Exhibit 99.1

Atlantic Power Limited Partnership

Consolidated Financial Statements

(In millions of Canadian dollars)

Years ended December 31, 2012 and 2011

Atlantic Power Limited Partnership

Consolidated Financial Statements

Years ended December 31, 2012 and 2011

Independent Auditors’ Report

The Board of Directors

Atlantic Power Limited Partnership:

We have audited the accompanying consolidated financial statements of Atlantic Power Limited Partnership and its subsidiaries (the Partnership), which comprise the consolidated statements of financial position as of December 31, 2012 and the related consolidated statements of income (loss), comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

KPMG LLP is a Delaware limited liability partnership,
the U.S. member firm of KPMG International Cooperative
(“KPMG International”), a Swiss entity.

1

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Atlantic Power Limited Partnership and its subsidiaries as of December 31, 2012, and the results of their operations and their cash flows for the year then ended in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board.

New York City, NY

June 25, 2013

2

INDEPENDENT AUDITORS’ REPORT

To the Directors of Atlantic Power Limited Partnership (formerly Capital Power Income L.P.)

We have audited the accompanying consolidated financial statements of Atlantic Power Limited Partnership, which comprise the consolidated statements of financial position as at December 31, 2011, the consolidated statements of income, comprehensive income (loss), changes in equity and cash flows for the year ended December 31, 2011, and notes, comprising a summary of significant accounting policies and other explanatory information.

Management’s responsibility for the consolidated financial statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

3

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Atlantic Power Limited Partnership as at December 31, 2011 and its consolidated financial performance and its consolidated cash flows for the year ended December 31, 2011 in accordance with International Financial Reporting Standards.

Chartered Accountants

June 29, 2012

Edmonton, Canada

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Atlantic Power Limited Partnership

Consolidated Statements of Income (Loss)

(In millions of Canadian dollars)

See accompanying notes to consolidated financial statements

5

Atlantic Power Limited Partnership

Consolidated Statements of Comprehensive Income

(In millions of Canadian dollars)

(1) Net of income tax of $nil.

(2) Net of income tax of $1.5 million (2011 - $3.4 million).

(3) Net of income tax of $nil.

(4) Net of income tax of $.6 million (2011 - $0.4 million).

(5) Net of income tax of $.5 million (2011 - $1.1 million).

(6) Net of income tax of $3.4 million (2011 - $nil).

See accompanying notes to consolidated financial statements.

6

Atlantic Power Limited Partnership

Consolidated Statements of Financial Position

(In millions of Canadian dollars)

See accompanying notes to consolidated financial statements.

7

Atlantic Power Limited Partnership

Consolidated Statements of Changes in Equity

(In millions of Canadian dollars)

See accompanying notes to consolidated financial statements.

8

Atlantic Power Limited Partnership

Consolidated Statements of Cash Flows

(In millions of Canadian dollars)

see accompanying notes to consolidated financial statements.

9

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

1.           Reporting entity

Atlantic Power Limited Partnership (the “Partnership”) (formerly Capital Power Income L.P.) is a limited partnership created under the laws of the Province of Ontario pursuant to a Partnership Agreement dated March 27, 1997, as amended and restated on November 4, 2009. The Partnership commenced operations on June 18, 1997 and currently has independent power generating facilities in British Columbia, Ontario, California, Colorado, Illinois, New Jersey, New York and Washington State. Its principal place of business is at 3250 Lacey Road Suite 500, Downers Grove, IL 60515. As of November 5, 2011, the Partnership is a wholly-owned subsidiary of Atlantic Power Corporation (“Atlantic Power” or the “Parent”) (note 4); its registered address is One Federal St, Floor 30, Boston, MA 02110.

