriters the option to purchase up to an additional Cdn$15 million aggregate principal amount of Series E Debentures at any time up to 30 days after the date of closing of the Series E Debenture Offering to cover over-allotments. The underwriters exercised that option for the full Cdn$15 million aggregate principal amou nt on February 2, 2018.

On the initial closing date, we received net proceeds from the Series E Debentures Offering, after deducting the underwriting fee and expenses, of approximately Cdn$94.7 million. We received an additional Cdn$14.4 million of net proceeds from the exercise of the over-allotment option. On January 29, 2018, we issued a notice to redeem all of the $42.5 million remaining principal amount of 5.75% Series C convertible unsecured debentures due June 2019 (the “Series C Debentures”) with the use of a portion of the proceeds from the Series E Debenture Offering. On February 2, 2018, we issued a notice to redeem Cdn$56.2 million principal amount of the 6.00% Series D extendible convertible unsecured subordinated debentures due December 2019 (the “Series D Debentures”) with the remaining proceeds from the Series E Debentures Offering. After the partial redemption, Cdn$24.7 million ($19.2 million) aggregate principal amount of the Series D Debentures remains outstanding.

The Series E Debentures have a maturity date of January 31, 2025. The Series E Debentures bear interest at a rate of 6.00% per year, and are convertible into our common shares at an initial conversion rate of approximately 238.0952 common shares per Cdn$1,000 principal amount, representing a conversion price of Cdn$4.20 per common share.

We assessed the conversion option of the Series E Debentures and determined it should be separated from the host instrument and accounted for as an embedded derivative liability as the conversion option is in a currency different from our functional currency. Changes in the fair value of the conversion are recorded in the consolidated statements of operation. The conversion option derivative was initially measured at fair value ($4.7 million), with the host contract carried at a value equal to the difference between the carrying value of the Series E Debenture and the fair value of the derivative. Accordingly, no gain or loss was recorded on the initial measurement of the derivative. The fair value of the conversion option derivative was $2.6 million as of March 31, 2018. The portion of the proceeds allocated to the separated derivative also created a discount of $4.7 million, which will be amortized to interest expense over the maturity period of the Series E Debentures. For additional information, see Note 8, Accounting for derivative instruments and hedging activitie s.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

7. Fair value of financial instruments

The following represents the recurring measurements of fair value hierarchy of our financial assets and liabilities that were recognized at fair value as of March 31, 2018 and December 31, 2017. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement.


	March 31, 2018
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	82.6	$	—	$	—	$	82.6
Restricted cash		5.7		—		—		5.7
Derivative instruments asset		—		8.2		—		8.2
Total	$	88.3	$	8.2	$	—	$	96.5
Liabilities:
Derivative instruments liability	$	—	$	21.8	$	2.6	$	24.4
Total	$	—	$	21.8	$	2.6	$	24.4


	December 31, 2017
	Level 1		Level 2		Level 3		Total
Assets:
Cash and cash equivalents	$	78.7	$	—	$	—	$	78.7
Restricted cash		6.2		—		—		6.2
Derivative instruments asset		—		5.5		—		5.5
Total	$	84.9	$	5.5	$	—	$	90.4
Liabilities:
Derivative instruments liability	$	—	$	24.3	$	—	$	24.3
Total	$	—	$	24.3	$	—	$	24.3

The fair values of our interest rate swaps, foreign exchange forward contracts, natural gas swaps and gas purchase agreements are based upon trades in liquid markets. Valuation model inputs can generally be verified and valuation techniques do not involve significant judgment. The fair values of such financial instruments are classified within Level 2 of the fair value hierarchy. We use our best estimates to determine the fair value of commodity and derivative contracts we hold. These estimates consider various factors including closing exchange prices, time value, volatility factors and credit exposure. The fair value of each contract is discounted using a risk-free interest rate.

We also adjust the fair value of financial assets and liabilities to reflect credit risk, which is calculated based on our credit rating and the credit rating of our counterparties. As of March 31, 2018, the credit valuation adjustments resulted in a $2.0 million net increase in fair value, which consists of a $0.1 million pre‑tax gain in other comprehensive income and a $1.9 million gain in change in fair value of derivative instruments. As of December 31, 2017, the credit valuation adjustments resulted in a $2.2 million net increase in fair value, which consists of a $0.2 million pre‑tax gain in other comprehensive income and a $2.0 million gain in change in fair value of derivative instruments.

The conversion option derivative for the Series E Debentures is classified within Level 3 of the fair value hierarchy. The significant unobservable inputs used in developing fair value include the volatility of our common shares and the fair value of the host contract, which is derived from recent similar convertible debenture offerings from peer companies. This derivative liability was valued at $4.7 million at inception on January 29, 2018 and is recorded at its fair value of $2.6 million at March 31, 2018. The unrealized change in fair value recorded in the consolidated statement of operations for this Level 3 instrument was $2.1 million for the three months ended March 31, 2018.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

The carrying amounts for cash and cash equivalents and restricted cash approximate fair value due to their short-term nature.

8. Accounting for derivative instruments and hedging activities

We recognize all derivative instruments on the balance sheet as either assets or liabilities and measure them at fair value in each reporting period. We have one contract designated as a cash flow hedge, and we defer the effective portion of the change in fair value of the derivatives in accumulated other comprehensive income (loss), until the hedged transactions occur and are recognized in earnings (loss). The ineffective portion of a cash flow hedge is immediately recognized in earnings (loss). For our other derivatives that are not designated as cash flow hedges, the changes in the fair value are immediately recognized in earnings (loss). These guidelines apply to our natural gas swaps, interest rate swaps, and foreign exchange contracts.

Gas purchase and sale agreements

We have a gas purchase agreement at our Nipigon project that expires on December 31, 2022 under which we purchase a minimum of 6,500 Gigajoules (“Gj”) of natural gas per day at a price of Cdn$4.57 per Gj. We also entered into a gas sales agreement for our Nipigon project under which we sell 6,500 Gj of natural gas per day at a price of Cdn$2.75 that expires on October 31, 2018. These agreements do not qualify for the normal purchase normal sales (“NPNS”) exemption and are accounted for as derivative financial instruments because we could not conclude that it is probable that these contracts will not settle net and will result in physical delivery. These derivative financial instruments are recorded in the consolidated balance sheets at fair value and the changes in their fair market value are recorded in the consolidated statements of operations.

Natural gas swaps

Our strategy to mitigate future exposure to changes in natural gas prices at our projects consists of periodically entering into financial swaps that effectively fix the price of natural gas expected to be purchased at these projects. These natural gas swaps are derivative financial instruments and are recorded in the consolidated balance sheets at fair value and the changes in their fair market value are recorded in the consolidated statements of operations.

We have entered into various natural gas swaps to effectively fix the price of 15.0 million Mmbtu of future natural gas purchases at our Orlando project, which is approximately 90% and 100% of our share of the expected natural gas purchases at the project in 2018 and 2019 to 2021, respectively. These contracts are accounted for as derivative financial instruments and are recorded in the consolidated balance sheet at fair value at March 31, 2018. Changes in the fair market value of these contracts are recorded in the consolidated statement of operations.

Interest rate swaps

Atlantic Power Limited Partnership Holdings (“APLP Holdings”) has entered into several interest rate swap agreements to mitigate its exposure to changes in interest at the Adjusted Eurodollar Rate. At March 31, 2018, these agreements totaled $357.6 million notional amount of the remaining $510.0 million aggregate principal amount of borrowings under the senior secured term loan facility (“Term Loan Facility”). These interest rate swap agreements expire at various dates through March 31, 2020. Borrowings under the $700.0 million Term Loans bear interest at a rate equal to the Adjusted Eurodollar Rate plus an applicable margin of 3.50%. Based on the terms of the Credit Agreement, the Adjusted Eurodollar Rate cannot be less than 1.00%, resulting in a minimum of a 4.50% all-in rate on the Term Loan Facility for the non-swapped portion of the remaining principal amount. The weighted average rate of these swap agreements is 1.10%, resulting in an all-in rate of approximately 4.60% for $357.6 million of the Term Loans. In January 2018, APLP Holdings entered into additional interest rate swap agreements. For the period beginning June 30, 2018 through September 30, 2019, we mitigated exposure to changes in interest rates for $100 million notional amount at a

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

one-month LIBOR fixed rate of 2.18% and for the period beginning October 1, 2019 through December 31, 2020, for $200 million notional amount at a one-month LIBOR fixed rate of 2.42%.

The Cadillac project has an interest rate swap agreement that effectively fixes the interest rate at 6.1% through February 15, 2019, 6.3% from February 16, 2019 to February 15, 2023, and 6.4% thereafter. The notional amount of the interest rate swap agreement matches the outstanding principal balance over the remaining life of Cadillac’s debt. This swap agreement, which qualifies for and is designated as a cash flow hedge, is effective through June 2025 and the effective portion of the changes in the fair market value is recorded in accumulated other comprehensive income (loss).

Foreign currency forward contracts

We use foreign currency forward contracts to manage our exposure to changes in foreign exchange rates as we generate cash flow in U.S. dollars and Canadian dollars. We currently have Canadian dollar payment obligations for preferred dividends, interest on our Canadian dollar-denominated convertible debentures and our Medium Term Notes, due June 23, 2036 (“MTNs”). Principal and interest payments for our senior secured term loans as well as our U.S dollar-denominated convertible debenture are made in U.S. dollars. We have a hedging strategy for the purpose of mitigating the currency risk impact on the future interest and principal payments, preferred dividends and other working capital requirements.

In July 2017, we entered into foreign exchange forward contracts to sell a total of Cdn$10 million at an exchange rate of 1.2481 in three tranches of Cdn$3.3 million each. Two tranches of Cdn$3.3 million remain and will settle on each of June 2018 and December 2018. In July 2017, we also entered into foreign exchange forward contracts to sell a total of Cdn$10 million at an exchange rate of 1.2943. Two tranches of Cdn$3.0 million and Cdn$2.0 million will settle in June 2018 and December 2018, respectively. In September 2017, we entered into foreign exchange forward contracts to sell Cdn$5.0 million at an exchange rate of 1.2196 in September 2018.

Foreign currency forward contracts are not designated as hedges, and changes in their market value are recorded in foreign exchange on the consolidated statements of operations at March 31, 2018.

Volume of forecasted transactions

We have entered into derivative instruments in order to economically hedge the following notional volumes of forecasted transactions as summarized below, by type, excluding those derivatives that qualified for NPNS exemption at March 31, 2018 and December 31, 2017:


		March 31,	December 31,
	Units	2018	2017
Natural gas swaps	Natural Gas (Mmbtu)	15.0	9.9
Gas purchase agreements	Natural Gas (Gigajoules)	9.7	9.9
Interest rate swaps	Interest (US$)	680.9	412.6
Foreign currency forward contracts	Dollars (Cdn$)	13.3	25.0

Fair value of derivative instruments

We disclose derivative instrument assets and liabilities on a trade‑by‑trade basis and do not offset amounts at the counterparty master agreement level. The following table summarizes the fair value of our derivative assets and liabilities :

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)


	March 31, 2018
	Derivative		Derivative
	Assets		Liabilities
Derivative instruments designated as cash flow hedges:
Interest rate swaps current	$	—	$	0.5
Interest rate swaps long-term		—		1.1
Total derivative instruments designated as cash flow hedges		—		1.6
Derivative instruments not designated as cash flow hedges:
Interest rate swaps current		4.4		—
Interest rate swaps long-term		3.4		—
Natural gas swaps current		—		0.5
Natural gas swaps long-term		—		0.4
Gas purchase agreements current		—		2.8
Gas purchase agreements long-term		—		16.5
Convertible debenture conversion option		—		2.6
Foreign currency forward contracts current		0.4		—
Total derivative instruments not designated as cash flow hedges		8.2		22.8
Total derivative instruments	$	8.2	$	24.4


	December 31, 2017
	Derivative		Derivative
	Assets		Liabilities
Derivative instruments designated as cash flow hedges:
Interest rate swaps current	$	—	$	0.6
Interest rate swaps long-term		—		1.5
Total derivative instruments designated as cash flow hedges		—		2.1
Derivative instruments not designated as cash flow hedges:
Interest rate swaps current		2.7		—
Interest rate swaps long-term		2.8		—
Natural gas swaps current		—		0.8
Natural gas swaps long-term		—		0.2
Gas purchase agreements current		—		2.9
Gas purchase agreements long-term		—		18.2
Foreign currency forward contracts current		—		0.1
Total derivative instruments not designated as cash flow hedges		5.5		22.2
Total derivative instruments	$	5.5	$	24.3

Accumulated other comprehensive income

The following table summarizes the changes in the accumulated other comprehensive income (loss) (“OCI”) balance attributable to derivative financial instruments designated as a hedge, net of tax:


	Interest Rate
Three Months Ended March 31, 2018	Swaps
Accumulated OCI balance at January 1, 2018	$	1.1
Change in fair value of cash flow hedges		0.2
Realized from OCI during the period		0.1
Accumulated OCI balance at March 31, 2018	$	1.4

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

Impact of derivative instruments on the consolidated statements of operations

The following table summarizes realized loss (gain) for derivative instruments not designated as cash flow hedges:



	Classification of loss (gain)	Three Months Ended March 31,
	recognized in income	2018		2017
Gas purchase agreements	Fuel	$	0.8	$	(0.4)
Natural gas swaps	Fuel		0.4		1.3
Interest rate swaps	Interest, net		(0.6)		0.9

The following table summarizes the unrealized (loss) gain resulting from changes in the fair value of derivative financial instruments that are not designated as cash flow hedges:


	Classification of gain (loss)	Three Months Ended March 31,
	recognized in income	2018		2017
Natural gas swaps	Change in fair value of derivatives	$	(0.2)	$	0.2
Gas purchase agreements	Change in fair value of derivatives		(1.3)		(2.1)
Interest rate swaps	Change in fair value of derivatives		(2.3)		0.7
		$	(3.8)	$	(1.2)
Convertible debenture conversion option	Other income, net		(2.1)		—
Foreign currency forwards	Foreign exchange loss	$	(0.5)	$	(0.2)

9. Income taxes


	Three Months Ended March 31,
	2018		2017
Current income tax expense	$	1.0	$	0.9
Deferred income tax expense (benefit)		2.2		(1.2)
Total income tax expense (benefit), net	$	3.2	$	(0.3)

For the three months ended March 31, 2018 and 2017

Income tax expense for the three months ended March 31, 2018 was $3.2 million. Expected income tax expense for the same period, based on the Canadian enacted statutory rate of 26%, was $4.5 million. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 was signed into law, making significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017 which have been reflected in our 2017 year-end financials, limitation on the deduction of net business interest expense, and base erosion and anti-abuse tax. Based on estimates as of the date of this filing, the interest expense limitation and base erosion and anti-abuse tax will not have a material impact to cash taxes. The primary items impacting the tax rate for the three months ended March 31, 2018 was a net increase to our valuation allowances of $0.8 million, consisting of $0.8 million increases in Canada related to losses and no changes in the United States for the three months ended March 31, 2018. In addition, the rate was further impacted by $0.1 million of other permanent differences. These items were offset by $1.3 million relating to capital loss on intercompany notes and $0.9 million relating to changes in tax rates.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

Income tax benefit for the three months ended March 31, 2017 was $0.3 million. Expected income tax benefit for the same period, based on the Canadian enacted statutory rate of 26%, was $0.2 million. The primary item increasing the tax rate for the three months ended March 31, 2017 was $0.7 million related to net increase to the Company’s valuation allowances in Canada due to an increase in tax assets. This was offset by $0.4 million relating to foreign exchange, $0.3 million relating to operating in higher tax rate jurisdictions and $0.1 million of other permanent differences.

