Northland Power Announces Third Quarter Results and Updates Construction and Development Progress

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Northland Power Inc. ("Northland") (TSX:NPI)(NPI.PR.A)(NPI.PR.C)(NPI.DB.A) today
reported its results for the third quarter ended September 30, 2012. 


"Northland's geographically and technologically diverse portfolio of generating
assets performed well in the third quarter," said John Brace, Northland's
President and CEO. "Our facilities largely performed to our expectations, and
subsequent to quarter end our Kingston, Ontario facility completed its planned
major maintenance outage on schedule. Looking ahead, Northland is
well-positioned to continue to deliver strong and stable returns to our
shareholders as we complete our current projects and continue to advance our
pipeline of attractive new development opportunities."


By 2015, Northland expects to complete over $1.5 billion of projects currently
in advanced development or construction. They include the $677 million North
Battleford facility, as well as approximately $900 million of additional
projects under the Ontario Power Authority's (OPA) feed-in-tariff (FIT) program.



Significant Events 

Construction continued on the first six of Northland's thirteen ground-mounted
solar projects contracted under the OPA FIT program, with the installation of
underground cabling and panel supports underway and 96% of the photovoltaic
modules delivered by November 6, 2012. Long-term non-recourse project debt
financing for the six projects was finalized on July 16, 2012 with a syndicate
of banks for $227 million and a $30 million letter of credit facility with an
18-year loan from commercial operation. The projects remain within budget and
generally on schedule for their respective commercial operations, which will
occur sequentially from early to mid 2013. 


Construction of Northland's $677 million North Battleford project progressed as
expected during the quarter, with approximately 91% of the construction
contractor's milestones completed by the end of September. The natural gas
pipeline connection was completed in August and the focus of site activities is
transitioning from construction to commissioning and startup, with first fire of
the gas turbine expected in December. The project remains within budget and on
schedule for commercial operations by the end of the second quarter of 2013
following the completion of construction, commissioning and synchronization with
the SaskPower grid.


Northland's development of approximately $900 million of additional projects
under the OPA FIT program (including the McLean's Mountain and Grand Bend wind
projects, the remaining seven ground-mounted solar projects and the Kabinakagami
run-of-river project) also progressed during the quarter, primarily on
permitting, initial engineering and construction contractor negotiations. 


Subsequent Events 

On October 29, 2012, Standard & Poor's reaffirmed Northland's debt rating of
BBB- with a positive outlook. Standard & Poor's report credited Northland's
stable cash flows from long-term power purchase agreements (PPAs) with
provincial agencies and government-owned utilities, and consistent financial
strategy, along with continued diversification as the basis for reaffirming
Northland's rating and outlook. 


On October 29, 2012, Kingston recommenced operations after its planned major
maintenance outage was completed on schedule.


On October 31, 2012, Northland's McLean's Mountain wind project that is being
developed through a 50/50 partnership with the United Chiefs and Councils of
Mnidoo Mnising First Nations received its renewable energy approval (REA).


Summary of Financial Results

For the three months ended September 30, 2012, Northland's thermal facilities
operated within management's expectations, while the results at the wind farms
were below the long-term forecasts due to Hydro-Quebec outages and Northland
planned outages at both Jardin and Mont Louis. 


The complete third quarter report for 2012, including management's discussion
and analysis and unaudited condensed interim financial statements, is available
at www.sedar.com and www.northlandpower.ca. 


The following table summarizes the consolidated financial and operating results.



----------------------------------------------------------------------------
                                   3 Months Ended                           
                                      Sept. 30      9 Months Ended Sept. 30 
                                     2012      2011       2012         2011 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
FINANCIAL (in thousands of                                                  
 dollars, except per share and                                              
 energy unit amounts)                                                       
  Sales                            82,919    80,854    269,057      257,373 
  Gross profit                     50,201    43,124    170,758      143,999 
  EBITDA(1)                        37,575    30,049    135,158      105,448 
  Operating income                 21,333    16,237     86,199       63,626 
  Net loss                        (22,158)  (71,547)    (7,375)     (39,866)
                                                                            
  Free cash flow(1)                 5,709     2,842     45,990       32,075 
  Cash Dividends paid to Common                                             
   and Class A Shareholders(2)     22,613    20,963     66,276       61,956 
  Total Dividends declared to                                               
   Common and Class A                                                       
   Shareholders(2)                 31,074    20,974     92,602       62,198 
                                                                            
Per share                                                                   
  Free cash flow                     0.05      0.04       0.40         0.42 
  Dividends declared to                                                     
   Shareholders(2)                   0.27      0.27       0.81         0.81 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Energy Volumes                                                              
  Electricity sales volume                                                  
   (megawatt hours)               755,058   709,626  2,361,588    2,164,544 
----------------------------------------------------------------------------
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(1) See "Non-IFRS measures"                                                
(2) Total dividends to common and Class A Shareholders represent cash      
dividends plus dividends re-invested in common shares issued as part of     
Northland's dividend re-investment plan                                     



Northland's third quarter consolidated sales and earnings before interest,
taxes, depreciation and amortization (EBITDA) were $82.9 million and $37.6
million respectively, compared to $80.9 million and $30 million in the same
quarter of 2011. Free cash flow of $5.7 million was up $2.9 million from the
same period last year. Major variances at Northland facilities compared to the
third quarter of 2011 are discussed below.