2.           Significant accounting policies

(a) Basis of presentation

These consolidated financial statements have been prepared by management in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

These consolidated financial statements have been prepared under the historical cost basis, except for the Partnership’s available-for-sale financial instruments, derivative financial instruments and cash and cash equivalents which are stated at fair value. The accounting policies set out below have been applied consistently during the financial reporting period. These consolidated financial statements are presented fairly and thereby approved and authorized to be released on this day June 25, 2013.

(b) Basis of consolidation

These consolidated financial statements include the accounts of the Partnership and its subsidiaries. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Partnership obtains control, and continue to be consolidated until the date that such control ceases to exist.

All intercompany balances and transactions have been eliminated on consolidation. The financial statements of the subsidiaries are prepared for the same reporting period as the Partnership, using consistent accounting policies.

Non-controlling interests in subsidiaries are identified separately from the Partnership’s equity. The interests of non-controlling interests are initially measured at fair value and do not participate in subsequent changes in equity.

(c) Business combinations and goodwill

The acquisitions of businesses are accounted for using the acquisition method. The consideration for each acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued by the Partnership in exchange for control of the acquired business. The acquired business’ identifiable assets, liabilities and contingent liabilities are recognized at their fair values at the acquisition date.

To the extent the fair value of consideration transferred exceeds the fair value of the net identifiable tangible and intangible assets acquired and liabilities assumed, goodwill is recognized. To the extent the fair value of consideration paid is less than the fair value of net identifiable tangible assets and intangible assets acquired and liabilities assumed, the excess is recognized immediately into income. Goodwill is not depreciated, but is measured at cost less any accumulated impairment losses. For a further discussion of impairment of goodwill, refer to the accounting policy for impairment of non-financial assets (note 2(h)).

Transaction costs incurred in connection with a business combination, such as legal fees, due diligence fees and other professional and consulting fees are expensed as incurred.

10

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

(d) Interest in joint venture

The Partnership has an investment in a joint venture, whereby the venturers have a contractual arrangement that establishes joint control over the economic activities of the arrangement. The arrangement has been identified as a jointly controlled asset as the Partnership maintains rights over individual assets and liabilities. The Partnership recognizes its share of those assets and liabilities in accordance with those associated rights and obligations.

(e) Foreign currency translation

Transactions in foreign currencies are translated to the respective functional currencies of the Partnership or the subsidiary concerned, at exchange rates in effect at the transaction date. At each reporting date monetary assets and liabilities denominated in foreign currencies are translated at the exchange rate in effect on the balance sheet date. Other non-monetary assets are not re-translated unless they are carried at fair value. Revenues and expenses are translated at average exchange rates prevailing during the period. The resulting foreign exchange gains and losses are included in the consolidated statements of income, except for available for sale equity investments (see note 2(j)).

The Partnership owns US subsidiaries, whose functional currency has been determined to be US dollars. Assets and liabilities are translated into Canadian dollars at the exchange rate in effect at the reporting date. Revenue and expenses are translated at average exchange rates prevailing during the period. The resulting translation gains and losses are deferred and included in accumulated other comprehensive income until there is a reduction in the Partnership’s net investment in the foreign operations. On disposal of a foreign operation the deferred gain or loss will be reclassified to income.

(f) Property, plant and equipment

Property, plant and equipment is recorded at cost net of accumulated depreciation and any accumulated impairment losses.

Costs that are capitalized include contracted services, materials, borrowing costs on qualifying assets, directly attributable labor and overhead costs and asset retirement costs. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

The costs of replacing a part of an item of property, plant and equipment is capitalized if it is probable that the future economic benefits of the part will flow to the Partnership and that its cost can be measured reliably. The carrying amount of the replaced part is derecognized. Costs of day-to-day servicing are recognized in the consolidated statements of income as incurred.

The Partnership capitalizes interest during construction on its property, plant and equipment and intangible assets to provide for the costs of borrowing on its construction activities. Where project specific debt is not used to finance construction, interest is applied during construction using the weighted average cost of debt incurred on the Partnership’s external borrowings used to finance qualifying assets. Qualifying assets are those which necessarily take a significant amount of time to get ready for their intended use.