As of March 31, 2018, we have recorded a valuation allowance of $152.3 million. The amount is comprised primarily of provisions against 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.

10. Equity compensation plans

Long‑term incentive plan (“LTIP”)

The following table summarizes the changes in outstanding LTIP notional units during the three months ended March 31, 2018:


		Grant Date
		Weighted-Average
	Units	Fair Value per Unit
Outstanding at December 31, 2017	2,884,574		2.22
Granted	2,483,237		2.02
Vested and redeemed	(1,216,252)		2.24
Outstanding at March 31, 2018	4,151,559	$	2.09

There were no cash payments made for vested notional units for the three months ended March 31, 2018 and 2017. Compensation expense for LTIP and Transition Equity Participation Agreement notional shares was $0.5 million for the three months ended March 31, 2018 and $0.7 million for the three months ended March 31, 2017.

Transition Equity Participation Agreement

We also have 539,904 transition notional shares outstanding at March 31, 2018 under the Transition Equity Participation Agreement with James J. Moore, Jr. Fifty percent of the transition notional shares granted in January 2015 with respect to fiscal year 2015 will vest upon the four-year anniversary of the date of grant and the remaining portion will vest on or any time after the two-year anniversary of the grant if the weighted average Canadian dollar closing price of our common shares on the Toronto Stock Exchange (“TSX”) for at least three consecutive calendar months has exceeded the market price per common share determined as of January 22, 2015 (Cdn$3.18) by at least 50% (Cdn$4.77).

11. Basic and diluted earnings (loss) per share

Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to Atlantic Power Corporation by the weighted average common shares outstanding during their respective periods. Shares issued and shares repurchased during the year are weighted for the portion of the year that they were outstanding. Diluted earnings (loss) per share is computed in a manner consistent with that of basic earnings/(loss) per share while giving effect to all potentially dilutive common shares that were outstanding during the period . The dilutive effect of our convertible debentures is calculated using the “if-converted method.” Under the if-converted method, the debentures are assumed to be converted at the beginning of the period, and the resulting common shares are included in the denominator of the

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

diluted earnings (loss) per share calculation for the entire period being presented. Interest expense, net of any income tax effects, would be added back to the numerator for purposes of the if-converted calculation. The outstanding equity compensation for non-vested LTIP and Transition Equity Participation Agreement notional shares are not considered outstanding for purposes of computing basic earnings (loss) per share. However, these instruments are included in the denominator for purposes of computing diluted earnings (loss) per share under the treasury stock method .

The following table sets forth the calculation of basic and diluted earnings (loss) per share for the three months ended March 31, 2018 and 2017:


	Three Months Ended March 31,
Basic	2018		2017
Numerator:
Net income (loss) attributable to Atlantic Power Corporation	$	15.9	$	(2.7)
Denominator:
Weighted average basic shares outstanding		114.8		114.8
Basic earnings ( loss) per share attributable to Atlantic Power Corporation	$	0.14	$	(0.02)
Diluted
Numerator:
Net income (loss) attributable to Atlantic Power Corporation	$	15.9	$	(2.7)
Add: convertible debenture interest expense		0.9		—
		16.8		(2.7)
Denominator:
Weighted average basic shares outstanding		114.8		114.8
Convertible debentures		22.7		—
LTIP notional units		—		—
		137.5		114.8
Diluted earnings ( loss) per share attributable to Atlantic Power Corporation	$	0.12	$	(0.02)

The following table summarizes our outstanding instruments that are anti-dilutive and were not included in the computation of our diluted earnings (loss) per share :

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

12. Equity

The following table provides a reconciliation of the beginning and ending equity attributable to shareholders of Atlantic Power Corporation, preferred shares issued by a subsidiary company and total equity for the three months ended March 31, 2018 and 2017:


	Three months ended March 31, 2018
	Total Atlantic		Preferred shares
	Power Corporation		issued by a subsidiary
	Shareholders’ Equity		company		Total Equity
Balance at January 1, 2018	$	(18.4)	$	215.2	$	196.8
Net income (loss)		15.9		(1.7)		14.2
Realized and unrealized gain on hedging activities, net of tax		0.3		—		0.3
Foreign currency translation adjustment		(4.6)		—		(4.6)
Common share repurchases		(6.4)		—		(6.4)
Preferred share repurchases		—		(4.0)		(4.0)
Stock-based compensation		0.5		—		0.5
Dividends declared on preferred shares of a subsidiary company		—		(2.2)		(2.2)
Balance at March 31, 2018	$	(12.7)	$	207.3	$	194.6


	Three months ended March 31, 2017
	Total Atlantic		Preferred shares
	Power Corporation		issued by a subsidiary
	Shareholders’ Equity		company		Total Equity
Balance at January 1, 2017	$	64.6	$	221.3	$	285.9
Net (loss) income		(2.7)		2.1		(0.6)
Realized and unrealized loss on hedging activities, net of tax		0.1		—		0.1
Foreign currency translation adjustment		2.0		—		2.0
Defined benefit plan, net of tax		0.1		—		0.1
Stock-based compensation		0.4		—		0.4
Dividends declared on preferred shares of a subsidiary company		—		(2.1)		(2.1)
Balance at March 31, 2017	$	64.5	$	221.3	$	285.8

Share Repurchase Program

On December 29, 2016, we commenced a normal course issuer bid (“NCIB”) for each series of our convertible unsecured subordinated debentures, our common shares and for each series of the preferred shares of Atlantic Power Preferred Equity Ltd. (“APPEL”), our wholly-owned subsidiary. The Board authorization permitted the Company to repurchase stock through open market repurchases. W e repurchased a cumulative 0.1 million common shares at a total cost of $0.2 million before its expiration on December 28, 2017. Repurchases and retirement of common shares are recorded to common shares on the consolidated balance sheets.

On December 29, 2017, we commenced a new NCIB for our Series C and Series D Debentures, our common shares and for each series of the preferred shares of APPEL. The new NCIBs expire on December 28, 2018 or such earlier date as the Company and/or APPEL complete their respective purchases pursuant to the new NCIBs. Under the new NCIBs, we may purchase up to a total of 11,308,946 common shares based on 10% of our public float as of

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

December 15, 2017 and we are limited to daily purchases of 11,789 common shares per day with certain exceptions including block purchases and purchases on other approved exchanges. All purchases made under the new NCIBs will be made through the facilities of the TSX or other Canadian designated exchanges and published marketplaces and in accordance with the rules of the TSX at market prices prevailing at the time of purchase. Common share purchases under the NCIBs may also be made on the NYSE in compliance with Rule 10b-18 under the Exchange Act or other designated exchanges and published marketplaces in the U.S. in accordance with applicable regulatory requirements. The ability to make certain purchases through the facilities of the NYSE is subject to regulatory approval. For the three months ended March 31, 2018, we repurchased and cancelled 3.0 million shares at a cost of $6.4 million.

Under the NCIB, we also repurchased and cancelled 237,500 of our Cdn$25.00 par value 4.85% Cumulative Redeemable Preferred Shares, Series 1 at Cdn$15.25 per share and 83,095 of our Cdn$25.00 par value Cumulative Floating Rate Preferred Shares, Series 3 at Cdn $17.80, for a total payment of Cdn$5.1 million, resulting in a $3.9 million gain recorded in net (loss) income attributable to preferred shares of a subsidiary company in the three months ended March 31, 2018.

13. Segment and geographic information

We have four reportable segments: East U.S., West U.S., Canada and Un-Allocated Corporate. We analyze the performance of our operating segments based on Project Adjusted EBITDA, which is defined as project income (loss) plus interest, taxes, depreciation and amortization (including non-cash impairment charges) and changes in fair value of derivative instruments. We use Project Adjusted EBITDA to provide comparative information about segment performance without considering how projects are capitalized or whether they contain derivative contracts that are required to be recorded at fair value. Our equity investments in unconsolidated affiliates are presented as proportionately consolidated based on our ownership percentage in the reconciliation of Project Adjusted EBITDA to project income (loss).

A reconciliation of Project Adjusted EBITDA to net income (loss) for the three months ended March 31, 2018 and 2017 is included in the tables below:


							Un-Allocated
	East U.S.		West U.S.		Canada		Corporate		Consolidated
Three Months Ended March 31, 2018
Project revenues	$	41.6	$	13.6	$	24.6	$	0.2	$	80.0
Segment assets		629.2		173.5		221.7		88.7		1,113.1
Project Adjusted EBITDA	$	33.2	$	6.1	$	14.2	$	(0.1)	$	53.4
Change in fair value of derivative instruments		(0.2)		—		(1.2)		(2.4)		(3.8)
Depreciation and amortization		11.6		8.1		8.0		0.2		27.9
Interest, net		1.0		—		—		—		1.0
Project income (loss)		20.8		(2.0)		7.4		2.1		28.3
Administration		—		—		—		6.0		6.0
Interest expense, net		—		—		—		15.1		15.1
Foreign exchange gain		—		—		—		(8.2)		(8.2)
Other income, net		—		—		—		(2.0)		(2.0)
Income (loss) before income taxes		20.8		(2.0)		7.4		(8.8)		17.4
Income tax expense		—		—		—		3.2		3.2
Net income (loss)	$	20.8	$	(2.0)	$	7.4	$	(12.0)	$	14.2

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)


							Un-Allocated
	East U.S.		West U.S.		Canada		Corporate		Consolidated
Three Months Ended March 31, 2017
Project revenues	$	36.1	$	23.4	$	38.7	$	0.2	$	98.4
Segment assets		628.3		304.9		292.9		215.4		1,441.5
Project Adjusted EBITDA	$	27.2	$	9.1	$	27.5	$	—	$	63.8
Change in fair value of derivative instruments		0.2		—		3.3		(2.3)		1.2
Depreciation and amortization		11.5		10.0		13.3		0.1		34.9
Interest, net		2.6		(0.2)		—		—		2.4
Project income (loss)		12.9		(0.7)		10.9		2.2		25.3
Administration		—		—		—		6.4		6.4
Interest expense, net		—		—		—		17.3		17.3
Foreign exchange loss		—		—		—		2.5		2.5
Income (loss) before income taxes		12.9		(0.7)		10.9		(24.0)		(0.9)
Income tax benefit		—		—		—		(0.3)		(0.3)
Net income (loss)	$	12.9	$	(0.7)	$	10.9	$	(23.7)	$	(0.6)

The table below provides information, by country, about our consolidated operations for each of the three months ended March 31, 2018 and 2017 and Property, Plant & Equipment as of March 31, 2018 and December 31, 2017, respectively. Revenue is recorded in the country in which it is earned and assets are recorded in the country in which they are located.



	Project Revenue Three Months Ended March 31,				Property, Plant and Equipment, net of accumulated depreciation
	2018		2017		March 31, 2018		December 31, 2017
United States	$	55.4	$	59.7	$	416.7	$	426.2
Canada		24.6		38.7		169.1		176.1
Total	$	80.0	$	98.4	$	585.8	$	602.3

BC Hydro, Equistar Chemicals, LP, Niagara Mohawk and Independent Electricity System Operator (“IESO”) provided 16.1%, 12.0%, 11.3% and 11.2%, respectively, of total consolidated revenues for the three months ended March 31, 2018. IESO, Niagara Mohawk and BC Hydro provided 30.0%, 11.7% and 10.4%, respectively, of total consolidated revenues for the three months ended March 31, 2017. IESO purchases electricity from the Calstock and Nipigon projects in the Canada segment, Niagara Mohawk purchases electricity from the Curtis Palmer project in the East U.S. segment, Equistar Chemicals, LP purchases electricity from the Morris project in the East U.S. segment, and BC Hydro purchases electricity from the Mamquam, Moresby Lake, and Williams Lake projects in the Canada segment.

14. Guarantees and Contingencies

Guarantees

We and our subsidiaries enter into various contracts that include indemnification and guarantee provisions as a routine part of our business activities. Examples of these contracts include asset purchases and sale agreements, joint venture agreements, operation and maintenance agreements, and other types of contractual agreements with vendors and other third parties, as well as affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters, as well as breaches of representations, warranties and covenants set forth in these agreements.

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ATLANTIC POWER CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in millions U.S. dollars, except per‑share amounts)

(Unaudited)

Contingencies

From time to time, Atlantic Power, its subsidiaries and the projects are parties to disputes and litigation that arise in the normal course of business. We assess our exposure to these matters and record estimated loss contingencies when a loss is likely and can be reasonably estimated. There are no matters pending which are expected to have a material adverse impact on our financial position or results of operations or have been reserved for as of March 31, 2018.

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FORWARD‑LOOKING INFORMATION

Certain statements in this Quarterly Report on Form 10‑Q constitute “forward‑looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. 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,” “continue,” or similar expressions suggesting future outcomes or events. Examples of such statements in this Quarterly Report on Form 10‑Q include, but are not limited to, statements with respect to the following:

our ability to generate sufficient cash flow to service our debt obligations or implement our business plan, including financing internal or external growth opportunities;

the outcome or impact of our business strategy to increase our intrinsic value on a per-share basis through disciplined management of our balance sheet and cost structure and investment of our discretionary cash in a combination of organic and external growth projects, acquisitions, and repurchases of debt and equity securities ;

our ability to renew or enter into new PPAs on favorable terms or at all after the expiration of our current agreements;

our ability to meet the financial covenants under our senior secured term loans and other indebtedness;

expectations regarding maintenance and capital expenditures; and

the impact of legislative, regulatory, competitive and technological changes.

