CPI Preferred Equity Ltd. and Atlantic Power Corporation

Headnote

MI 11-102 Passport System and National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- relief from continuous disclosure, audit committee, insider reporting and corporate governance disclosure requirements of securities legislation -- disclosure of assets and operations of parent issuer on a consolidated basis more relevant to holders of designated credit support securities -- Series 2 Shares and Series 3 Shares are not "designated credit support securities" under NI 51-102 because the Series 2 Shares are convertible into the Series 3 Shares and the Series 3 Shares are convertible into the Series 2 Shares -- Filer may not be "parent credit support issuer" of Issuer because Filer holds shares in the Issuer indirectly through the Partnership.

Applicable Legislative Provisions

National Instrument 51-102 Continuous Disclosure Obligations, s. 13.1.

National Instrument 52-109 Certification of Disclosure in Annual and Interim Filings, s. 8.6.

National Instrument 52-110 Audit Committees, s. 8.1.

National Instrument 55-102 System for Electronic Disclosure by Insiders, s. 6.1.

National Instrument 55-104 Insider Reporting Requirements and Exemptions, s. 10.1.

National Instrument 58-101 Disclosure of Corporate Governance Practices, s. 3.1.

Citation: Atlantic Power Corporation, Re, 2011 ABASC 568

November 4, 2011

IN THE MATTER OF

THE SECURITIES LEGISLATION OF

ALBERTA AND ONTARIO

(the Jurisdictions)

AND

IN THE MATTER OF

THE PROCESS FOR EXEMPTIVE RELIEF

APPLICATIONS IN MULTIPLE JURISDICTIONS

AND

IN THE MATTER OF

CPI PREFERRED EQUITY LTD.

(the Issuer) AND

ATLANTIC POWER CORPORATION

(the Filer)

DECISION

Background

The securities regulatory authority or regulator in each of the Jurisdictions (the Decision Maker) has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the Legislation) exempting:

(a) the Issuer from the continuous disclosure requirements of securities legislation of the provinces and territories of Canada, including, without limitation, the requirements of National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), as amended from time to time (the Continuous Disclosure Requirements);

(b) the Issuer from the requirements of National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109), as amended from time to time (the Certification Requirements);

(c) the insiders of the Issuer from the insider reporting requirement (as defined in National Instrument 14-101 Definitions), as amended from time to time (the Insider Reporting Requirements);

(d) the Issuer from the requirements of National Instrument 52-110 Audit Committees (NI 52-110), as amended from time to time (the Audit Committee Requirements); and

(e) the Issuer from the requirements of National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101), as amended from time to time (the Corporate Governance Requirements);

(collectively, the Exemption Sought).

Furthermore, the Decision Makers have received a request from the Filer for a decision that the application and this decision (collectively, the Confidential Material) be kept confidential and not made public until the earlier of: (i) the date the Filer advises the Principal Regulator (as defined below) that the proposed plan of arrangement under section 192 of the Canada Business Corporations Act (the Arrangement), pursuant to which the Filer will acquire, directly and indirectly, all of the outstanding limited partnership units (Units) of Capital Power Income L.P. (the Partnership), as described in greater detail in the management proxy circular and joint proxy statement of the Filer and the Partnership dated 28 September 2011 (the Joint Proxy Statement), has been completed, (ii) the date the Filer advises the Principal Regulator that there is no longer any need for the Confidential Material to remain strictly confidential and (iii) the date that is 90 days after the date of this Decision (the Confidentiality Sought).

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Alberta Securities Commission is the principal regulator for the application;

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in British Columbia, Saskatchewan, Manitoba, Québec, New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland and Labrador, Yukon Territory, Northwest Territories, and Nunavut; and

(c) this decision is the decision of the principal regulator and evidences the decision of the securities regulatory authority or regulator in Ontario.

Interpretation

Terms defined in National Instrument 14-101 Definitions or MI 11-102 have the same meaning if used in this decision, unless otherwise defined herein.

Representations

This decision is based on the following facts represented by the Filer:

The Filer

1. The Filer is a corporation continued under the laws of the Province of British Columbia.

2. The Filer's headquarters are located at 200 Clarendon Street, Floor 25, Boston, Massachusetts, USA 02116.

3. The Filer is a reporting issuer in each of the provinces and territories of Canada and is not in default of any applicable requirements under the securities legislation in any of the provinces and territories of Canada. The Filer is an SEC issuer (as defined in NI 51-102) and its financial statements are prepared in accordance with U.S. GAAP (as defined in National Instrument 52-107 Acceptable Accounting Principles and Auditing Standards).

4. The Filer is authorized to issue an unlimited number of common shares. As at 7 October 2011, the Filer had 68,988,977 common shares outstanding.