Gains and losses on the disposal of an item of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount at the date of disposal and are recognized into net income as part of depreciation and amortization.

Depreciation is charged to net income on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the asset. Major components of property, plant and equipment are depreciated separately over their respective useful lives. Land and construction work in progress are not depreciated. The estimated remaining useful lives for generation plant and equipment, vehicles, and furniture & fixtures range from two to fifty years. The estimated useful lives, residual values and method of depreciation are reviewed on an annual basis. Any changes are adjusted on a prospective basis.

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Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

(g) Intangible assets

Intangible assets are recorded at cost net of accumulated amortization and any accumulated impairment losses.

Amortization is charged to net income on a straight-line basis to write-off the cost less the estimated residual value over the estimated remaining term of the agreement or in line with the life of the related generating plant to which it relates. The estimated remaining useful lives range from one to seventeen years.

Estimated useful lives, methods of amortization and residual values are reviewed annually, and adjusted prospectively if required.

Gains or losses on the disposal of intangible assets are determined as the difference between the net disposal proceeds and the carrying amount of the asset, and are recognized into net income as other operating income or other operating costs.

(h) Impairment of non-financial assets

For the purpose of impairment testing, assets that cannot be tested individually are grouped together into a cash generating unit (CGU), which is the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets. For the purposes of goodwill impairment testing, goodwill acquired in a business combination is allocated to the CGU, or the group of CGUs, that is expected to benefit from the synergies of the combination. This allocation is subject to an operating segment ceiling test and reflects the lowest level at which that goodwill is monitored for internal reporting purposes.

Items of property, plant and equipment and intangible assets are periodically reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds its recoverable amount.

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount may be impaired, at the CGU. Goodwill is tested by comparing the recoverable amount of the CGU to which the goodwill relates to the carrying amount, including goodwill, of the CGU. For the purpose of impairment testing, goodwill acquired in an acquisition is, from the date of acquisition, allocated to each of the Partnership’s CGUs that are expected to benefit from the acquisition.

The recoverable amount of an asset or CGU is considered to be the higher of its value in use and its fair value less cost to sell. In assessing value in use, the estimated future cash flows are discounted using a discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. The fair value less costs to sell is based on estimated market values based on actual market transactions, if available, or a valuation model is used.

The Partnership’s corporate assets do not generate separate cash inflows. If there is an indication that a corporate asset may be impaired, then the recoverable amount is determined for the CGU to which the corporate asset belongs.

An impairment loss is recognized if it is determined that the estimated recoverable amount of an asset or CGU is less than the net carrying amount. The impairment loss will be recorded as the excess of the carrying amount of the asset over its recoverable amount. Impairment losses recognized in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the CGUs, and then to reduce the carrying amounts of the other assets in the CGUs on a pro rata basis.

At the end of each reporting period the Partnership makes an assessment as to whether there is any indication that previously incurred impairment losses no longer exist. If such an indication exists, the Company estimates the asset’s or CGU’s recoverable amount. Other than for goodwill, a previously recognized impairment charge is reversed when there has been a change in the assumptions used to determine the asset’s recoverable amount since the impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount or the carrying amount that would have been determined, net of depreciation, had an impairment loss not been recognized. Impairment losses on goodwill are not reversed.

Any reversal is recognized into net income for the period. An impairment loss in respect of goodwill is not reversed.

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Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

(i) Inventories

Inventories represent small parts and other consumables and fuel, the majority of which is consumed by the Partnership in provision of its goods and services, and are valued at the lower of cost and net realizable value. Cost includes the purchase price, transportation costs and other costs to bring the inventories to their present location and condition. The costs of inventory items that are interchangeable are determined on an average cost basis. For inventory items that are not interchangeable, cost is assigned using specific identification of their individual costs. Natural gas inventory held in storage for trading purposes is recorded at fair value less costs to sell, as measured by the one-month forward price of natural gas. Previous write downs of inventories from cost to net realizable value can be fully or partially reversed if supported by economic circumstances.