Earnings before interest, taxes, depreciation and amortization

In the third quarter of 2012, EBITDA increased by $7.5 million due largely to
the following factors.


Northland's operating facilities contributed an additional $6.7 million in
EBITDA over 2011, primarily due to: (i) a full quarter of contributions from the
Mont Louis wind farm (which commenced operations on September 17, 2011), and the
Spy Hill facility (which commenced operations on October 19, 2011); (ii)
favourable results from Kingston due to PPA rate increases related to the
pass-through of 2011 TransCanada toll increases; and (iii) a performance
incentive fee from the Kirkland Lake managed facility. These were partially
offset by lower results at Thorold and Germany, largely due to equipment
inspections and repairs. 


Management and administration expenses for the three months ended September 30,
2012 were up from the prior year largely due to higher head count and expanded
efforts associated with Northland's early-stage development activities across a
range of technologies and geographic locations.


Net Loss

Net loss for the third quarter of 2012 at $22.2 million includes the following
items. 


Non-cash fair value losses of $24.6 million comprised of: (i) a $7.6 million
loss in the fair value of interest rate swaps on the facilities' non-recourse
project debt due to a decrease in long-term market interest rates; (ii) a $16
million increase in the liability associated with the fair value of Northland
Class B convertible shares due to an increase in Northland's common share price
during the quarter, and (iii) a $1.1 million unrealized foreign exchange loss on
Northland's US dollar and Euro foreign exchange contracts. 


Finance lease income was up $3.5 million as a result of the inclusion of Spy
Hill. As described in Northland's 2011 Annual Report, Spy Hill's long-term PPA
with SaskPower is considered a finance lease for accounting purposes. As a
result, the monthly capacity payments from SaskPower are treated as lease
income, while electricity sales are recognized in sales revenue. The accounting
treatment of Spy Hill's PPA as a finance lease has no impact on Northland's
EBITDA or free cash flow. 


Finance costs, primarily interest expense, increased by $3.4 million as the
recognition of interest charges on the Spy Hill and Mont Louis debt (capitalized
during construction) was partially offset by lower convertible debenture
interest due to conversions of debentures into common shares. 


Amortization of contracts and other intangible assets of $5 million approximated
the prior year. 


The above factors, combined with a $1.3 million provision for current taxes and
a $2.9 million recovery of future income taxes, resulted in a net loss for the
third quarter of $22.2 million. 


Year to Date

Sales were higher in the first nine months of 2012 compared to the prior year
and primarily reflect the inclusion of the financial results for the Spy Hill
and Mont Louis facilities, higher PPA prices at Kingston and the performance
incentive fee received from Kirkland Lake. The cost of sales was down due to
lower natural gas costs and lower production at Thorold during the first and
third quarters of 2012. Plant operating costs were up due to the inclusion of
Spy Hill and Mont Louis, the scheduled inspection of the combustion turbine
electrical generator at Iroquois Falls in the second quarter of 2012, and the
additional third quarter maintenance expenditures at Thorold, Jardin and the
German wind farms as discussed previously. Management and administration costs
related to operations and development were higher than the prior year as
previously discussed.


Finance lease income was up $10.6 million as a result of the inclusion of Spy
Hill. For the year to date, Northland recorded a $27.3 million non-cash fair
value loss comprised of: (i) an $11.6 million loss in the fair value of interest
rate swaps on the facilities' non-recourse project debt; (ii) a $15.1 million
increase in the liability associated with the fair value of Northland Class B
Shares due to an increase in Northland's common share price, and (iii) a $0.6
million unrealized foreign exchange loss on Northland's foreign exchange
contracts. 


Dividends to Shareholders, Payout Ratio and Free Cash Flow

For the three-month period ending September 30, 2012, common and Class A share
dividends declared for the quarter totalled $0.27 per share. 