5. The Filer's common shares trade on the New York Stock Exchange and on the Toronto Stock Exchange (the TSX).

The Issuer

6. The Issuer is a corporation incorporated under the laws of the Province of Alberta.

7. The head office and principal place of business of the Issuer is 10065 Jasper Avenue, Edmonton, Alberta T5J 3B1.

8. The Issuer is a reporting issuer in each of the provinces and territories of Canada and, to the best of the knowledge of the Filer, is not in default of any applicable requirements under the securities legislation in any of the provinces and territories of Canada.

9. The Issuer operates as a holding company and indirectly holds all of the Partnership's business and power generation and other assets in the United States.

10. The authorized share capital of the Issuer currently consists of an unlimited number of Class A common shares (the Common Shares) and an unlimited number of cumulative redeemable preferred shares (the Preferred Shares), issuable in series. Of the Preferred Shares, up to 5,750,000 Cumulative Redeemable Preferred Shares, Series 1 (the Series 1 Shares), up to 4,000,000 Cumulative Rate Reset Preferred Shares, Series 2 (the Series 2 Shares), and up to 4,000,000 Cumulative Floating Rate Preferred Shares, Series 3 (the Series 3 Shares) have been authorized for issuance. As of 7 October 2011, there were 5,000,000 Series 1 Shares outstanding, 4,000,000 Series 2 Shares outstanding and no Series 3 Shares outstanding.

11. The only voting securities of the Issuer are the Common Shares, all of which are owned by the Partnership.

12. The Partnership, as the holder of all of the outstanding Common Shares, is entitled to one vote in respect of each Common Share held on all votes taken at meetings of the shareholders of the Issuer, except meetings at which only holders of a specified class of shares are entitled to vote.

13. The Preferred Shares may at any time and from time to time be issued in one or more series having such rights, restrictions and privileges determined by the directors of the Issuer. Subject to any rights which may be attached to a series of Preferred Shares and applicable law, the holders of Preferred Shares shall not be entitled to vote at any meeting of shareholders of the Issuer.

14. Except as required by law and in certain limited circumstances where the Issuer has failed to pay eight quarterly dividends on the Series 1 Shares, the holders of Series 1 Shares are not entitled to vote at any meeting of shareholders of the Issuer. Holders of Series 1 Shares are entitled to fixed, cumulative, preferential cash dividends if, as and when declared by the board of directors of the Issuer, and on the liquidation, dissolution or wind-up of the Issuer, holders of Series 1 Shares are entitled to receive a fixed amount per share, plus accrued and unpaid dividends. The Series 1 Shares are redeemable at the option of the Issuer in certain circumstances, on payment of a specified amount.

15. Except as required by law and in certain limited circumstances where the Issuer has failed to pay eight quarterly dividends on the Series 2 Shares, the holders of Series 2 Shares are not entitled to vote at any meeting of shareholders of the Issuer. Holders of Series 2 Shares are entitled to fixed, cumulative, preferential cash dividends if, as and when declared by the board of directors of the Issuer, and on the liquidation, dissolution or wind-up of the Issuer, holders of Series 2 Shares are entitled to receive a fixed amount per share, plus accrued and unpaid dividends. The Series 2 Shares are redeemable at the option of the Issuer in certain circumstances on payment of a specified amount. The Series 2 Shares are convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 3 Shares.

16. Except as required by law and in certain limited circumstances where the Issuer has failed to pay eight quarterly dividends on the Series 3 Shares, the holders of Series 3 Shares are not entitled to vote at any meeting of shareholders of the Issuer. Holders of Series 3 Shares are entitled to floating, cumulative, preferential cash dividends if, as and when declared by the board of directors of the Issuer, and on the liquidation, dissolution or wind-up of the Issuer, holders of Series 3 Shares are entitled to receive a fixed amount per share, plus accrued and unpaid dividends. The Series 3 Shares are redeemable at the option of the Issuer in certain circumstances on payment of a specified amount. The Series 3 Shares are convertible, in certain circumstances at the option of the holder or the Issuer, into an equal number of Series 2 Shares.

17. The Partnership has provided a full and unconditional guarantee (the Partnership Guarantee) of the payments to be made by the Issuer, as stipulated in the terms of each of the Series 1 Shares, the Series 2 Shares and the Series 3 Shares, which results in the holders of such securities being entitled to receive payment from the Partnership within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in section 13.4(1) of NI 51-102.

18. All of the Series 1 Shares were issued pursuant to a short form prospectus dated 18 May 2007. The Series 1 Shares trade on the TSX.

19. All of the Series 2 Shares were issued pursuant to a short form prospectus dated 21 October 2009. The Series 2 Shares trade on the TSX.