Such forward‑looking statements reflect our current expectations regarding future events and operating performance and speak only as of the date of this Quarterly Report on Form 10‑Q. 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. 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.

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. In addition, 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 included in the filings Atlantic Power makes from time to time with the SEC and the risk factors described under “Item 1A. Risk Factors” in our Annual Report on Form 10‑K for the year ended December 31, 2017 and in this Quarterly Report on Form 10‑Q. To the extent any risk factors in our Annual Report on Form 10‑K for the year ended December 31, 2017 relate to the factual information disclosed elsewhere in this Quarterly Report on Form 10‑Q, including with respect to our business plan and any updates to our business strategy, such risk factors should be read in light of such information. Our business is both highly competitive and subject to various risks.

These risks include, without limitation:

the expiration or termination of PPAs and our ability to renew or enter into new PPAs on favorable terms or at all;

our ability to service our debt obligations or generate sufficient cash flow to pay preferred dividends;

our ability to access liquidity for the ongoing operation of our business and the execution of our business plan or any potential options, which may involve one or more of the use of cash on hand, the issuance of additional corporate debt or equity securities and the incurrence of privately‑placed bank or institutional non‑recourse operating level debt;

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our indebtedness and financing arrangements and the terms, covenants and restrictions included in our senior secured term loans;

exchange rate fluctuations;

the impact of downgrades in our credit rating or the credit rating of our outstanding debt securities, and changes in our creditworthiness;

unstable capital and credit markets;

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

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

the dependence of our projects on third-party suppliers;

projects not operating according to plan;

the effects of weather, which affects demand for electricity and fuel as well as operating conditions;

U.S., Canadian and/or global economic conditions and uncertainty;

risks beyond our control, including but not limited to geopolitical crisis, acts of terrorism or related acts of war, natural disasters or other catastrophic events;

the adequacy of our insurance coverage;

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

the impact of impairment of goodwill, long‑lived assets or equity method investments;

increased competition, including for acquisitions;

our limited control over the operation of certain minority‑owned projects;

transfer restrictions on our equity interests in certain projects;

risks inherent in the use of derivative instruments;

labor disruptions;

the impact of hostile cyber intrusions;

the impact of our failure to comply with the U.S. Foreign Corrupt Practices Act and/or Canadian Corruption of Foreign Public Officials Act; and

our ability to retain, motivate and recruit executives and other key employees.

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 that are based on assumptions about future economic conditions and courses of action. Although the forward‑looking statements contained in this Quarterly Report on Form 10‑Q 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 Quarterly Report on Form 10‑Q 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 Quarterly Report on Form 10‑Q. These forward‑looking statements are made as of the date of

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this Quarterly Report on Form 10‑Q and, except as expressly required by applicable law, we assume no obligation to update or revise them to reflect new events or circumstances.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the financial condition and results of operations of Atlantic Power should be read in conjunction with the interim consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10‑Q. All dollar amounts discussed below are in millions of U.S. dollars except per share amounts, or unless otherwise stated. The interim financial statements have been prepared in accordance with GAAP.

OVERVIEW

Atlantic Power is an independent power producer that owns power generation assets in nine states in the United States and two provinces in Canada. Our power generation projects, which are diversified by geography, fuel type, dispatch profile and offtaker, sell electricity to utilities and other large customers predominantly under long‑term PPAs, which seek to minimize exposure to changes in commodity prices. As of March 31, 2018, the Company’s portfolio consisted of twenty-two projects with an aggregate electric generating capacity of approximately 1,793 MW on a gross ownership basis and approximately 1,440 MW on a net ownership basis. Eighteen of the projects are majority‑owned and operated by the Company. At March 31, 2018, three of our Ontario projects were not in operation, two because of contract expirations at December 31, 2017, and the other, Tunis, has a forward-starting 15-year contractual agreement that will commence with commercial operation of the plant in the third quarter of 2018. In early February 2018, our three plants in San Diego, totaling 112 MW on a gross and net ownership basis, ceased operations . The sixteen projects in operation at March 31, 2018 have generating capacity of approximately 1,561 MW on a gross ownership basis and approximately 1,208 MW on a net ownership basis.

We sell the majority of the capacity and energy from our power generation projects under PPAs to a variety of utilities and other parties. Under the PPAs, 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). Our PPAs have expiration dates ranging from September 30, 2018 to December 31, 2037. We also sell steam from a number of our projects to industrial purchasers under steam sales agreements. Sales of electricity are generally higher during the summer and winter months, when temperature extremes create demand for either summer cooling or winter heating.

The majority of our natural gas, coal and biomass power generation projects have long‑term fuel supply agreements, typically accompanied by fuel transportation arrangements. In most cases, the term of the fuel supply and transportation arrangements correspond to the term of the relevant PPAs and many of the PPAs and steam sales agreements provide for the indexing or pass‑through of fuel costs to our customers. In cases where there is no pass‑through of fuel costs, we often attempt to mitigate the market price risk of changing commodity costs through the use of hedging strategies.

We directly operate and maintain eighteen of our power generation projects. We also partner with recognized leaders in the independent power industry to operate and maintain our other projects. Under these operation, maintenance and management agreements, the operator is typically responsible for operations, maintenance and repair services.

RECENT DEVELOPMENTS

Kenilworth extension

On April 27, 2018, a subsidiary of Merck & Co., Inc. exercised its first option to extend the term of its Energy Services Agreement (“ESA”) with our Kenilworth project for one year to September 30, 2019.

Senior secured term loan facility repricing

On April 19, 2018, the repricing of the $510 million senior secured term loan and senior secured revolving credit facility became effective. As a result of the repricing, the interest rate margin on the term loan and revolver was reduced by an additional 0.50% to LIBOR plus 3.00%. The LIBOR floor remains at 1.00% and the mandatory 1% annual amortization and cash sweep provisions of the term loan are unchanged.

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Share buybacks

Under the new NCIB, we repurchased and cancelled approximately 3.0 million shares at a cost of $6.4 million during the three months ended March 31, 2018. We also repurchased and cancelled 237,500 of our Cdn$25.00 par value 4.85% Cumulative Redeemable Preferred Shares, Series 1 at Cdn$15.25 per share and 83,095 of our Cdn$25.00 par value Cumulative Floating Rate Preferred Shares, Series 3 at Cdn $17.80 for a total payment of Cdn$5.1 million.

Series E Debentures

On January 29, 2018, we closed the Series E Debentures Offering of Cdn$100 million aggregate principal amount of Series E Debentures. We also granted the underwriters the option to purchase up to an additional Cdn$15 million aggregate principal amount of Series E Debentures at any time up to 30 days after the date of closing of the Series E Debentures Offering to cover over-allotments. The underwriters exercised that option, for the full Cdn$15 million aggregate principal amount, on February 2, 2018.

On the initial closing date, we received net proceeds from the Series E Debentures Offering, after deducting the underwriting fee and expenses, of approximately Cdn$94.7 million. We received an additional Cdn$14.4 million of net proceeds from the exercise of the over-allotment option. On January 29, 2018, we issued a notice to redeem all of the $42.5 million remaining principal amount of Series C Debentures with the use of a portion of the proceeds from the Series E Debentures Offering. On February 2, 2018 we issued a notice to redeem Cdn$56. 2 million principal amount of the Series D Debentures with the remaining proceeds from the Series E Debentures Offering. After the partial redemption, Cdn$24.7 million ($19.2 million) aggregate principal amount of the Series D Debentures remain outstanding.

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OUR POWER PROJECTS

The table below outlines our portfolio of power generating assets in operation as of May 3, 2018, including our interest in each facility. Management believes the portfolio is well diversified in terms of electricity and steam buyers, fuel type, regulatory jurisdictions and regional power pools, thereby partially mitigating exposure to market, regulatory or environmental conditions specific to any single region. Our customers are generally large utilities and other parties with investment‑grade credit ratings, as measured by Standard & Poor’s (“S&P”). For customers rated by Moody’s, we substitute the corresponding S&P rating in the table below. Customers that have assigned ratings at the top end of the range of investment‑grade have, in the opinion of the rating agency, the strongest capability for payment of debt or payment of claims, while customers at the lower end of the range of investment‑grade have weaker capacity. Agency ratings are subject to change, and there can be no assurance that a ratings agency will continue to rate the customers, and/or maintain their current ratings. A security rating may be subject to revision or withdrawal at any time by the rating agency, and each rating should be evaluated independently of any other rating. We cannot predict the effect that a change in the ratings of the customers will have on their liquidity or their ability to pay their debts or other obligations.

Power

Customer Credit

Project

Location

Type

Economic Interest

Net MW

Primary Electric Purchasers

Contract Expiry

Rating (S&P)

East U.S. Segment

Orlando (1)

Florida

Natural Gas

129

50.00

Progress Energy Florida

December, 2023

A–

Piedmont

Georgia

Biomass

100.00

Georgia Power

September, 2032

A–

Morris

Illinois

Natural Gas

177

100.00

120

Merchant

N/A

Equistar Chemicals, LP (2)

December, 2034

BBB+

Cadillac

Michigan

Biomass

100.00

Consumers Energy

June, 2028

BBB+

Chambers (1)

New Jersey

Coal

262

40.00

Atlantic City Electric (3)

March, 2024

BBB+

Chemours Co.

March, 2024

Kenilworth

New Jersey

Natural Gas

100.00

Merck & Co., Inc.

September, 2019

Curtis Palmer (4)

New York

Hydro

100.00

Niagara Mohawk Power Corporation

December, 2027

A–

West U.S. Segment

Oxnard

California

Natural Gas

100.00

Southern California Edison

April, 2020

BBB+

Manchief

Colorado

Natural Gas

300

100.00

300

Public Service Company of Colorado

April, 2022 (5)

A–

Frederickson (1)

Washington

Natural Gas

250

50.15

Benton Co. PUD

August, 2022

AA–

Grays Harbor PUD

August, 2022

A+

Franklin, Co. PUD

August, 2022

A+

Koma Kulshan (1)

Washington

Hydro

49.80

Puget Sound Energy

December, 2037

BBB

Canada Segment

Mamquam

British Columbia

Hydro

100.00

British Columbia Hydro and Power Authority

September, 2027 (6)

AAA

Moresby Lake

British Columbia

Hydro

100.00

British Columbia Hydro and Power Authority

August, 2022

AAA

Williams Lake

British Columbia

Biomass

100.00

British Columbia Hydro and Power Authority

June, 2019 (7)

AAA

Calstock

Ontario

Biomass

100.00

Ontario Electricity Financial Corporation

June, 2020

Nipigon

Ontario

Natural Gas

100.00

Ontario Electricity Financial Corporation

December 2022 (8)

⁽¹⁾

Unconsolidated entities for which the results of operations are reflected in equity earnings of unconsolidated affiliates.

⁽²⁾

Represents the credit rating of LyondellBasell, the parent company of Equistar Chemicals, as Equistar is not rated.

⁽³⁾

The base PPA with Atlantic City Electric (“ACE”) makes up the majority of the revenue from the 89 Net MW. For sales of energy and capacity not purchased by ACE under the base PPA and sold to the spot market, profits are shared with ACE under a separate power sales agreement.

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⁽⁴⁾

The Curtis Palmer PPA expires at the earlier of December 2027 or the provision of 10,000 GWh of generation. From January 6, 1995 through March 31, 2018, the facility has generated 7,425 GWh under its PPA. Based on cumulative generation to date, we expect the PPA to expire prior to December 2027.

⁽⁵⁾

Public Service Company of Colorado has options to purchase Manchief in either May 2020 or May 2021.

⁽⁶⁾

BC Hydro has the option to purchase Mamquam in November 2021 and every five-year anniversary thereafter.

⁽⁷⁾

The Williams Lake energy purchase agreement may extend to September 30, 2019 at the option of BC Hydro.

⁽⁸⁾

In December 2017, we entered into a long-term enhanced dispatch contract with the IESO for Nipigon for the period November 1, 2018 through December 31, 2022. As a result, the PPA will be terminated effective October 31, 2018. The long-term enhanced dispatch contract provides for Nipigon to receive monthly capacity-type payments based on the original PPA, with adjustment for operational savings that will be shared with the IESO. In addition, the project will function as a market participant and earn energy revenues for those periods during which it operates.

The following table below outlines our power generating assets under contract, but not currently in operation:

Power

Customer Credit

Project

Location

Type

Economic Interest

Net MW

Primary Electric Purchasers

Contract Expiry

Rating (S&P)

West U.S. Segment

Naval Station

California

Natural Gas

100.00

San Diego Gas & Electric

(1)

Naval Training Center

California

Natural Gas

100.00

San Diego Gas & Electric

(1)

North Island

California

Natural Gas

100.00

San Diego Gas & Electric

(1)

Canada Segment

Tunis

Ontario

Natural Gas

100.00

Independent Electricity System Operator

(2)

⁽¹⁾

Although our original PPAs with San Diego Gas & Electric (“SDG&E”) for these three projects were not scheduled to expire until December 2019, we ceased operations at these projects in February 2018, when our land use agreements with the U.S. Navy expired. In July 2017, we executed amendments to the existing PPAs with SDG&E for Naval Station, North Island and Naval Training Center, which provided for termination of the existing PPAs, and we entered into new seven-year Power Purchase Tolling Agreements (“PPTAs”) with SDG&E for the Naval Station and North Island projects. The PPTAs are subject to certain significant conditions, including retaining the right to operate on the Navy properties beyond February 2018 (“site control”). We also entered into Resource Adequacy (“RA”) contracts with SDG&E for all three projects. The RA contracts are also require us to obtain site control. We obtained approval of the California Public Utilities Commission (“CPUC”) for the aforementioned PPTAs, termination of the existing PPAs and the RA contracts on March 1, 2018. As a result of the approval, the existing PPAs with SDG&E for Naval Station, North Island and Naval Training Center were terminated on March 1, 2018. Although we are in discussions with the Navy. In September 2017, we entered into a seven-year PPA with Southern California Edison for our NTC project that would commence in January 2019. The PPA is a sale of RA capacity and a toll of the energy production resulting from offering the resource to the California Independent System Operator. This PPA is subject to obtaining CPUC approval and also would require us to have site control at NTC. As of May 3, 2018, we have not obtained site control at any of the three plant sites.