Free cash flow of $5.7 million for the quarter was $2.9 million higher than in
2011 as the $7.5 million increase in EBITDA as discussed previously and a $0.4
million decrease in non-expansionary capital expenditures were partially offset
by: (i) a $3.3 million increase in net interest expense, largely related to Mont
Louis and Spy Hill which capitalized interest costs during construction; (ii) a
$1.2 million increase in scheduled principal payments; (iii) $1.5 million higher
preferred dividends as a result of the second quarter issuance of the cumulative
rate reset preferred shares, series 3 ("Series 3 Preferred Shares"); (iv) $0.6
million in higher current taxes, largely associated with the additional
preferred share dividends; and (v) a $2.5 million milestone payment related to
Kingston's gas turbine maintenance agreement with General Electric and its
subsidiaries ("GE"), net of a $1.7 million maintenance reserve utilization to
fund its planned major outage that began in late September.


Management continues to expect the cash dividend payout ratio for the full
fiscal year 2012 to be 135-145% of free cash flow excluding reinvested
dividends, and 185-195% on an all-cash dividend basis. The payout ratio in the
third quarter, historically the quarter with the lowest free cash flow, was 396%
or 546% excluding the effect of the DRIP largely due to the impact of
seasonality and timing of scheduled debt repayments. The payout ratio in excess
of 100% largely reflects the level of spending on growth initiatives and payment
of dividends on equity capital raised to fund construction projects, for which
corresponding cash flows will not be received until 2013 and beyond. 


Outlook

Northland actively pursues new power development opportunities that encompass a
range of clean technologies, including natural gas, wind, solar, and hydro, to
provide a sustainable source of energy in various geographic regions and
political jurisdictions. Northland believes this diversified strategy will
mitigate the risk of adverse changes to local demographics or governmental
policies. 


In the third quarter of 2012 and through the date of this report, Northland
continued to execute on its strategy of expanding its earlier stage development
pipeline in its targeted market areas. Examples of new initiatives include the
partnership formed in August with Innu Takuaikan Uashat Mak Mani-Utenam (ITUM)
in Quebec to pursue the development of up to 250 MW of wind energy projects, and
in October the acquisition of rights to develop two gas-fired peaking plants of
100 MW each in Illinois. Additional progress has been made on wind power
projects in both Quebec and British Columbia, and on additional hydroelectric
power projects in British Columbia. Prospecting for new natural gas-fired power
projects and renewable energy projects in the U.S. continues to increase.
Northland continues to consider its Ontario developments, particularly the
Oshawa and Queen's Quay cogeneration projects, the Marmora pumped storage
project, and other projects to be excellent prospects in the medium to
longer-term, despite the difficult political climate that has emerged over the
last several months. Northland's approach continues to be one of ensuring the
balance between progressing development opportunities which meet the company's
investment criteria, while prudently managing the company's cost exposure to
earlier stage projects.


In 2012, management continues to expect Northland to generate EBITDA of
approximately $170 million to $180 million. Management expects that EBITDA will
increase to a range of $360 to $400 million on an annualized basis starting in
2014 once the projects in construction and advanced development are completed
and begin commercial operations.


Northland's board and management are committed to maintaining the current
dividend of $1.08 per common share and Class A Share on an annual basis, payable
monthly. Northland's 2012 dividend payments are expected to exceed free cash
flow due largely to the level of spending on growth initiatives and payments of
dividends on equity capital raised for construction projects for which
corresponding cash flows will not be received until future years. For 2012,
management continues to expect the cash dividends to be 135-145% of free cash
flow excluding reinvested dividends and 185-195% of free cash flow on an
all-cash dividend basis. Management expects the free cash flow to fully fund or
exceed dividend payments on an annualized basis in the second half of 2013 with
the addition of the combined cash flows of the ground-mounted solar and North
Battleford projects. Dividend payments could continue to exceed free cash flow
if significant additional equity investments are made as a result of future
development successes. Northland's management and board have anticipated the
impact of growth on the payout ratio and are confident that Northland has
adequate access to funds to meet its planned future dividends from operating
cash flows, DRIP, cash and cash equivalents on hand and, if necessary, use of
its line of credit. 


Non-IFRS Measures

This press release includes references to Northland's free cash flow and EBITDA
which are not measures prescribed by International Financial Reporting Standards
(IFRS). Free cash flow and EBITDA, as presented, may not be comparable to
similar measures presented by other companies. These measures should not be
considered alternatives to net income, cash flow from operating activities or
other measures of financial performance calculated in accordance with IFRS.
Rather, these measures are provided to complement IFRS measures in the analysis
of Northland's results of operations from management's perspective. Management
believes that free cash flow and EBITDA are widely accepted financial indicators
used by investors to assess the performance of a company and its ability to
generate cash through operations.


Earnings Conference Call

Northland will hold an earnings conference call on November 7th at 9:00 am EST.
John Brace, Northland's President and Chief Executive Officer and Paul Bradley,
Northland's Chief Financial Officer will discuss the financial results and
company developments before opening the call to questions from analysts and
members of the media.