(j) Non-derivative financial instruments

Financial assets are identified and classified as either available for sale, held at fair value through profit or loss or loans and receivables. Financial liabilities are classified as either held at fair value through profit or loss or other financial liabilities. Initially, all financial assets and financial liabilities are recorded on the balance sheet at fair value.

Financial instruments at fair value through profit or loss

A financial asset is classified at fair value through profit or loss if it is classified as held for trading or is designated as such upon initial recognition. The Partnership may designate financial instruments as held at fair value through profit or loss when such financial instruments have a reliably determinable fair value and where doing so eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets and liabilities or recognizing gains and losses on them on a different basis.

Financial assets and financial liabilities held at fair value through profit or loss are measured at fair value with the changes in fair value reported in income for the year. Upon initial recognition transaction costs are recognized in the consolidated statement of income as incurred.

Gains or losses realized on derecognition of investments held at fair value through profit or loss are recognized in the consolidated statement of income.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active market. The Partnership’s current loans and receivables comprise its trade and other receivables. Non-current loans and other long-term receivables comprise lease receivables and amounts due from customers more than one year from the date of the statement of financial position which will be repaid between 2013 and 2020.

These assets are recognized initially at fair value plus any directly attributable transaction costs. After initial recognition they are measured at amortized cost using the effective interest method less any impairment losses as described in note 21. The effective interest method calculates the amortized cost of a financial asset or liability and allocates the interest income or expense over the term of the financial asset or liability using an effective interest rate.

Available for sale financial assets

The partnership classifies these investments as available for sale: those not classified as loans and receivables, held-to-maturity investments, or financial assets at fair value through profit or loss. The Partnership’s investment in Primary Energy Recycling Holdings LLC (PERH) is classified as an available for sale financial asset. Available for sale financial assets are measured at fair value with changes in fair value reported in other comprehensive income until the financial asset is disposed of or becomes impaired. On derecognition of an available for sale financial asset the cumulative gain or loss that was previously recognized in equity is transferred to the consolidated statement of income. The Partnership disposed of its interest in PERH during the reporting period. See note 10.

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Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

Other financial liabilities

The Partnership’s loans and borrowings and trade and other payables are recognized on the date at which the Partnership becomes a party to the contractual arrangement. Liabilities are derecognized when the contractual obligations are discharged, cancelled or expire.

Liabilities are recognized initially at fair value net of any directly attributable transaction costs, such as debenture discounts, premiums and issue expenses. Subsequently these liabilities are measured at amortized cost using the effective interest rate method.

Financial assets and financial liabilities are presented on a net basis when the Partnership has a legally enforceable right to set-off the recognized amounts and intends to settle on a net basis or to realize the asset and settle the liability simultaneously.

Preferred Shares

Preference share capital is classified as equity if is non-redeemable, or redeemable only at the company’s option.

(k) Derivative instruments and hedging activities

To reduce its exposure to movements in energy commodity prices and foreign currency exchange rates, the Partnership uses various risk management techniques including the use of derivative instruments. Derivative instruments may include forward contracts. Such instruments may be used to establish a fixed price for an energy commodity or a cash flow denominated in a foreign currency.

All derivative instruments, including embedded derivatives, are recorded at fair value on the statement of financial position as derivative instrument assets or derivative instrument liabilities except for embedded derivative instruments that are clearly and closely linked to their host contract and the combined instrument is not measured at fair value. Any contract to buy or sell a non-financial item that was entered into and continues to be held for the purpose of the receipt or delivery of a non-financial item in accordance with the Partnership’s expected purchase, sale or usage requirements, is not treated as a derivative.