⁽²⁾

In December 2014, we entered into an agreement with the Ontario Power Authority and its successor, the IESO, for the future operations of the Tunis facility. Subject to meeting certain technical requirements, Tunis will operate under a 15-year agreement with the IESO commencing during the third quarter of 2018. The agreement provides the Tunis project with a fixed monthly payment which escalates annually according to a pre-defined formula while allowing it to earn additional energy revenues for those periods during which it operates.

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The following table outlines our power generating assets not currently in operation or under contract:

Power

Customer Credit

Project

Location

Type

Economic Interest

Net MW

Primary Electric Purchasers

Contract Expiry

Rating (S&P)

Canada Segment

Kapuskasing

Ontario

Natural Gas

100.00

N/A

North Bay

Ontario

Natural Gas

100.00

N/A

Consolidated Overview and Results of Operations

Performance highlights

The following table provides a summary of our consolidated results of operations for the three months ended March 31, 2018 and 2017, which are analyzed in greater detail below:


	Three months ended
	March 31,
	2018		2017
Project revenue	$	80.0	$	98.4
Project income	$	28.3	$	25.3
Net income (loss) attributable to Atlantic Power Corporation	$	15.9	$	(2.7)
Income (loss) per share attributable to Atlantic Power Corporation—basic	$	0.17	$	(0.02)
Income (loss) per share attributable to Atlantic Power Corporation—diluted	$	0.15		(0.02)
Project Adjusted EBITDA (1)	$	53.4	$	63.8

⁽¹⁾

See reconciliation and definition in Supplementary Non‑GAAP Financial Information.

Revenue decreased by $18.4 million to $80.0 million in the three months ended March 31, 2018 from $98.4 million in the three months ended March 31, 2017. The primary drivers of the decrease are as follows:

Enhanced dispatch contracts – the enhanced dispatch contracts with the IESO expired in December 2017 for Kapuskasing and North Bay, which resulted in a $16.8 million decrease in project revenue; and

San Diego projects – the Naval Station, Naval Training and North Island projects ceased operations in February 2018. This resulted in a $9.8 million decrease of project revenue.

These decreases were partially offset by:

Morris project - $3.6 million increase in revenue at our Morris project due to higher dispatch than the comparable 2017 period.

Consolidated project income increased by $3.0 million to $28.3 million in the three months ended March 31, 2018 from $25.3 million in the three months ended March 31, 2017. The primary drivers of the increase are as follows:

Fuel expense – fuel expense decreased by $6.7 million from the comparable 2017 period primarily due to a $5.9 million decrease at the San Diego projects, which ceased operations in February 2018;

Depreciation expense – depreciation expense decreased $5.7 million from the comparable 2017 period primarily due to decreases of $4.4 million and $3.7 million at our Kapuskasing and North Bay projects, respectively, which were fully depreciated as of December 31, 2017. This decrease was partially offset by $4.5 million of increased amortization of the PPA intangible asset at our Nipigon project; and

Fuel swap and natural gas purchase agreements – the change in fair value of our derivative instruments increased $5.0 million from the comparable 2017 period.

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These increases in project income were partially offset by a decrease in project income resulting from:

Revenue – revenue decreased $18.4 million as discussed above.

A detailed discussion of project income (loss) by segment is provided in Consolidated Overview and Results of Operations below. The discussion of Project Adjusted EBITDA by segment begins on page 41.

We have four reportable segments: East U.S., West U.S., Canada and Un‑Allocated Corporate. The segment classified as Un‑allocated Corporate includes activities that support the executive and administrative offices, capital structure, costs of being a public registrant, costs to develop future projects and intercompany eliminations. These costs are not allocated to the operating segments when determining segment profit or loss. Project income (loss) is the primary GAAP measure of our operating results and is discussed below by reportable segment.

Three months ended March 31, 2018 compared to the three months ended March 31, 2017

The following table provides our consolidated results of operations:


	Three months ended March 31,
	2018		2017		$ change		% change
Project revenue:
Energy sales	$	38.4	$	37.1	$	1.3	3.5	%
Energy capacity revenue		20.1		19.5		0.6	3.1	%
Other		21.5		41.8		(20.3)	(48.6)	%
		80.0		98.4		(18.4)	(18.7)	%
Project expenses:
Fuel		22.2		28.9		(6.7)	(23.2)	%
Operations and maintenance		21.2		20.4		0.8	3.9	%
Depreciation and amortization		23.8		29.5		(5.7)	(19.3)	%
		67.2		78.8		(11.6)	(14.7)	%
Project other income:
Change in fair value of derivative instruments		3.8		(1.2)		5.0	NM
Equity in earnings of unconsolidated affiliates		12.3		9.0		3.3	36.7	%
Interest, net		(0.6)		(2.2)		1.6	(72.7)	%
Other income, net		—		0.1		(0.1)	(100.0)	%
		15.5		5.7		9.8	171.9	%
Project income		28.3		25.3		3.0	11.9	%
Administrative and other expenses:
Administration		6.0		6.4		(0.4)	(6.3)	%
Interest expense, net		15.1		17.3		(2.2)	(12.7)	%
Foreign exchange (gain) loss		(8.2)		2.5		(10.7)	NM
Other income, net		(2.0)		—		(2.0)	NM
		10.9		26.2		(15.3)	(58.4)	%
Income (loss) from operations before income taxes		17.4		(0.9)		18.3	NM
Income tax expense (benefit)		3.2		(0.3)		3.5	NM
Net income (loss)		14.2		(0.6)		14.8	NM
Net (loss) income attributable to preferred shares of a subsidiary company		(1.7)		2.1		(3.8)	NM
Net income (loss) attributable to Atlantic Power Corporation	$	15.9	$	(2.7)	$	18.6	NM

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	Three months ended March 31, 2018
							Un-Allocated		Consolidated
	East U.S.		West U.S.		Canada		Corporate		Total
Project revenue:
Energy sales	$	25.3	$	5.1	$	8.0	$	—	$	38.4
Energy capacity revenue		11.3		5.9		2.9		—		20.1
Other		5.0		2.6		13.7		0.2		21.5
		41.6		13.6		24.6		0.2		80.0
Project expenses:
Fuel		13.6		5.4		3.2		—		22.2
Operations and maintenance		8.2		5.6		7.1		0.3		21.2
Depreciation and amortization		9.1		6.5		8.1		0.1		23.8
		30.9		17.5		18.4		0.4		67.2
Project other income (expense):
Change in fair value of derivative instruments		0.3		—		1.2		2.3		3.8
Equity in earnings of unconsolidated affiliates		10.4		1.9		—		—		12.3
Interest expense, net		(0.6)		—		—		—		(0.6)
		10.1		1.9		1.2		2.3		15.5
Project income (loss)	$	20.8	$	(2.0)	$	7.4	$	2.1	$	28.3


	Three months ended March 31, 2017
							Un-Allocated		Consolidated
	East U.S.		West U.S.		Canada		Corporate		Total
Project revenue:
Energy sales	$	21.8	$	8.5	$	6.8	$	—	$	37.1
Energy capacity revenue		10.1		6.7		2.7		—		19.5
Other		4.2		8.2		29.2		0.2		41.8
		36.1		23.4		38.7		0.2		98.4
Project expenses:
Fuel		12.6		11.6		4.7		—		28.9
Operations and maintenance		7.5		6.1		6.6		0.2		20.4
Depreciation and amortization		8.8		7.3		13.2		0.2		29.5
		28.9		25.0		24.5		0.4		78.8
Project other income (expense):
Change in fair value of derivative instruments		(0.2)		—		(3.3)		2.3		(1.2)
Equity in earnings of unconsolidated affiliates		8.1		0.9		—		—		9.0
Interest expense, net		(2.2)		—		—		—		(2.2)
Other income, net		—		—		—		0.1		0.1
		5.7		0.9		(3.3)		2.4		5.7
Project income (loss)	$	12.9	$	(0.7)	$	10.9	$	2.2	$	25.3

East U.S.

Project income for the three months ended March 31, 2018 increased $7.9 million from the comparable 2017 period primarily due to:

increased project income of $2.4 million at Morris primarily due to higher dispatch than the comparable 2017 period;

increased project income of $1.4 million at Piedmont primarily due to $1.6 million of lower interest expense resulting from the repayment of the project-level debt, in full, in 2017; and

increased project income of $0.7 million at Selkirk, which had a $0.7 project loss in the comparable 2017 period and was sold in the fourth quarter of 2017.

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West U.S.

Project loss for the three months ended March 31, 2018 increased $1.3 million from the comparable 2017 period primarily due to:

decreased project income of $0.9 million, $0.6 million and $0.4 million at North Island, Naval Station and Naval Training Center, respectively, which ceased operations in February 2018; and

decreased project income of $0.6 million at Oxnard primarily due to $0.6 million of higher maintenance expenses than the comparable 2017 period.

These decreases were partially offset by:

Increased project income of $1.0 million at Frederickson primarily due to a $0.9 million increase in equity earnings resulting from lower amortization expense of the PPA intangible asset, which was impaired in the fourth quarter of 2017.

Canada

Project income for the three months ended Mach 31, 2018 decreased $3.5 million from the comparable 2017 period primarily due to:

decreased project income of $3.7 million at North Bay primarily due to the expiration of the enhanced dispatch contract in December 2017;

decreased project income of $3.1 million at Kapuskasing primarily due to the expiration of the enhanced dispatch contract in December 2017; and

decreased project income of $2.7 million at Tunis primarily due to higher maintenance expense incurred in order to restart operations;

These decreases were partially offset by:

increased project income of $2.6 million at Williams Lake primarily due to a $1.6 million decrease in depreciation expense resulting from a $28.5 million long-lived asset impairment recorded in the fourth quarter of 2017 and $1.0 million of increased revenue from higher generation than the comparable 2017 period;

increased project income of $1.7 million at Nipigon primarily due to an increase in the fair value of a gas purchase agreement accounted for as a derivative; and

increased project income of $0.9 million at Mamquam primarily due to higher water flows than the comparable 2017 period.

Un‑allocated Corporate

Total project income for the three months ended March 31, 2018 did not change materially from the comparable 2017 period.

Administrative and other expenses (income)

Administrative and other expenses (income) include the income and expenses not attributable to any specific project and is allocated to the Un‑allocated Corporate segment. These costs include the activities that support the executive and administrative offices, treasury function, costs of being a public registrant, costs to develop or acquire future projects, interest costs on our corporate obligations, the impact of foreign exchange fluctuations and corporate taxes. Significant non‑cash items that impact Administrative and other expenses (income), and that are subject to potentially significant fluctuations include the non‑cash impact of foreign exchange fluctuations from period to period on

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the U.S. dollar equivalent of our Canadian dollar‑denominated obligations and the related deferred income tax expense (benefit) associated with these non‑cash items.

Administration

Administration expense did not change materially from the 2017 comparable period.

Interest expense, net

Interest expense decreased $2.2 million from the comparable 2017 period primarily due to lower outstanding debt balances than the comparable 2017 period, as well as a lower interest rate on our senior secured credit facility.

Foreign exchange gains

Foreign exchange gain was $8.2 million for the three months ended March 31, 2018, an increase of $10.7 million from a $2.5 million foreign exchange loss in the comparable 2017 period, primarily due to an increase in the revaluation of instruments denominated in Canadian dollars. The closing U.S. dollar to Canadian dollar exchange rates were 1.29 and 1.33 at March 31, 2018 and 2017, respectively, an increase of 2.8% as compared to a decrease of 0.9% in 2017. The average U.S. dollar to Canadian dollar exchange rates were 1.29 and 1.34 for the three months ended March 31, 2018 and 2017, respectively.

Other income, net

Other income, net increased $2.0 million primarily due to the change in fair value of the conversion option derivative related to the Series E Debentures.

Income tax expense

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Project Operating Performance

Two of the primary metrics we utilize to measure the operating performance of our projects are generation and availability. Generation measures the net output of our proportionate project ownership percentage in megawatt hours (“MWh”). Availability is calculated by dividing the total scheduled hours of a project less forced outage hours by the total hours in the period measured. The terms of our PPAs require our projects to maintain certain levels of availability. The majority of our projects were able to achieve their respective capacity payments. For projects where reduced availability adversely impacted capacity payments, the impact was not material for the three months ended March 31, 2018. The terms of our PPAs provide for certain levels of planned and unplanned outages. All references below are denominated in net Gigawatt-hours (“net GWh”).

Generation


	Three months ended March 31,
			% change
(in Net GWh)	2018	2017	2018 vs. 2017
Segment
East U.S.	656.2	589.7	11.3	%
West U.S.	243.3	351.3	(30.7)	%
Canada	221.0	211.7	4.4	%
Total	1,120.5	1,152.7	(2.8)	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Aggregate power generation for the three months ended March 31, 2018 decreased 2.8% from the comparable 2017 period primarily due to:

decreased generation in the West U.S. segment primarily due to a combined 114.0 net GWh decrease in generation at Naval Station, North Island and Naval Training Center due to ceased operations in February 2018, and a 45.5 net GWh decrease in generation at Frederickson due to low demand, partially offset by a 55.5 GWh increase in generation at Manchief due to higher dispatch than the comparable 2017 period.

These decreases were partially offset by:

increased generation in the East U.S. segment primarily due to a 34.3 net GWh increase in generation at Morris due to higher dispatch than the comparable period in 2017, a 12.6 net GWh increase in generation at Orlando due to a maintenance outage performed in the comparable 2017 period, an 11.9 net GWh increase in generation at Chambers due to higher dispatch than the comparable 2017 period, and a 10.6 net GWh increase in generation at Piedmont due to a maintenance outage performed in the comparable 2017 period; and

increased generation in the Canada segment primarily due to a 7.5 net GWh increase at Mamquam due to higher water flows than the comparable 2017 period.