Conference call details are as follows: 

Date: Wednesday November 7, 2012

State Time: 9:00 a.m. Eastern Standard Time

Phone Number: Toll free within North America: 1-800-269-0310 or Local 416-352-0507

For those unable to attend the live call, an audio recording will be available
on Northland's website at (www.northlandpower.ca) from the afternoon of November
7 until November 21, 2012.


ABOUT NORTHLAND

Northland Power Inc. owns or has a net economic interest in 1,005 MW of
operating generating capacity, and 320 MW of generating capacity in
construction. Northland is also actively developing 280 MW of wind, solar and
run-of-river hydro projects already awarded PPAs, and approximately 2,200 MW of
additional power generation opportunities. Northland's assets comprise
facilities that produce electricity from "clean" natural gas and "green"
renewable sources such as wind, solar and biomass. Electricity generation and
capacity is primarily sold under long-term contracts with creditworthy
customers. Northland's operating thermal power assets are located in the
provinces of Ontario and Saskatchewan, Canada, and include the 120 MW Iroquois
Falls cogeneration facility, the 110 MW Kingston combined-cycle power facility,
the 265 MW Thorold cogeneration facility, the 86 MW Spy Hill peaking facility
and an economic interest in two natural-gas- and biomass-fired generation
facilities as well as a 19% equity interest in the 230 MW Panda-Brandywine
combined-cycle power facility located outside Washington, D.C. Northland's
operating renewable power facilities include the 128 MW Jardin d'Eole wind farm
and the 100 MW Mont Louis wind farm both located in Quebec, two wind farms
totalling 22 MW of installed capacity located in Germany and several rooftop
solar power facilities in Ontario. Northland owns the 260 MW North Battleford
project, which is currently under construction in Saskatchewan, Canada, and is
currently constructing 60 MW of ground-mounted solar projects located in various
communities in eastern and central Ontario. Northland's cash flows are
diversified over five geographically separate regions and regulatory
jurisdictions.


Northland's common shares, Series 1 and Series 3 preferred shares and
convertible debentures trade on the Toronto Stock Exchange under the symbols
NPI, NPI.PR.A, NPI.PR.C and NPI.DB.A, respectively.


FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements which are provided for
the purpose of presenting information about management's current expectations
and plans. Readers are cautioned that such statements may not be appropriate for
other purposes. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or conditions, or
include words such as "expects," "anticipates," "plans," "believes,"
"estimates," "intends," "targets," "projects," "forecasts" or negative versions
thereof and other similar expressions, or future or conditional verbs such as
"may," "will," "should," "would" and "could." These statements may include,
without limitation, statements regarding future EBITDA, cash flows and dividend
payments, the construction, completion, attainment of commercial operations,
cost and output of development projects, plans for raising capital, and the
operations, business, financial condition, priorities, ongoing objectives,
strategies and outlook of Northland and its subsidiaries. These statements are
based upon certain material factors or assumptions that were applied in
developing the forward-looking statements, including the design specifications
of development projects, the provisions of contracts to which Northland or a
subsidiary is a party, management's current plans, its perception of historical
trends, current conditions and expected future developments, as well as other
factors that are believed to be appropriate in the circumstances. Although these
forward-looking statements are based upon management's current reasonable
expectations and assumptions, they are subject to numerous risks and
uncertainties. Some of the factors that could cause results or events to differ
from current expectations include, but are not limited to, construction risks,
counterparty risks, operational risks, the variability of revenues from
generating facilities powered by intermittent renewable resources and the other
factors described in the "Risks and Uncertainties" section of Northland's 2011
Annual Report and Annual Information Form, both of which can be found at
www.sedar.com under Northland's profile and on Northland's website
www.northlandpower.ca. Northland's actual results could differ materially from
those expressed in, or implied by, these forward-looking statements and,
accordingly, no assurances can be given that any of the events anticipated by
the forward-looking statements will transpire or occur. 


The forward-looking statements contained in this release are based on
assumptions that were considered reasonable on November 6, 2012. Other than as
specifically required by law, Northland undertakes no obligation to update any
forward-looking statements to reflect events or circumstances after such date or
to reflect the occurrence of unanticipated events, whether as a result of new
information, future events or results, or otherwise.



FOR FURTHER INFORMATION PLEASE CONTACT: 
Northland Power Inc.
Barb Bokla
Manager, Investor Relations
647-288-1438
(416)-962-6266 (FAX)


Northland Power Inc.
Adam Beaumont
Director of Finance
647-288-1929
(416)-962-6266 (FAX)
[e-mail]
www.northlandpower.ca