The Partnership uses non-financial forward delivery derivatives and hedges to manage the Partnership’s exposure to fluctuations in natural gas prices related to obligations arising from its natural gas fired generation facilities. Under the non-financial forward delivery derivatives, the Partnership agrees to purchase natural gas at a fixed price for delivery of a pre-determined quantity under a specified timeframe. Under the financial contracts- for-differences derivatives, the Partnership agrees to exchange, with creditworthy or adequately secured counterparties, the difference between the variable or indexed price and the fixed on a notional quantity of the underlying commodity for a specified timeframe.

Foreign exchange forward contracts are used by the Partnership to manage foreign exchange exposures, consisting mainly of U.S. dollar exposures, resulting from anticipated transactions denominated in foreign currencies.

The Partnership uses hedge accounting when there is a high degree of correlation between the risk in the item designated as being hedged (the hedged item) and the derivative instrument designated as a hedge (the hedging instrument).The Partnership documents all relationships between hedging instruments and hedged items at the hedge’s inception, including its risk management objectives and its assessment of the effectiveness of the hedging relationship on a retrospective and prospective basis.

The Partnership uses cash flow hedges for certain of its anticipated transactions to reduce exposure to fluctuations in changes in natural gas prices. In a cash flow hedging relationship, the effective portion of the change in the fair value of the hedging derivative is recognized in other comprehensive income, while the ineffective portion is recognized in the consolidated statement of income. The amounts recognized in accumulated other comprehensive income as cash flow hedging gains/losses are reclassified into the consolidated statement of income in the same period or periods in which the hedged item occurs and is recorded in the consolidated statement of income when it becomes probable that the hedged items will not occur.

The Partnership has not designated any fair value hedges at the date of the statement of financial position.

A hedging relationship is discontinued if the hedge relationship ceases to be effective, if the hedged item is an anticipated transaction and it is probable that the transaction will not occur by the end of the originally specified time period, if the Partnership terminates its designation of the hedging relationship, or if either the hedged or

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Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

hedging instrument ceases to exist as a result of its maturity, expiry, sale, termination or cancellation and is not replaced as part of the Partnership’s hedging strategy.

If a cash flow hedging relationship is discontinued or ceases to be effective, any cumulative gains or losses arising prior to such time are deferred in accumulated other comprehensive income and recognized in income in the same period as the hedged item, and subsequent changes in the fair value of the derivative instrument are reflected in the consolidated statement of income. If the hedged or hedging item matures, expires, or is sold, extinguished or terminated and the hedging item is not replaced, any gains or losses associated with the hedging item that were previously recognized in other comprehensive income are recognized in the consolidated statement of income in the same period as the corresponding gains or losses on the hedged item. When it is no longer probable that an anticipated transaction will occur within the originally determined period and the associated cash flow hedge has been discontinued, any gains or losses associated with the hedging item that were previously recognized in other comprehensive income are recognized in the consolidated statement of income in the period.

When the conditions for hedge accounting cannot be applied, the changes in fair value of the derivative instruments are recognized in the consolidated statement of income. The fair value of derivative financial instruments reflects changes in the commodity market prices and foreign exchange rates. Fair value is determined based on exchange or over-the-counter quotations by reference to bid or asking price, as appropriate, in active markets. In illiquid or inactive markets, the Partnership uses appropriate valuation and price modeling techniques commonly used by market participants to estimate fair value. Fair values determined using valuation models require the use of assumptions concerning the amounts and timing of future cash flows. Fair value amounts reflect management’s best estimates using external readily observable market data such as future prices, interest rate yield curves, the impact of counterparty credit risk, foreign exchange rates, discount rates for time value, and volatility where available. It is possible that the assumptions used in establishing fair value amounts will differ from future outcomes and the impact of such variations could be material.

(l) Impairment of financial assets

A financial asset not carried at fair value through profit or loss is assessed for indicators of impairment at the end of each reporting period. An impairment loss is recorded where it is identified that there is objective evidence that one or more events has occurred after the initial recognition of the asset, that has had an impact on the estimated future cash flows of the asset.