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Availability


	Three months ended March 31,
					% change
	2018		2017		2018 vs. 2017
Segment
East U.S.	98.0	%	96.8	%	1.2	%
West U.S.	97.2	%	98.6	%	(1.4)	%
Canada	99.7	%	91.4	%	9.1	%
Weighted average	98.3	%	96.4	%	2.0	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Aggregate power availability for the three months ended March 31, 2018 increased 2.0% from the comparable 2017 period primarily due to:

increased availability in the Canada segment primarily due to a maintenance outage at Mamquam in the comparable period in 2017; and

increased availability in the East U.S. segment primarily due to a maintenance outage in February 2017 at Piedmont, partially offset by decreased availability at Kenilworth due to a planned outage in the three months ended March 31, 2018.

These increases were partially offset by:

decreased availability in the West U.S. segment primarily due to a forced outage at Oxnard.

Supplementary Non‑GAAP Financial Information

The key measurement we use to evaluate the results of our business is Project Adjusted EBITDA. Project Adjusted EBITDA is defined as project income (loss) plus 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 believe that Project Adjusted EBITDA is a useful measure of financial results at our projects because it excludes non-cash impairment charges, gains or losses on the sale of assets and non-cash mark-to-market adjustments, all of which can affect year-to-year comparisons. Project Adjusted EBITDA is before corporate overhead expense. The most directly comparable GAAP measure to Project Adjusted EBITDA is Project income. A reconciliation of Net income (loss) to Project income and to Project Adjusted EBITDA is provided under “Project Adjusted EBITDA” below. Project Adjusted EBITDA for our equity investments in unconsolidated affiliates is presented on a proportionately consolidated basis in the table below.

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Project Adjusted EBITDA


	Three months ended
	March 31,				$ change
	2018		2017		2018 vs 2017
Net income (loss)	$	14.2	$	(0.6)	$	14.8
Income tax expense (benefit)		3.2		(0.3)		3.5
Income (loss) from operations before income taxes		17.4		(0.9)		18.3
Administration		6.0		6.4		(0.4)
Interest expense, net		15.1		17.3		(2.2)
Foreign exchange (gain) loss		(8.2)		2.5		(10.7)
Other income, net		(2.0)		—		(2.0)
Project income	$	28.3	$	25.3	$	3.0
Reconciliation to Project Adjusted EBITDA
Depreciation and amortization		27.9		34.9		(7.0)
Interest expense, net		1.0		2.4		(1.4)
Change in the fair value of derivative instruments		(3.8)		1.2		(5.0)
Project Adjusted EBITDA	$	53.4	$	63.8	$	(10.4)
Project Adjusted EBITDA by segment
East U.S.		33.2		27.2		6.0
West U.S.		6.1		9.1		(3.0)
Canada		14.2		27.5		(13.3)
Un-Allocated Corporate		(0.1)		—		(0.1)
Total	$	53.4	$	63.8	$	(10.4)

East U.S.

The following table summarizes Project Adjusted EBITDA for our East U.S. segment for the periods indicated:


	Three months ended March 31,
					% change
	2018		2017		2018 vs. 2017
East U.S.
Project Adjusted EBITDA	$	33.2	$	27.2	22	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Project Adjusted EBITDA for the three months ended March 31, 2018 increased $6.0 million from the comparable 2017 period primarily due to increased Project Adjusted EBITDA of:

$3.6 million at Morris due to $3.6 million of increased revenue from higher generation and higher merchant energy prices, a higher capacity price and higher steam and ancillary services revenues than the comparable 2017 period;

$0.7 million at Selkirk, which had a project loss in the comparable 2017 period and was sold in the fourth period of 2017; and

$0.5 million at Orlando due to lower fuel prices.

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West U.S.

The following table summarizes Project Adjusted EBITDA for our West U.S. segment for the periods indicated:


	Three months ended March 31,
					% change
	2018		2017		2018 vs 2017
West U.S.
Project Adjusted EBITDA	$	6.1	$	9.1	(33)	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Project Adjusted EBITDA for the three months ended March 31, 2018 decreased $3.0 million from the comparable 2017 period primarily due to decreased Project Adjusted EBITDA of:

$1.1 million, $1.1 million and $0.5 million at Naval Station, North Island and Naval Training Center, respectively, which ceased operations in February 2018; and

$0.6 million at Oxnard due to $0.6 million higher maintenance expense than the comparable 2017 period.

Canada

The following table summarizes Project Adjusted EBITDA for our Canada segment for the periods indicated:


	Three months ended March 31,
					% change
	2018		2017		2018 vs. 2017
Canada
Project Adjusted EBITDA	$	14.2	$	27.5	(48)	%

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Project Adjusted EBITDA for the three months ended March 31, 2018 decreased $13.3 million from the comparable 2017 period primarily due to decreased Project Adjusted EBITDA of:

$7.5 million and $7.4 million at Kapuskasing and North Bay, respectively, due to expiration of the enhanced dispatch contracts in December 2017; and

$2.6 million at Tunis due to higher maintenance expense incurred in order to restart operations.

These decreases were partially offset by increased Project Adjusted EBITDA of:

$1.7 million at Nipigon primarily due to a contractual rate increase under the enhanced dispatch contract;

$1.0 million at Williams Lake primarily due to higher contracted firm energy revenues than the comparable 2017 period; and

$0.9 million at Mamquam primarily due to higher water flows and the timing of maintenance expense relative to the comparable 2017 period.

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Un‑allocated Corporate

The following table summarizes Project Adjusted EBITDA for our Un‑allocated Corporate segment for the periods indicated:


	Three months ended March 31,
					% change
	2018		2017		2018 vs. 2017
Un-allocated Corporate
Project Adjusted EBITDA	$	(0.1)	$	—	NM

Three months ended March 31, 2018 compared with three months ended March 31, 2017

Project Adjusted EBITDA for the three months ended March 31, 2018 did not change materially from the comparable 2017 period.

Liquidity and Capital Resources


	March 31,		December 31,
	2018		2017
Cash and cash equivalents	$	82.6	$	78.7
Restricted cash		5.7		6.2
Total		88.3		84.9
Revolving credit facility availability		122.5		119.5
Total liquidity	$	210.8	$	204.4

Overview

Our primary sources of liquidity are distributions from our projects and availability under our Revolving Credit Facility. Our liquidity depends in part on our ability to successfully enter into new PPAs at projects when PPAs expire or terminate. PPAs in our portfolio have expiration dates ranging from September 30, 2018 to December 31, 2037. When a PPA expires or is terminated, it may be difficult for us to secure a new PPA, if at all, or the price received by the project for power under subsequent arrangements may be reduced significantly. As a result, this may reduce the cash received from project distributions and the cash available for further debt reduction, identification of and investment in accretive growth opportunities (both internal and external), to the extent available, and other allocation of available cash. See “Risk Factors—Risks Related to Our Structure—We may not generate sufficient cash flow to service our debt obligations or implement our business plan, including financing external growth opportunities or fund our operations” in our Annual Report on Form 10‑K for the year ended December 31, 2017.

We expect to reinvest approximately $36.2 million in our portfolio, including equity method investments, in the form of project capital expenditures and maintenance expenses in 2018, of which $7.2 million has been incurred through March 31, 2018. Such investments are generally paid at the project level. See “—Capital and Major Maintenance Expenditures” in our Annual Report on Form 10‑K for the year ended December 31, 2017. We do not expect any other material or unusual requirements for cash outflows for 2018 for capital expenditures or other required investments. We believe that we will be able to generate sufficient amounts of cash and cash equivalents to maintain our operations and meet obligations as they become due for at least the next 12 months.

Consolidated Cash Flow Discussion

The following table reflects the changes in cash flows for the periods indicated:


	Three months ended
	March 31,
	2018		2017		Change
Net cash provided by operating activities	$	50.3	$	34.1	$	16.2
Net cash used in investing activities		(1.1)		(2.0)		0.9
Net cash used in financing activities		(45.7)		(29.5)		(16.2)

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Operating Activities

Cash flow from our projects may vary from period to period based on working capital requirements and the operating performance of the projects, as well as changes in prices under the PPAs, fuel supply and transportation agreements, steam sales agreements and other project contracts, and the transition to merchant or re‑contracted pricing following the expiration of PPAs. Project cash flows may have some seasonality and the pattern and frequency of distributions to us from the projects during the year can also vary, although such seasonal variances do not typically have a material impact on our business.

For the three months ended March 31, 2018, the net increase in cash flows provided by operating activities of $16.2 million was primarily the result of the following:

Working capital – changes in working capital resulted in a $20.9 million increase in cash flows from operating activities primarily due to an $18.3 million decrease in working capital at our Kapuskasing, North Bay, Nipigon and San Diego projects, which were not in operation at March 31, 2018.

Interest expense – we paid $4.5 million of lower interest due to lower interest rates on our senior secured credit facility and the repayment of Piedmont’s project-level debt in 2017; and

Morris – higher dispatch at Morris had a $3.6 million impact on cash flows from operations in the three months ended March 31, 2018.

These increases were partially offset by the following decrease to cash flows from operations:

Contract expirations – the expiration of the enhanced dispatch contracts at our North Bay and Kapuskasing projects on December 31, 2017, as well as operations ceasing in February 2018 at our San Diego projects, had a $17.6 million impact on cash flows from operations.

Investing Activities

For the three months ended March 31, 2018, the net increase in cash flows used in investing activities of $0.9 million was primarily the result of the following:

Capitalized plant additions – capitalized plant additions were $0.9 million lower in the three months ended March 31, 2018 than the comparable 2017 period.

Financing Activities

For the three months ended March 31, 2018, the net decrease in cash flows used in financing activities of $16.2 million was primarily the result of the following:

Convertible debenture redemptions – we paid $88.1 million to redeem and cancel the Series C Debentures, in full, and the Series D Debentures, in part with proceeds from the issuance of the Series E Debentures;

Corporate and project-level debt repayments – we made $5.0 million of higher principal payments than the comparable 2017 period;

Preferred share repurchases – we paid $4.0 million in the three months ended March 31, 2018 to repurchase and cancel preferred shares;

Common share repurchases – we paid $6.4 million in the three months ended March 31, 2018 to repurchase and cancel common shares; and

Deferred financing costs – we incurred $4.8 million of deferred financing costs related to the issuance of the Series E Debentures.

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These decreases were partially offset by the following increases to cash flows used in financing activities:

Convertible debenture issuance – we received $92.2 million from the issuance of the Series E Debentures.

Corporate Debt

The following table summarizes the maturities of our corporate debt at March 31, 2018:


							Remaining
	Maturity	Interest					Principal
	Date	Rates					Repayments		2018		2019		2020		2021		2022		Thereafter
Senior secured term loan facility (1)	April 2023	4.40	%	-	5.20	%	$	510.0	$	60.0	$	65.0	$	105.0	$	80.0	$	75.0	$	125.0
Atlantic Power Income LP Note	June 2036	5.95	%					162.9		—		—		—		—		—		162.9
Convertible Debenture	December 2019	6.00	%					19.2		—		19.2		—		—		—		—
Convertible Debenture	January 2025	6.00	%					89.2		—		—		—		—		—		89.2
Total Corporate Debt							$	781.3	$	60.0	$	84.2	$	105.0	$	80.0	$	75.0	$	377.1

⁽¹⁾

The Credit Facility contains a mandatory amortization feature determined by using the greater of (i) 50% of the cash flow of APLP Holdings and its subsidiaries that remains after the application of funds, in accordance with a customary priority, to operations and maintenance expenses of APLP Holdings and its subsidiaries, debt service on the Credit Facilities and the 5.95% MTNs, letters of credit costs to meet the requirements of the debt service reserve account, debt service on other permitted debt of APLP Holdings and its subsidiaries, capital expenditures permitted under the Credit Agreement, and payment on the preferred equity issued by APPEL, a subsidiary of APLP Holdings or (ii) such other amount up to 100% of the cash flow described in clause (i) above that is required to reduce the aggregate principal amount of Term Loans outstanding to achieve a target principal amount that declines quarterly based on a pre-determined specified schedule. Note that failing to meet the mandatory amortization requirements is not an event of default, but could result in APLP Holdings being unable to make distributions to Atlantic Power Corporation and APPEL being unable to pay dividends to its shareholders. The amortization profile in the table above is based on principal payments according to the targeted principal amount described in (ii) above.

Project‑Level Debt

Project‑level debt of our consolidated projects is secured by the respective project and its contracts with no other recourse to us. Project‑level debt generally amortizes during the term of the respective revenue‑generating contracts of the projects. The following table summarizes the maturities of project‑level debt. The amounts represent our share of the non‑recourse project‑level debt balances at March 31, 2018. Certain of the projects have more than one tranche of debt outstanding with different maturities, different interest rates and/or debt containing variable interest rates. Project‑level debt agreements contain covenants that restrict the amount of cash distributed by the project if certain debt service coverage ratios are not attained. At May 3, 2018, all of our projects were in compliance with the covenants contained in project‑level debt. Projects that do not meet their debt service coverage ratios are limited from making distributions, but are not callable or subject to acceleration under the terms of their debt agreements.

The range of interest rates presented represents the rates in effect at March 31, 2018. The amounts listed below are in millions of U.S. dollars, except as otherwise stated.


							Total
							Remaining
	Maturity	Range of					Principal
	Date	Interest Rates					Repayments		2018		2019		2020		2021		2022		Thereafter
Consolidated Projects:
Epsilon Power Partners	January 2019	4.91	%				$	5.6	$	4.8	$	0.8	$	—	$	—	$	—	$	—
Cadillac	August 2025	6.13	%					23.3		2.2		3.1		3.1		2.7		3.3		8.9
Total Consolidated Projects								28.9		7.0		3.9		3.1		2.7		3.3		8.9
Equity Method Projects:
Chambers (1)	December 2019 and 2023	4.50	%	-	5.00	%		42.9		—		5.2		7.8		8.8		10.1		11.0
Total Equity Method Projects								42.9		—		5.2		7.8		8.8		10.1		11.0
Total Project-Level Debt							$	71.8	$	7.0	$	9.1	$	10.9	$	11.5	$	13.4	$	19.9

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⁽¹⁾

In June 2014, Chambers refinanced its project debt and issued (i) Series A (tax-exempt) Bonds due December 2023, of which our proportionate share is $41.3 million and (ii) Series B (taxable) Bonds due December 2019, of which our proportionate share is $1.6 million. The above table does not include our $4.2 million proportionate share of issuance premiums.

Uses of Liquidity

Our requirements for liquidity and capital resources, other than operating our projects, consist primarily of principal and interest on our outstanding convertible debentures, senior secured term loans, MTNs and other corporate and project-level debt, funding the repurchase of shares of our common stock, our convertible debentures, our preferred shares (to the extent we choose to pursue any such repurchases), collateral and investment in our projects through capital expenditures, including major maintenance and business development costs and dividend payments to preferred shareholders of a subsidiary company.