20. The outstanding Series 1 Shares of the Issuer are "designated credit support securities" (as defined in NI 51-102). The Series 2 Shares of the Issuer would constitute "designated credit support securities" (as defined in NI 51-102), except for the fact that they are convertible into Series 3 Shares of the Issuer in certain circumstances. Similarly, the Series 3 Shares of the Issuer would constitute "designated credit support securities" (as defined in NI 51-102), except for the fact that they are convertible into Series 2 Shares of the Issuer in certain circumstances. As a result of the issuance of the Series 2 Shares, the Issuer does not meet the requirements in section 13.4(2)(c) of NI 51-102.

21. The Series 2 Shares are only convertible into Series 3 Shares and the Series 3 Shares are only convertible into Series 2 Shares. The payments to be made by the Issuer under the terms of each of the Series 2 Shares and the Series 3 Shares are fully and unconditionally guaranteed by the Partnership, and, but for the convertibility feature allowing their conversion to preferred shares of the other series, each of the Series 2 Shares and Series 3 Shares would qualify as "designated credit support securities" (as defined in NI 51-102). In other words, an investor in either the Series 2 Shares or the Series 3 Shares will effectively always hold a preferred share that in substance is a "designated credit support security" (as defined in NI 51-102).

22. Because of the convertibility of the Series 2 Shares and the Series 3 Shares, the Issuer and the Partnership applied to the Alberta Securities Commission and the Ontario Securities Commission and received exemptive relief, which, among other things, permitted the Issuer to rely on the continuous disclosure of the Partnership and provided relief to the insiders of the Issuer (EPCOR Power Equity Ltd., EPCOR Power Equity L.P., Re, 2009 ABASC 492, the 2009 Relief).

23. The Issuer has not issued any securities, and does not have any securities outstanding, other than the Series 1 Shares, which are "designated credit support securities" (as defined in NI 51-102), the Series 2 Shares, in respect of which the Issuer was granted the 2009 Relief, the Common Shares, which were issued to and are held by the Partnership as "parent credit supporter" (as defined in NI 51-102), and other securities described in section 13.4(2)(c)(ii), (iii) and (iv) of NI 51-102. Relying on the 2009 Relief, the Issuer currently files in electronic format copies of all documents the Partnership is required to file under the Legislation, other than in connection with a distribution, at the same time as the filing by the Partnership of those documents.

The Partnership

24. The Partnership is a limited partnership organized under the laws of the Province of Ontario pursuant to an amended and restated limited partnership agreement made effective as of 4 November 2009, as may be amended, supplemented, restated or amended and restated from time to time.

25. The head office and principal place of business of the Partnership is 10065 Jasper Avenue, Edmonton, Alberta T5J 3B1.

26. The Partnership is a reporting issuer in each of the provinces and territories of Canada and, to the best of the knowledge of the Filer, is not in default of any of the applicable requirements under the securities legislation in any of the provinces and territories of Canada.

27. The Units of the Partnership are listed for trading on the TSX under the symbol "CPA.UN". As at 7 October 2011, the Partnership had 56,597,899 Units outstanding.

28. The Partnership has issued $210 million aggregate principal amount of unsecured medium term notes, which notes are held by the public and are not listed on any stock exchange.

The Arrangement

29. On 28 September 2011, the Court of Queen's Bench of Alberta granted the interim order facilitating the calling of the special meeting of the Partnership to approve the Arrangement (the Special Meeting) and prescribing the conduct of such meeting and other matters.

30. The Special Meeting was held on 1 November 2011.

31. The final order was granted by the court on 1 November 2011 to approve the Arrangement.

32. Pursuant to the Arrangement, the Filer has agreed to acquire, directly and indirectly, all of the outstanding Units of the Partnership all as more particularly described in the Joint Proxy Statement.

33. Following completion of the Arrangement, the Filer will directly or indirectly own all of the Units of the Partnership and all of the shares of the general partner of the Partnership, CPI Income Services Ltd., the Units of the Partnership will be delisted from the TSX and the unsecured medium term notes of the Partnership referred to above will continue to be outstanding.

34. Following completion of the Arrangement, the Filer will consolidate financial statements of each of the Partnership and the Issuer into the Filer's financial statements that would be filed.

35. Upon completion of the Arrangement, all of the Common Shares of the Issuer will continue to be directly owned by the Partnership (and, therefore, indirectly, by the Filer) and the Series 1 Shares and the Series 2 Shares will continue to be held by the public and listed for trading on the TSX.

36. Following completion of the Arrangement, the Partnership Guarantee will continue in effect and, accordingly, the Partnership will continue to be a "credit supporter" (as defined in NI 51-102) of the Issuer.