For listed and unlisted equity investments classified as available for sale, a significant or prolonged decline in the fair value of the investment below its cost is considered to be objective evidence of impairment.

For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are in addition assessed for impairment on a collective basis. Objective evidence of impairment includes the Partnership’s past experience of collecting payments, as well as observable changes in national or local economic conditions.

For financial assets carried at amortized cost, the amount of the impairment loss recognized is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the asset’s original effective interest rate. Any impairment loss is recognized in net income. If, in a subsequent reporting period, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is adjusted through net income.

(m) Provisions

A provision is recognized if, as a result of a past event, the Partnership has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. The obligation is discounted using a discount rate that reflects current market assessments of the time value of money and the risks specific to the liability for which the estimates of future cash flows have not been adjusted. The unwinding of the liability due to the passage of time, or accretion, is recognized as a financing expense, and is recorded over the estimated time period until settlement of the obligation. Provisions are reviewed and adjusted, where required, to reflect the current best estimate at the end of each reporting period

The Partnership recognizes decommissioning provisions for its power plants, as it is obliged to remove the facilities at the end of their useful lives and restore the plant sites to their original condition. The present value of

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Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

the expected costs required to settle the obligation is added to the carrying amount of the associated plant asset and depreciated over the life of the related asset. Changes in a decommissioning provision resulting from changes in estimated cash flows will be added to or deducted from the cost of the related asset.

A provision for onerous contracts is recognized when the expected benefits to be derived by the Partnership from a contract are lower than the unavoidable cost of meeting its obligations under contract. The provision is measured at the present value of the lower of expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Partnership recognizes any impairment loss on the assets associated with that contract.

(n) Revenue recognition

Revenue is recognized to the extent that it is probable that economic benefits will flow to the Partnership and where it can be reliably measured. Revenues are measured at the fair value of the consideration received, excluding discounts, rebates and sales taxes or duty.

Power Purchase Agreements (PPAs), steam purchase arrangements and energy services agreements are long-term contracts to sell power and steam on a predetermined basis. As detailed in note 2(p), PPAs may be classified as a lease. Revenue recognition for PPAs that contain a lease is described in note 2(p).

For those PPAs that are not considered to contain a lease, revenue recognition is as follows:

Revenue arising wholly on the sale of electricity, steam and natural gas is recognized when the risks and rewards of ownership pass to the buyer, collection is reasonably assured and the price is reasonably determinable. This occurs upon delivery or availability for delivery under take or pay contracts. In determining the fair value of revenue to be recognized for certain long-term contracts which contain fixed rates based on cumulative volume delivered, revenue is recognized at the lower of (1) the amount billable under the contract and (2) an amount determined by the MWhs made available during the period multiplied by the average price per MWh over the term of the contract from the date of acquisition. Any excess of the amount billable in the current period over the average revenue based on MWhs made available is recorded as deferred revenue.

Gains and losses on derivative instruments settlements are recorded in revenues or cost of fuel, as appropriate.

(o) Income taxes

The Partnership was not subject to Canadian income taxes prior to December 31, 2010. Certain subsidiaries are taxable and applicable income withholding and other taxes have been reflected in these consolidated financial statements. The Partnership was subject to Canadian income taxes after 2010.

Income tax comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss except to the extent of items recognized directly in equity or in other comprehensive income.

Current tax is the expected tax payable or receivable on the taxable income or loss for the year using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for the following temporary differences: the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss, and differences relating to investments in subsidiaries and jointly controlled entities to the extent that it is probable that they will not reverse in the foreseeable future. In addition, deferred tax is not recognized for taxable temporary differences arising on the initial recognition of goodwill. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realized simultaneously.