Capital and Maintenance Expenditures

Capital expenditures and maintenance expenses for the projects are generally paid at the project level using project cash flows and project reserves. Therefore, the distributions that we receive from the projects are made net of capital expenditures needed at the projects. The operating projects which we own consist of large capital assets that have established commercial operations. On‑going capital expenditures for assets of this nature are generally not significant because most expenditures relate to planned repairs and maintenance and are expensed when incurred.

We expect to reinvest approximately $1.4 million in 2018 (of which $0.2 million was reinvested in the three months ended March 31, 2018) in our portfolio, including equity method investments, in the form of project capital expenditures, and incur $34.8 million of maintenance expenses (of which $7.0 million was incurred in the three months ended March 31, 2018). Such investments are generally paid at the project level. See “—Capital and Major Maintenance Expenditures” in our Annual Report on Form 10‑K for the year ended December 31, 2017. We do not expect any other material or unusual requirements for cash outflows for 2018 for capital expenditures or other required investments. We believe that we will be able to generate sufficient amounts of cash and cash equivalents to maintain our operations and meet obligations as they become due for at least the next 12 months.

We believe one of the benefits of our diverse fleet is that plant overhauls and other expenditures do not occur in the same year for each facility. Recognized industry guidelines and original equipment manufacturer recommendations provide a source of data to assess maintenance needs. In addition, we utilize predictive and risk‑based analysis to refine our expectations, prioritize our spending and balance the funding requirements necessary for these expenditures over time. Future capital expenditures and maintenance expenses may exceed the projected level in 2018 as a result of the timing of more infrequent events such as steam turbine overhauls and/or gas turbine and hydroelectric turbine upgrades.

Recently Adopted and Recently Issued Accounting Guidance

See Note 1 to the consolidated financial statements in this Quarterly Report on Form 10‑Q.

Off‑Balance Sheet Arrangements

As of March 31, 2018, we had no off‑balance sheet arrangements as defined in Item 303(a)(4) of Regulation S‑K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to financial market risk results primarily from fluctuations in interest and currency rates and fuel and electricity prices. There have been no material changes to our market risks as disclosed in our Annual Report on Form 10‑K for the fiscal year ended December 31, 2017.

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ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d- 15(e) of the Exchange Act as of the end of the period covered by this report, and they have concluded that these controls and procedures are effective.

Changes in Internal Control over Financial Reporting

There have been no changes in internal control over financial reporting during the three months ended March 31, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Internal Control over Financial Reporting

Because of their inherent limitations, our disclosure controls and procedures and our internal control over financial reporting may not prevent material errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to risks, including that the control may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate.

ITEM 1A. RISK FACTORS

There were no material changes to the risk factors disclosed in “Item 1A. Risk Factors” of our Annual Report on Form 10‑K for the year ended December 31, 2017 except to the extent additional factual information disclosed elsewhere in this Quarterly Report on Form 10‑Q relates to such risk factors (including, without limitation, the matters discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations”). To the extent any risk factors in our Annual Report on Form 10‑K for the year ended December 31, 2017 relate to the factual information disclosed elsewhere in this Quarterly Report on Form 10‑Q, including with respect to our business plan and any updated to our business strategy, such risk factors should be read in light of such information.

ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEED

Share Repurchase Program

On December 29, 2017, we commenced an NCIB for each of our Series C and Series D Debentures, our common shares and for each series of the preferred shares of APPEL, our wholly-owned subsidiary. The NCIB expires on December 28, 2018 or such earlier date as the Company and/or APPEL complete their respective purchases pursuant to the NCIBs. Under the NCIB, we may purchase up to a total of 11,308,946 common shares based on 10% of our public float as of December 15, 2017 and we are limited to daily purchases of 11,789 common shares per day with certain exceptions including block purchases and purchases on other approved exchanges. Through March 31, 2018, we repurchased and cancelled approximately 3.0 million shares at a cost of $6.4 million. W e also repurchased and cancelled approximately 237,500 of our Cdn$25.00 par value 4.85% Cumulative Redeemable Preferred Shares, Series 1 at Cdn$15.25 per share and 83,095 of our Cdn$25.00 par value Cumulative Floating Rate Preferred Shares, Series 3 at Cdn $17.80, for a total payment of Cdn$5.1 million in the three months ended March 31, 2018.

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The following table provides purchases of equity securities by the Issuer and Affiliated Purchases for the period of January 1, 2018 through March 31, 2018:


					Total Number of Shares		Dollar Value of Maximum Number
	Total Number of		Average Price Paid		as Part of a Publicly Announced		of Shares to be Purchased Under
Purchase Period	Shares Purchased		Per Share		Purchase Plan		the Plan
1/1/2018 - 1/31/2018		—				—		—
2/1/2018 - 2/28/2018		—				—		—
3/1/2018 - 3/31/2018		3,029,840		$ 2.10		3,029,840		$ 26,576,023
Total		3,029,840				3,029,840

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ITEM 6. EXHIBITS

EXHIBIT INDEX


Exhibit No.		Description
10.1*		Third Amendment dated April 19, 2018 to the Credit and Guaranty Agreement, dated as of April 13, 2016, among APLP Holdings Limited Partnership, as Borrower, Atlantic Power Corporation, as guarantor, Certain Subsidiaries of APLP Holdings Limited Partnership, as Guarantors, Various Lenders, Goldman Sachs Bank USA and Bank of America, N.A., as L/C Issuers, Goldman Sachs Lending Partners LLC and Bank of America, N.A., as Joint Syndication Agents, Goldman Sachs Lending Partners LLC as Administrative Agent and Collateral Agent, and Goldman Sachs Lending Partners LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets, The Bank of Tokyo-Mitsubishi UFJ, Ltd., Wells Fargo Securities, LLC, and Industrial and Commercial Bank of China, in their respective capacities as Joint Lead Arrangers and Joint Bookrunners.
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a‑14(a) or Rule 15d‑14(a) of the Securities Exchange Act of 1934
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a‑14(a) or Rule 15d‑14(a) of the Securities Exchange Act of 1934
32.1**		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
32.2**		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002
101.INS*		XBRL Instance Document
101.SCH*		XBRL Taxonomy Extension Schema
101.CAL*		XBRL Taxonomy Extension Calculation Linkbase
101.DEF*		XBRL Taxonomy Extension Definition Linkbase
101.LAB*		XBRL Taxonomy Extension Label Linkbase
101.PRE*		XBRL Taxonomy Extension Presentation Linkbase

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


Date: May 3, 2018	Atlantic Power Corporation


	By:	/s/ Terrence Ronan
		Name:	Terrence Ronan
		Title:	Chief Financial Officer (Duly Authorized Officer and Principal Financial Officer)

Exhibit 10.1

Execution Version

THIRD AMENDMENT

TO CREDIT AND GUARANTY AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “ Amendment ”) is dated as of April 19, 2018 and is entered into by and among APLP HOLDINGS LIMITED PARTNERSHIP , a limited partnership formed under the laws of the Province of Ontario, Canada (the “ Borrower ”), by its general partner, ATLANTIC POWER GP II INC. , a corporation organized under the laws of the Province of British Columbia, Canada (in such capacity, the “ General Partner ”), ATLANTIC POWER CORPORATION , a corporation organized under the laws of the Province of British Columbia, Canada (the “ Sponsor ”), GOLDMAN SACHS LENDING PARTNERS LLC (“ Goldman Sachs ”), as Administrative Agent (“ Administrative Agent ”), acting with the consent of the Requisite Lenders and, for purposes of Section VIII hereof, the GUARANTORS listed on the signature pages hereto, and is made with reference to that certain CREDIT AND GUARANTY AGREEMENT dated as of April 13, 2016, as amended by that certain First Amendment to Credit and Guaranty Agreement, dated as of April 17, 2017, and as further amended by that certain Second Amendment to Credit and Guaranty Agreement, dated as of October 18, 2017 (and as further amended through the date hereof, the “Credit Agreement” ) by and among the Borrower, by its General Partner, the Sponsor and the subsidiaries of the Borrower named therein, as Guarantors, the Lenders and L/C Issuers party thereto from time to time, the Administrative Agent and the Collateral Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement after giving effect to this Amendment.

RECITALS

WHEREAS, the Credit Parties have requested that the Requisite Lenders agree to amend certain provisions of the Credit Agreement as provided for herein;

WHEREAS, subject to the conditions set forth herein, each Lender that has delivered their counterpart signature of this Amendment to the Administrative Agent in accordance with instructions given to the Lenders for delivery of such signatures hereby agrees to such amendment relating to the Credit Agreement as hereinafter set forth;

WHEREAS , each Term Loan Lender under the Credit Agreement immediately prior to the Third Amendment Effective Date (collectively, the “ Existing Term Loan Lenders ”) that executes and delivers a consent to this Amendment in the form of the “Term Loan Lender Consent” attached hereto as Annex I (a “ Term Loan Lender Consent ”) and selects Option A thereunder (the “ Continuing Term Loan Lenders ”) hereby agrees to the terms and conditions of this Amendment;

WHEREAS , each Existing Term Loan Lender that executes and delivers a Term Loan Lender Consent and selects Option B thereunder (the “ Cash Roll Term Loan Lenders ” and, together with the Continuing Term Loan Lenders, the “ Consenting Term Loan Lenders ”) hereby agrees to the terms and conditions of this Amendment and agrees that it shall execute, or shall be deemed to have executed, a counterpart of the Master Assignment and Assumption Agreement substantially in the form attached hereto as Annex III (a “ Master Assignment ”) and

shall in accordance therewith sell all of its existing Term Loans as specified in the applicable Master Assignment and commits to repurchase a like amount of the repriced Term Loans via assignment post-closing, as further set forth in this Amendment;

WHEREAS , each Existing Term Loan Lender that fails to execute and return a Term Loan Lender Consent by 12:00 p.m. (New York City time), on April 6, 2018 (the “ Consent Deadline ”) (each, a “ Non-Consenting Term Loan Lender ”) shall, in accordance with Section 2.24 of the Credit Agreement, assign and delegate, without recourse (in accordance with Section 10.6 of the Credit Agreement), all of its interests, rights and obligations under the Credit Agreement and the related Credit Documents in respect of its existing Term Loans to an assignee that shall assume such obligations as specified in the applicable Master Assignment and Assumption Agreement substantially in the form attached hereto as Annex III (a “ Master Assignment ”), as further set forth in this Amendment;

WHEREAS , each Revolving Lender holding Revolving Loans immediately prior to the Third Amendment Effective Date (the “ Existing Revolving Loans ”) or unused Revolving Commitments immediately prior to the Third Amendment Effective Date (the “ Existing Revolving Commitments ” and, such Revolving Lenders holding such Existing Revolving Loans or Existing Revolving Commitments, the “ Existing Revolving Lenders ” and, together with the Existing Term Loan Lenders, the “ Existing Lenders ”) that executes and delivers a consent to this Amendment in the form of the “Revolving Lender Consent” attached hereto as Annex II (a “ Revolving Lender Consent ”, and the Revolving Lender Consents together with the Term Loan Lender Consents, the “ Lender Consents ”) (collectively, the “ Consenting Revolving Lenders ” and, together with the Consenting Term Loan Lenders, the “ Consenting Lenders ”) will, by the fact of such execution and delivery, be deemed to have consented to the terms of this Amendment;

WHEREAS , each Existing Revolving Lender that fails to execute and return a Revolving Lender Consent by the Consent Deadline (each, a “ Non-Consenting Revolving Lender ”) shall, in accordance with Section 2.24 of the Credit Agreement, assign and delegate, without recourse (in accordance with Section 10.6 of the Credit Agreement), all of its interests, rights and obligations under the Credit Agreement and the related Credit Documents in respect of its Existing Revolving Loans and Existing Revolving Commitments to an assignee that shall assume such obligations as specified in the applicable Master Assignment, as further set forth in this Amendment; and

WHEREAS , each Credit Party party hereto (collectively, the “ Reaffirming Parties ”, and each, a “ Reaffirming Party ”) expects to realize substantial direct and indirect benefits as a result of this Amendment becoming effective and the consummation of the transactions contemplated hereby and agrees to reaffirm its obligations pursuant to the Credit Agreement, the Collateral Documents, and the other Credit Documents to which it is a party.

NOW, THEREFORE , in consideration of the premises and the agreements, provisions and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION I. AMENDMENTS TO CREDIT AGREEMENT.

1.1 Amendments to Section 1: Definitions .

A. Section 1.1 of the Credit Agreement is hereby amended by adding the following definitions in proper alphabetical sequence:

“ Third Amendment ” means that certain Third Amendment Agreement to Credit and Guaranty Agreement dated as of April 19, 2018 among the Borrower, by its General Partner, the Administrative Agent, the Lenders and the Guarantors listed on the signature pages thereto.

“ Third Amendment Effective Date ” means the date of satisfaction of the conditions referred to in Section III of the Third Amendment.

B. Section 1.1 of the Credit Agreement is hereby amended by amending and restating the definition of “ Applicable Margin ” as follows:

“ Applicable Margin ” means (a) prior to the Third Amendment Effective Date, (1) with respect to Revolving Loans that are Eurodollar Rate Loans and Letter of Credit Fees, 3.50% per annum and with respect to Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, 2.50% per annum and (2) with respect to Term Loans that are Eurodollar Rate Loans, 3.50% per annum and with respect to Term Loans that are Base Rate Loans, 2.50% per annum , and (b) from and after the Third Amendment Effective Date, (1) with respect to Revolving Loans that are Eurodollar Rate Loans and Letter of Credit Fees, 3.00% per annum and with respect to Revolving Loans that are Base Rate Loans or Canadian Prime Rate Loans, 2.00% per annum and (2) with respect to Term Loans that are Eurodollar Rate Loans, 3.00% per annum and with respect to Term Loans that are Base Rate Loans, 2.00% per annum.

1.2 Amendments to Section 2.14 .

Section 2.14(c) of the Credit Agreement is hereby amended by replacing the phrase “the date that is six (6) months after the Second Amendment Effective Date ( provided that the reduction in the interest rate as implemented by the Second Amendment shall not be considered a Repricing Transaction)” therein with the phrase “the date that is six (6) months after the Third Amendment Effective Date ( provided that the reduction in the interest rate as implemented by the Third Amendment shall not be considered a Repricing Transaction)” in each of such places it appears in such Section (such amendment, along with the Amendments in Sections 1.1(A) and Sections 1.1(B) above, the “Repricing Amendments ”).