37. In connection with the Arrangement, the Filer will provide a full and unconditional guarantee (the Filer Guarantee) of the payments to be made by the Issuer, as stipulated in the terms of each of the Series 1 Shares, the Series 2 Shares and the Series 3 Shares, which will result in the holders of such securities being entitled to receive payment from the Filer within 15 days of any failure by the Issuer to make a payment, as contemplated by paragraph (d) of the definition of "designated credit support security" in section 13.4(1) of NI 51-102.

38. Notwithstanding the above, following completion of the Arrangement, (i) the Filer will not directly satisfy the definition of "parent credit supporter" (as defined in NI 51-102) as a result of the indirect ownership of the Issuer through the Partnership, and (ii) the Partnership will not directly satisfy the definition of "subsidiary credit supporter" (as defined in NI 51-102) as a result of it being a limited partnership rather than a corporation.

39. Following completion of the Arrangement, subject to obtaining the Requested Relief, the Issuer will file in electronic format copies of all documents the Filer is required to file under the Legislation, other than in connection with a distribution, at the same time as the filing by the Filer of those documents. The Issuer will also file, in electronic format, in or with the interim and annual consolidated financial statements of the Filer filed, for the periods covered by the interim or annual consolidated financial statements of the Filer, consolidating summary financial information for the Filer presented with a separate column for each of (a) the Filer, (b) the Issuer, (c) the Partnership, (d) the other subsidiaries of the Filer on a combined basis, (e) consolidating adjustments, and (f) the total consolidated amounts.

Decision

Each of the Decision Makers is satisfied that the decision meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemption Sought is granted provided that:

(a) in respect of the Continuous Disclosure Requirements, the Issuer and the Filer (as applicable) continue to satisfy the conditions set out in subsection 13.4(2.1) of NI 51-102 except as modified as follows:

(i) any reference to parent credit supporter in section 13.4 of NI 51-102 shall be deemed to include the Filer notwithstanding its indirect ownership of the Issuer through the Partnership;

(ii) notwithstanding anything to the contrary under the securities legislation of any of the provinces and territories of Canada, any reference to:

(A) a subsidiary credit supporter in section 13.4 of NI 51-102 shall be deemed to include the Partnership; and

(B) an affiliate of the Filer in section 13.4 of NI 51-102 shall be deemed to include the Partnership;

(iii) the Filer does not have to comply with the condition in paragraph 13.4(2)(a) of NI 51-102 if:

(A) no party other than any of the Filer and affiliates of the Filer will have any direct or indirect ownership of, or control or direction over, the voting securities of the Partnership;

(B) no party other than any of the Filer, the Partnership and other affiliates of the Filer will have any direct or indirect ownership of, or control or direction over, voting securities of the Issuer; and

(C) the Filer consolidates in its financial statements the financial statements of each of the Partnership and the Issuer as well as any entities consolidated by the Partnership and the Issuer into their respective financial statements;

(iv) the Issuer does not have to comply with the requirement in section 13.4(2)(c) of NI 51-102 if the Issuer does not issue any securities, and does not have any securities outstanding, other than:

(A) designated credit support securities (as such term is defined in NI 51-102);

(B) securities issued to and held by the Filer, the Partnership or any affiliate of the Filer or the Partnership;

(C) debt securities issued to and held by banks, loan corporations, loan and investment corporations, savings companies, trust corporations, treasury branches, savings or credit unions, financial services cooperatives, insurance companies or other financial institutions;

(D) securities issued under the exemptions from the prospectus requirement in section 2.35 of National Instrument 45-106 Prospectus and Registration Exemptions; and

(E) Series 1 Shares, Series 2 Shares and Series 3 Shares;

(v) the Filer shall be deemed to control the Partnership for purposes of section 13.4(2.1)(b) of NI 51-102 if the Filer has direct or indirect ownership of, or control or direction over all of the voting securities of the Partnership, notwithstanding anything to the contrary under the securities legislation of any of the provinces and territories of Canada; and

(vi) the Filer does not have to comply with the condition in paragraph 13.4(2.1)(e) of NI 51-102 if the Filer provides the Filer Guarantee and the Partnership provides the Partnership Guarantee;

(b) in respect of the Certification Requirements, the Audit Committee Requirements and the Corporate Governance Requirements, the Filer and the Issuer continue to satisfy the conditions for relief from the Continuous Disclosure Requirements as set forth and modified above; and

(c) in respect of the Insider Reporting Requirements, an insider of the Issuer can only rely on the Exemption Sought so long as:

(i) the insider of the Issuer complies with the conditions in paragraphs 13.4(3)(b) and 13.4(3)(c) of NI 51-102, as applicable; and

(ii) the Filer and the Issuer continue to satisfy the conditions for relief from the Continuous Disclosure Requirements as set forth and modified above.

Furthermore, the decision of the Decision Makers is that the Confidentiality Sought is granted.