A deferred tax asset is recognized for unused tax loses, tax credits, and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which that can be utilized. Deferred

16

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

(p) Leases or arrangements containing a lease

The Partnership has entered into PPAs to sell power at predetermined rates. PPAs are assessed as to whether they contain leases which convey to the counterparty the right to the use of the Partnership’s property, plant and equipment in return for payment. Such arrangements may be classified as either finance or operating leases. PPAs that transfer substantially all of the benefits and risks of ownership of property, plant and equipment from the Partnership are classified as finance leases. PPAs that do not transfer all of the benefits and risks of ownership of property, plant and equipment are classified as either operating leases or executory contracts.

For those PPAs determined to be finance leases with the Partnership as the lessor, finance income is recognized in a manner that produces a constant rate of return on the net investment in the lease. The net investment is composed of net minimum lease payments and unearned finance income. Unearned finance income is the difference between the total minimum lease payments and the carrying value of the receivable. Unearned finance income is deferred and recognized into income over the lease term.

Payments received under PPAs classified as finance leases are segmented into those for the lease and those for other elements on the basis of their relative value.

For those PPAs determined to be operating leases with the Partnership as the lessor, revenue is recognized based as volume is delivered using the rates outlined in the PPA as this is most representative of the use of the underlying leased asset.

(q) Cash and cash equivalents

Cash and cash equivalents include cash or highly liquid investment-grade short-term investments with original terms to maturity of three months or less, and are measured at amortized cost using the effective interest method.

(r) Future accounting changes

A number of new standards, and amendments to standards and interpretations, as described below, are not yet effective for the year ended December 31, 2012 and have not been applied in preparing these consolidated financial statements. The Partnership is currently assessing the impact of adopting these standards and amendments on its consolidated financial statements. For those standards where earlier application is permitted, the Partnership expects to apply the changes at the effective date.

IAS 1 — Presentation of Financial Statements — In June 2011, the International Accounting Standards Board (IASB) issued amendments to IAS 1 which will require entities to group items within other comprehensive income on the basis of whether or not they will be reclassified to income or loss in a future period. The implications of adopting the amendments to IAS 1 will be limited to the Partnership’s presentation within its statement of other comprehensive income. The amendments are effective for annual periods beginning on or after July 1, 2012 and are to be applied retrospectively. Earlier application is permitted.

IFRS 7 — Financial Instruments: Disclosures — In December 2011, the IASB issued amendments to IFRS 7 which establishes enhanced disclosure requirements for offsetting financial assets and liabilities. The implications of adopting the amendments to IFRS 7 will result in additional disclosure to the Company’s consolidated financial statements. The amendments are effective for annual periods beginning on or after January 1, 2013 and are to be applied retrospectively. Earlier application is permitted.

IFRS 10 — Consolidated Financial Statements — In May 2011, the IASB issued IFRS 10 which replaces IAS 27 — Consolidated and Separate Financial Statements and SIC 12 - Consolidation — Special Purpose Entities. IFRS 10 establishes principles for the presentation and preparation of consolidated financial statements. The new standard provides a revised definition of control and a single consolidation model as the basis for consolidation for all types of entities. The standard also provides additional guidance to assist in the determination of control. The Partnership does not expect that the adoption of this new standard will have a material effect on the consolidated financial statements, as application of the new definition of control does not change the Partnership’s current accounting treatment for entities in which it holds an interest in. IFRS 10 is effective for annual periods beginning on or after January 1, 2013 and is to be applied retrospectively. Earlier application is permitted but must be applied simultaneously with IFRS 11 and IFRS 12. In October 2012, the IASB issued

17

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). This document sets out amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements. The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate financial statements. The amendments also introduce new disclosure requirements for investment entities in IFRS 12 and IAS 27. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2014. Earlier application is permitted.