SECTION II. CONTINUATION OF EXISTING LOANS; NON-CONSENTING LENDERS; OTHER TERMS AND AGREEMENTS.

2.1 Continuing Lenders. Each Existing Term Loan Lender selecting Option A on the Term Loan Lender Consent hereby consents and agrees to this Amendment. Each Existing

Revolving Lender executing and delivering a Revolving Lender Consent hereby consents and agrees to this Amendment.

2.2 Cash Roll Term Loan Lenders. Each Existing Term Loan Lender hereto selecting Option B on the Term Loan Lender Consent hereby consents and agrees (subject to the effectiveness of the assignment referred to in the following clause (ii)) to (i) this Amendment, (ii) sell the entire principal amount of its existing Term Loans via an assignment on the Third Amendment Effective Date pursuant to a Master Assignment and (iii) commit to repurchase a like amount of the repriced Term Loans via an assignment after the Third Amendment Effective Date. By executing a Term Loan Lender Consent and selecting Option B, each Cash Roll Term Loan Lender shall be deemed to have executed a counterpart to the applicable Master Assignment to give effect, solely upon the consent and acceptance by the Replacement Lender, to the assignment described in clause (ii) of the immediately preceding sentence.

2.3 Non-Consenting Term Loan Lenders. The Borrower hereby gives notice to each Non-Consenting Term Loan Lender that, upon receipt of Lender Consents from the Existing Lenders constituting the Requisite Lenders prior to the Third Amendment Effective Date, if such Non-Consenting Term Loan Lender has not executed and delivered a Term Loan Lender Consent on or prior to the Consent Deadline, such Non-Consenting Term Loan Lender shall, pursuant to Section 2.24 of the Credit Agreement, execute within one (1) Business Day after the Third Amendment Effective Date or be deemed to have executed a counterpart of the applicable Master Assignment and shall in accordance therewith sell its Existing Terms Loans as specified in the Master Assignment. Pursuant to the Master Assignment, each Non-Consenting Term Loan Lender shall sell and assign the principal amount of its Existing Term Loans as set forth in Schedule I to the Master Assignment, as such Schedule is completed by the Administrative Agent on or prior to the Third Amendment Effective Date, to Goldman Sachs, as assignee (in such capacity the “ Replacement Lender ”) under such Master Assignment, solely upon the consent and acceptance by the Replacement Lender. The Replacement Lender shall be deemed to have consented to this Amendment with respect to such purchased Term Loans at the time of such assignment.

2.4 Non-Consenting Revolving Lenders. The Borrower hereby gives notice to each Non-Consenting Revolving Lender that, upon receipt of Lender Consents from the Existing Lenders constituting the Requisite Lenders prior to the Third Amendment Effective Date, if such Non-Consenting Revolving Lender has not executed and delivered a Revolving Lender Consent on or prior to the Consent Deadline, such Non-Consenting Revolving Lender shall, pursuant to Section 2.24 of the Credit Agreement, execute within one (1) Business Day after the Third Amendment Effective Date or be deemed to have executed a counterpart of the applicable Master Assignment and shall in accordance therewith sell its Existing Revolving Loans and Existing Revolving Commitments as specified in the Master Assignment. Pursuant to the Master Assignment, each Non-Consenting Revolving Lender shall sell and assign the principal amount of its Existing Revolving Loans and Existing Revolving Commitments as set forth in Schedule I to the Master Assignment, as such Schedule is completed by the Administrative Agent on or prior to the Third Amendment Effective Date, to the Replacement Lender under such Master Assignment, solely upon the consent and acceptance by the Replacement Lender. The Replacement Lender shall be deemed to have consented to this Amendment with respect to such purchased Revolving Loans and Revolving Commitments at the time of such assignment.

SECTION III. CONDITIONS TO EFFECTIVENESS.

The Repricing Amendments shall become effective as of the date hereof only upon the satisfaction of all of the following conditions precedent (the date of satisfaction of such conditions being referred to herein as the “ Third Amendment Effective Date ”):

A. Execution . Administrative Agent shall have received a counterpart signature page of this Amendment duly executed by (i) each of the Credit Parties and the General Partner, (ii) the Lenders under the Credit Agreement consisting of at least the Requisite Lenders and (iii) the Administrative Agent.

B. Fees; Interest .

(a) The Administrative Agent shall have received (i) all fees, costs, expenses and other amounts due and payable on or prior to the Third Amendment Effective Date, including, to the extent invoiced, reimbursement or other payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder or any other Credit Document and (ii) for the account of each Lender, all interest accrued but unpaid on all existing Loans through the Third Amendment Effective Date.

(b) The Arrangers, as Repricing Arrangers (as defined below), shall have each received all fees due and payable under that certain engagement letter, dated as of April 3, 2018, by and among the Sponsor and the Arrangers (the “ Third Amendment Engagement Letter ”), and the fee letters between the Sponsor and each Arranger, dated as of April 3, 2018, respectively.

C. Legal Opinions. The Administrative Agent shall have received a favorable opinion of (a) Norton Rose Fulbright US LLP, New York, Delaware and California special counsel to the Credit Parties and (b) Goodmans LLP, Burnet, Duckworth & Palmer LLP and MLT Atkins LLP, local Canadian counsel to the Credit Parties, in each case in form and substance satisfactory to the Administrative Agent.

D. Third Amendment Effective Date Certificate. The Administrative Agent shall have received a certificate signed by a Responsible Officer of the Borrower as to the matters set forth in paragraphs (F) and (G) of this Section III .

E. Organizational Documents; Incumbency. The Administrative Agent shall have received, in respect of each Credit Party and the General Partner, a certificate dated as of the Third Amendment Effective Date of the secretary or an assistant secretary or director (or such other officer reasonably acceptable to the Administrative Agent) of such party, in form and substance reasonably satisfactory to the Administrative Agent, certifying (i) that either (A) attached thereto is a true and complete and up to date copy of the Organizational Documents including any certificate on change of name and all amendments thereto of such Credit Party or the General Partner, as applicable, certified as of a recent date by the Secretary of State (or comparable Governmental Authority) of its jurisdiction of organization (where applicable), and that the same has not been amended since the date of such certification or (B) the Organizational Documents of such Credit Party or the General Partner, as applicable, delivered on the Effective Date to the Administrative Agent have not been amended and are in full force and effect; (ii) that

either (A) attached thereto is a true and complete copy of the bylaws or comparable governing documents of such Credit Party or the General Partner, as applicable, as then in effect and as in effect at all times without amendment of supersession from the date on which the resolutions referred to in clause (iii) below were adopted to and including the date of such certificate or (B) that the bylaws or comparable governing documents of such Credit Party or the General Partner, as applicable, delivered on the Effective Date to the Administrative Agent have not been amended and are in full force and effect; (iii) that attached thereto is a true and complete copy of resolutions of the board of directors or similar governing body of such Credit Party (or, in the case of a limited partnership, of the general partner, acting on behalf of such limited partnership) and the General Partner, acting in its own capacity, approving and, to the extent required in any jurisdiction, resolutions of the meeting of shareholders of a Credit Party (or, in the case of a limited partnership, of the general partner, acting on behalf of such limited partnership) and the General Partner, acting in its own capacity, in each case, authorizing the execution, delivery and performance of this Amendment and any related Credit Documents to which it is a party which are in full force and effect without amendment or supersession as of the date of the certificate; (iv) a good standing certificate (to the extent such concept is known in the relevant jurisdiction) from the applicable Governmental Authority of such Credit Party’s or the General Partner’s, as applicable, jurisdiction of incorporation, organization or formation dated the Third Amendment Effective Date or a recent date prior thereto; and (v) as to the incumbency and genuineness of the signature of each officer, director or other comparable authorized manager or attorney of such Credit Party or the General Partner, as applicable, executing this Amendment or any of such other Credit Documents, and attaching all such copies of the documents described above.

F. No Default. No Default or Event of Default has occurred and is continuing both before and immediately after giving effect to the transactions contemplated hereby.

G. Representations and Warranties. The representations and warranties of the Borrower and each of the Guarantors set forth in Section IV of this Amendment are true and correct.

H. Master Assignment. The Replacement Lender shall have executed and delivered the Master Assignment contemplated by Section II above and all conditions to the consummation of the assignments in accordance with Section II above shall have been satisfied and such assignments shall have been consummated.

I. Non-Consenting Lenders. The Borrower shall have, substantially concurrently with the effectiveness of this Amendment, paid to all Non-Consenting Term Loan Lenders and Non-Consenting Revolving Lenders all indemnities, fees, cost reimbursements and other Obligations (other than interest payable under Section III.B. above and principal and all other amounts paid to such Non-Consenting Term Loan Lender or Non-Consenting Revolving Lender under Section II above), if any, then due and owing to such Non-Consenting Term Loan Lenders and Non-Consenting Revolving Lenders under the Credit Agreement and the other Credit Documents (immediately prior to the Third Amendment Effective Date).

J. Necessary Consents. Each Credit Party shall have obtained all material consents necessary or advisable in connection with the transactions contemplated by this Amendment.

SECTION IV. REPRESENTATIONS AND WARRANTIES.

In order to induce the other parties hereto to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, each Credit Party represents and warrants to each of the Lenders and the Administrative Agent that, as of the Third Amendment Effective Date:

A. Corporate Power and Authority. Each Credit Party, which is party hereto, has all requisite power and authority to enter into this Amendment and to carry out the transactions contemplated by, and perform its obligations under, the Credit Agreement as amended by this Amendment (the “ Amended Agreement ”) and the other Credit Documents.

B. Authorization of Agreements. The execution and delivery of this Amendment and the performance of the Amended Agreement and the other Credit Documents have been duly authorized by all necessary action on the part of each Credit Party.

C. No Conflict. The execution and delivery by each Credit Party of this Amendment and the performance by each Credit Party of the Amended Agreement and the other Credit Documents do not and will not (i) violate (A) any provision of any law, statute, rule or regulation, or of the certificate or articles of incorporation or partnership agreement, other constitutive documents or by-laws of Holdings, the Borrower or any Credit Party or (B) any applicable order of any court or any rule, regulation or order of any Governmental Authority, (ii) be in conflict with, result in a breach of or constitute (alone or with notice or lapse of time or both) a default under any Contractual Obligation of the applicable Credit Party, where any such conflict, violation, breach or default referred to in clause (i) or (ii) of this Section IV.C. , individually or in the aggregate could reasonably be expected to have a Material Adverse Effect, (iii) except as permitted under the Amended Agreement, result in or require the creation or imposition of any Lien upon any of the properties or assets of each Credit Party (other than any Liens created under any of the Credit Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or partners or any approval or consent of any Person under any Contractual Obligation of each Credit Party, except for such approvals or consents which will be obtained on or before the Third Amendment Effective Date and except for any such approvals or consents the failure of which to obtain will not have a Material Adverse Effect.

D. Governmental Consents. No action, consent or approval of, registration or filing with or any other action by any Governmental Authority is or will be required in connection with the execution and delivery by each Credit Party of this Amendment and the performance by the Borrower and Holdings of the Amended Agreement and the other Credit Documents, except for such actions, consents and approvals the failure to obtain or make which could not reasonably be expected to result in a Material Adverse Effect or which have been obtained and are in full force and effect.

E. Binding Obligation. This Amendment and the Amended Agreement have been duly executed and delivered by each of the Credit Parties party thereto and each constitutes a legal, valid and binding obligation of such Credit Party to the extent a party thereto, enforceable against such Credit Party in accordance with its terms, except as enforceability may be limited by

bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors’ rights generally and except as enforceability may be limited by general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

F. Incorporation of Representations and Warranties from Credit Agreement. The representations and warranties (a) contained in Section 4 of the Amended Agreement (other than Section 4.24) are and will be true and correct in all material respects on and as of the Third Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date and (b) contained in Section 4.24 of the Amended Agreement are and will be true and correct in all material respects on and as of the Third Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties (x) specifically relate to an earlier date, in which case they were true and correct in all material respects on and as of such earlier date, or (y) have been updated, modified, supplemented or otherwise superseded by information contained in the most recent Form 10-K and Form 10-Q and any Form 8-K (to the extent such Form 8-K was filed on or after the date of the most recent Form 10-Q) filed by the Sponsor with the Securities and Exchange Commission, in which case they were true and correct in all material respects on and as of the date of the most recent Form 10-K and Form 10-Q and any such Form 8-K and will be true and correct in all material respects on and as of the Third Amendment Effective Date to the same extent as though made on and as of that date; provided that, in each case, such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof.

G. Absence of Default. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Default.

SECTION V. BORROWER’S CONSENT.

For purposes of Section 10.6 of the Credit Agreement, the Borrower hereby consents to any assignee of the Replacement Lender or any of its respective Affiliates (in each case otherwise being an Eligible Assignee) becoming a Term Loan Lender and/or Revolving Lender, as applicable, in connection with the syndication of the Term Loans and Revolving Commitments acquired by the Replacement Lender pursuant to Section II hereof.

SECTION VI. REPRICING ARRANGERS.

The Credit Parties and the Lenders party hereto agree that (a) the Arrangers, in their respective capacities as joint lead arrangers with respect to this Amendment (collectively, the “ Repricing Arrangers ”), shall be entitled to the privileges, indemnification, immunities and other benefits afforded to the Arrangers under the Amended Agreement and (b) except as otherwise agreed to in writing by the Borrower, the General Partner and the Repricing Arrangers, the Repricing Arrangers shall have no duties, responsibilities or liabilities with respect to this Amendment, the Amended Agreement or any other Credit Document.

SECTION VII. INDEMNIFICATION.

Each Credit Party hereby confirms that the indemnification provisions set forth in Section 10.3 of the Amended Agreement shall apply to this Amendment and the transactions contemplated hereby.

SECTION VIII. REAFFIRMATION.

Each of the Reaffirming Parties, as party to the Credit Agreement and certain of the Collateral Documents and the other Credit Documents, in each case as amended, supplemented or otherwise modified from time to time, hereby (i) acknowledges and agrees that all of its obligations under the Credit Agreement, the Collateral Documents and the other Credit Documents to which it is a party are reaffirmed and remain in full force and effect on a continuous basis, (ii) reaffirms (A) each Lien granted by it to the Administrative Agent for the benefit of the Secured Parties and (B) any guaranties made by it pursuant to the Credit Agreement, (iii) acknowledges and agrees that the grants of security interests by it contained in any Collateral Document to which it is a party shall remain, in full force and effect after giving effect to this Amendment, and (iv) agrees that the Obligations include, among other things and without limitation, the prompt and complete payment and performance by the Borrower when due and payable (whether at the stated maturity, by acceleration or otherwise) of principal and interest on, and premium (if any) on, the Term Loans under the Amended Agreement. Nothing contained in this Amendment shall be construed as substitution or novation of the obligations outstanding under the Credit Agreement or the other Credit Documents, which shall remain in full force and effect, except to any extent modified hereby

Each Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Guarantor is not required by the terms of the Credit Agreement or any other Credit Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Credit Document shall be deemed to require the consent of such Guarantor to any future amendments to the Credit Agreement.

SECTION IX. ADMINISTRATIVE AGENT.

The Credit Parties acknowledge and agree that Goldman Sachs, in its capacity as administrative agent under the Credit Agreement, will serve as Administrative Agent under this Amendment and under the Amended Agreement.

SECTION X. MISCELLANEOUS.

A. Reference to and Effect on the Credit Agreement and the Other Credit Documents .

(i) On and after the Third Amendment Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import referring to the Credit Agreement, and each reference in the other Credit Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit Agreement shall mean and be a

reference to the Credit Agreement as amended by this Amendment.

(ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Credit Documents shall remain in full force and effect and are hereby ratified and confirmed.

(iii) The execution, delivery and performance of this Amendment shall not constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of any Agent or Lender under, the Credit Agreement or any of the other Credit Documents.

(iv) This Amendment shall be deemed to be a Credit Document as defined in the Credit Agreement.

B. Headings . Section and Subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect.

C. Applicable Law . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE LAW OF THE STATE OF NEW YORK.

D. Jurisdiction; Waiver of Jury Trial . The provisions of Sections 10.15 and 10.16 of the Credit Agreement pertaining to consent to jurisdiction, service of process, and waiver of jury trial are hereby incorporated by reference herein, mutatis mutandis .

E. Counterparts . This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. Delivery of an executed counterpart of a signature page of this Amendment by facsimile or in electronic format (e.g., “pdf” or “tif” file format) shall be effective as delivery of a manually executed counterpart of this Amendment.

F. Severability . Any term or provision of this Amendment which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Amendment or affecting the validity or enforceability of any of the terms or provisions of this Amendment in any other jurisdiction. If any provision of this Amendment is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as would be enforceable.

[ Remainder of this page intentionally left blank. ]

IN WITNESS WHEREOF , the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above.


BORROWER:	APLP HOLDINGS LIMITED PARTNERSHIP
	By: Atlantic Power GP II, Inc., its General Partner

	By:	/s/ Terrence Ronan
	Name:		Terrence Ronan
	Title:		Chief Financial Officer


SPONSOR:	ATLANTIC POWER CORPORATION

	By:	/s/ Terrence Ronan
	Name:		Terrence Ronan
	Title:		Chief Financial Officer

[Signature Page to Third Amendment]


GUARANTORS:
ATLANTIC POWER LIMITED PARTNERSHIP
By: Atlantic Power GP Inc., its General Partner


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


AP (CURTIS PALMER) LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


AP POWER HOLDINGS LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


AP USGP HOLDINGS, LLC
By: Atlantic Power (US) GP Holdings, Inc., its sole member


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


APDC, INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


GUARANTORS (cont.):

APPLIED ENERGY LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


ATLANTIC POWER (COASTAL RIVERS) CORPORATION


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER ENERGY SERVICES (CANADA) INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER ENERGY SERVICES (US) LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


ATLANTIC POWER ENTERPRISES LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


GUARANTORS (cont.):

ATLANTIC POWER FPLP HOLDINGS LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


ATLANTIC POWER GP INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER GP II, INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER HOLDINGS LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]



GUARANTORS (cont.):

ATLANTIC POWER PREFERRED EQUITY LTD.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER (US) GP
By: Atlantic Power (US) GP Holdings, Inc., its General Partner


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER (US) GP HOLDINGS, INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


ATLANTIC POWER USA LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


GUARANTORS (cont.):

ATLANTIC POWER USA HOLDINGS LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


ATLANTIC POWER USA VENTURES LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


ATLANTIC POWER (WILLIAMS LAKE) LTD.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Chief Financial Officer


CURTIS/PALMER HYDROELECTRIC COMPANY L.P.
By: Curtis Palmer LLC, its General Partner


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


CURTIS PALMER LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


GUARANTORS (cont.):

EF KENILWORTH LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


EF OXNARD LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


FREDERICKSON POWER MANAGEMENT INC.


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


MANCHIEF LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


MANCHIEF HOLDING LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President


MANCHIEF POWER COMPANY LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


GUARANTORS (cont.):

MORRIS COGENERATION, LLC


By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

ATLANTIC MIDWAY VENTURES LLC



By:	/s/ Terrence Ronan
Name:		Terrence Ronan
Title:		Vice President

[Signature Page to Third Amendment]


	GOLDMAN SACHS LENDING PARTNERS LLC ,
	as Administrative Agent

	By:	/s/ Douglas Tansey
	Authorized Signatory

[Signature Page to Third Amendment]

ANNEX I TO THIRD AMENDMENT

TERM LOAN LENDER CONSENT TO

THIRD AMENDMENT TO CREDIT AGREEMENT


	[NAME OF TERM LOAN LENDER], as a Term Loan Lender

	By
	Name:
	Title:

	[[For Term Loan Lenders requiring a second signature block]

	By
	Name:
	Title:]

PROCEDURE FOR TERM LOAN LENDERS:

The above-named Term Loan Lender elects to:

OPTION A – CONSENT TO AMENDMENT AND CONTINUATION OF EXISTING TERM LOANS (CASHLESS OPTION): ☐ Consent and agree to the Third Amendment and continue as a Term Loan Lender under the Credit Agreement after giving effect to the Third Amendment.

OPTION B – CONSENT TO AMENDMENT VIA CASH SETTLEMENT: ☐ Consent to the Third Amendment and agree to sell all of its existing Term Loans to the Replacement Lender pursuant to a Master Assignment.

Annex I

ANNEX II TO THIRD AMENDMENT

REVOLVING LENDER CONSENT TO

THIRD AMENDMENT TO CREDIT AGREEMENT


	[NAME OF REVOLVING LENDER], as a Revolving Lender

	By
	Name:
	Title:

	[[For Revolving Lenders requiring a second signature block]

	By
	Name:
	Title:]

Annex II

ANNEX III TO THIRD AMENDMENT

FORM OF MASTER ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement (this “ Master Assignment ”) is dated as of the Effective Date set forth below and is entered into by and between each Assignor identified in Section 1 below (each, an “ Assignor ”) and Goldman Sachs Lending Partners LLC (the “ Assignee ”). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “ Credit Agreement ”), receipt of a copy of which is hereby acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment as if set forth herein in full.

For an agreed consideration, each Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the applicable Assignor, subject to and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the Administrative Agent as contemplated below, (i) all of the applicable Assignor’s rights and obligations in its capacity as a Term Loan Lender and/or Revolving Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest of all of the applicable Assignor’s outstanding rights and obligations under the respective facilities identified opposite such Assignor’s name on Schedule I hereto (including, without limitation, any letters of credit, guaranties, and swingline loans included in such facilities), and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the applicable Assignor (in its capacity as a Term Loan Lender and/or Revolving Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by the applicable Assignor to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Such sale and assignment is without recourse to any Assignor and, except as expressly provided in this Assignment, without representation or warranty by any Assignor.

By purchasing the Assigned Interest, the Assignee agrees that, for purposes of that certain Third Amendment to Credit and Guaranty Agreement, dated as of April 19, 2018 (the “ Third Amendment ”), by and among the Borrower, by its General Partner, the Sponsor and certain subsidiaries of the Borrower, as Guarantors, the Requisite Lenders, the Replacement Lender and the Consenting Lenders referred to therein and the Administrative Agent, it shall be deemed to have consented and agreed to the Third Amendment.


1.	Assignor:	Each person identified on Schedule I hereto

ANNEX III-1


2.	Assignee:	GOLDMAN SACHS LENDING PARTNERS LLC
3.	Borrower:	APLP HOLDINGS LIMITED PARTNERSHIP
4.	Administrative Agent:	GOLDMAN SACHS LENDING PARTNERS LLC, as the administrative agent under the Credit Agreement
5.	Credit Agreement:	The Credit and Guaranty Agreement, dated as of April 13, 2016, as amended by that certain First Amendment to Credit and Guaranty Agreement, dated as of April 17, 2017, and as further amended by that certain Second Amendment to Credit and Guaranty Agreement, dated as of October 18, 2017 (as it may be further amended, restated, extended, supplemented or otherwise modified from time to time; the terms defined therein and not otherwise defined herein being used herein as therein defined), by and among the Borrower, by its General Partner, ATLANTIC POWER GP II INC ., ATLANTIC POWER CORPORATION (“ Sponsor ”) and certain subsidiaries of Borrower, as Guarantors, the Lenders party thereto from time to time, GOLDMAN SACHS BANK USA and BANK OF AMERICA, N.A. (“ Bank of America ”) , as L/C Issuers, GOLDMAN SACHS LENDING PARTNERS LLC (“ Goldman Sachs ”) and Bank of America, as Joint Syndication Agents, Goldman Sachs as Administrative Agent (together with its permitted successors in such capacity, “ Administrative Agent ”) and as Collateral Agent (together with its permitted successors in such capacity, “ Collateral Agent ”), Goldman Sachs, MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED , RBC CAPITAL MARKETS , THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. , a member of MUFG, a global financial group, WELLS FARGO SECURITIES, LLC , and INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED, NEW YORK BRANCH , in their respective capacities as Arrangers and Bookrunners.
6.	Assigned Interests:	As indicated on Schedule I hereto.

Effective Date: April 19, 2018

ANNEX III-2

The terms set forth in this Assignment are hereby agreed to:


	ASSIGNEE:

	GOLDMAN SACHS LENDING PARTNERS LLC


	By:
	Authorized Signatory

Consented to and Accepted:

GOLDMAN SACHS LENDING PARTNERS LLC ,
as Administrative Agent


By:
Authorized Signatory

Consented to:

APLP HOLDINGS LIMITED PARTNERSHIP , as Borrower, by its General Partner, ATLANTIC POWER GP II INC .



By:
Authorized Signatory

ANNEX III-3

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR MASTER ASSIGNMENT

AND ASSUMPTION AGREEMENT

1. Representations and Warranties .

1.1 Assignor . Each Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (b) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with any Credit Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Credit Agreement or any other instrument or document delivered pursuant thereto, other than this Assignment (herein collectively the “ Credit Documents ”), or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Credit Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Credit Document.

1.2 Assignee . The Assignee (a) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Assignment and to consummate the transactions contemplated hereby and to become a Lender under the Credit Agreement, (ii) it meets all requirements of an Eligible Assignee under the Credit Agreement, (iii) from and after the Effective Date of the assignment, it shall be bound by the provisions of the Credit Agreement and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 5.1 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon Administrative Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Assignment and to purchase the Assigned Interest, and (vii) attached to this Assignment is any documentation required to be delivered by it pursuant to the terms of the Credit Agreement (in particular, as prescribed in Section 2.21(c) thereof), duly completed and executed by the Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the Assignor or any other Lender, and based on such

ANNEX III-4

documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Documents are required to be performed by it as a Lender.

2. Payments . All payments with respect to the Assigned Interests shall be made on the Effective Date as follows:

2.1 From and after the Effective Date of the assignment, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the applicable Assignor for amounts which have accrued to but excluding the Effective Date of the assignment and to the Assignee for amounts which have accrued from and after the Effective Date of the assignment. Notwithstanding the foregoing, the Administrative Agent shall make all payments of interest, fees or other amounts paid or payable in kind from and after the Effective Date of the assignment to the Assignee.

3. General Provisions . This Assignment shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns. This Assignment may be executed in any number of counterparts, which together shall constitute one instrument. Delivery of an executed counterpart of a signature page of this Assignment by telecopy shall be effective as delivery of a manually executed counterpart of this Assignment. THIS ASSIGNMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF THAT WOULD RESULT IN THE APPLICATION OF ANY LAW OTHER THAN THE STATE OF NEW YORK.

[ Remainder of page intentionally left blank . ]

ANNEX III-5

SCHEDULE I TO

MASTER ASSIGNMENT AND ASSUMPTION

Term Loans


Assignor	Aggregate Amount of Commitments/Loans for all Lenders	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans 1
[  ]	$[  ]	$[  ]	[  ]%
[  ]	$[  ]	$[  ]	[  ]%

Revolving Commitments/Revolving Loans


Assignor	Aggregate Amount of Commitments/Loans for all Lenders	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans 2
[  ]	$[  ]	$[  ]	[  ]%
[  ]	$[  ]	$[  ]	[  ]%

1 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

2 Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

ANNEX III-6

Exhibit 31.1

Certifications

I, James J. Moore, certify that:

I have reviewed this Quarterly Report on Form 10‑Q of Atlantic Power Corporation;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a‑15(e) and 15d‑15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a‑15(f) and 15d‑15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: May 3, 2018	/s/ James J. Moore, Jr.
	James J. Moore, Jr.
	President and Chief Executive Officer

Exhibit 31.2

Certifications

I, Terrence Ronan, certify that:

I have reviewed this Quarterly Report on Form 10‑Q of Atlantic Power Corporation;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

ay
Date: May 3, 2018	/s/ Terrence Ronan
	Terrence Ronan
	Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES‑OXLEY ACT OF 2002

The undersigned officer of Atlantic Power Corporation (the “Company”) hereby certifies to his knowledge that the Company’s Quarterly Report on Form 10‑Q for the three months ended March 31, 2018 (the “Report”), as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, as amended, and that the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.


Date: May 3, 2018	/s/ James J. Moore, Jr.
	James J. Moore, Jr.
	President and Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE

SARBANES‑OXLEY ACT OF 2002


Date: May 3, 2018	/s/ Terrence Ronan
	Terrence Ronan
	Chief Financial Officer