IFRS 11 — Joint Arrangements — IFRS 11 was issued in May 2011 and supersedes IAS 31 — Interests in Joint Ventures and SIC 13 — Jointly Controlled Entities — Non-Monetary Contributions by Venturers. The standard classifies joint arrangements as joint operations or joint ventures. Joint operations are arrangements where the owners directly own a share of the individual assets and are directly responsible for contributing a share of the individual liabilities of the joint arrangement. Each owner will account for its share of the arrangement using the proportionate consolidation method. Joint ventures are arrangements where the arrangement itself directly owns the assets and is directly responsible for the liabilities of the arrangement. IFRS 11 eliminated the choice to account for joint ventures using the proportionate consolidation method and instead requires the equity method of accounting. The Partnership does not expect that the adoption of this new standard will have a material effect on the consolidated financial statements, as it is substantially aligned with the Partnership’s current practice. IFRS 11 is effective for annual periods beginning on or after January 1, 2013 and is to be applied retrospectively. Earlier application is permitted but must be applied simultaneously with IFRS 10 and IFRS 12.

IFRS 12 — Disclosures of Interests in Other Entities — In May 2011, the IASB issued IFRS 12, a new and comprehensive standard on disclosure requirements for all forms of interests in other entities, including subsidiaries, joint arrangements, associates and unconsolidated structured entities. IFRS 12 is effective for annual periods beginning on or after January 1, 2013 and is to be applied retrospectively and will result in additional disclosure to the Partnership’s consolidated financial statements. Earlier application is permitted but must be applied simultaneously with IFRS 11 and IFRS 10. In October 2012, the IASB issued Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27). This document sets out amendments to IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements. The amendments define an investment entity and introduce an exception to consolidating particular subsidiaries for investment entities. These amendments require an investment entity to measure those subsidiaries at fair value through profit or loss in accordance with IFRS 9 Financial Instruments in its consolidated and separate financial statements. The amendments also introduce new disclosure requirements for investment entities in IFRS 12 and IAS 27. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2014. Earlier application is permitted.

IFRS 13 — Fair value Measurement — In May 2011, the IASB issued IFRS 13 which defines fair value, sets out in a single IFRS a framework for measuring fair value and enhances disclosures about fair value measurements. IFRS 13 applies to fair value measurements required or permitted by other IFRSs, but does not (a) introduce any new requirements to measure an asset or a liability at fair value, (b) change what is measured at fair value in IFRSs, or (c) address how to present changes in fair value. The implications of adopting this new standard will be limited to the Partnership’s fair value disclosures for financial instruments and asset impairment calculations. IFRS 13 is effective for annual periods beginning on or after January 1, 2013 and is to be applied prospectively. Earlier application is permitted.

IAS 32 — Financial Instruments: Presentation — In December 2011, the IASB issued amendments to IAS 32 which clarifies the criteria for offsetting financial assets and liabilities. The Partnership does not expect that the adoption of the amendments will have a material effect on the consolidated financial statements, as they are substantially aligned with the Partnership’s current policies. The amendments are effective for annual periods beginning on or after January 1, 2014 and are to be applied retrospectively. Earlier application is permitted.

IFRS 9 — Financial Instruments — In November 2009, the IASB issued IFRS 9 — Financial Instruments which addresses the classification and measurement requirements of financial assets. The standard was amended in October 2010 to include the requirements for the classification and measurement of financial liabilities. The changes are effective for annual periods beginning on or after January 1, 2015 and are to be applied retrospectively. Earlier application is permitted.

IAS 16 — Property, Plant and Equipment — In May 2012 the IASB, as part of the Annual Improvements 2009-2011 cycle, amended IAS 16 to clarify that spare parts and servicing equipment are classified as property, plant and equipment rather than inventory when they meet the definition of property, plant and equipment. The previous wording of IAS 16 indicated that servicing equipment should be classified as inventory, even if it was used for more than one period. Following the amendment, the equipment used for more than one period is

18

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

classified as property, plant and equipment. The amendment is effective for annual periods beginning on or after January 1, 2013. These changes are not expected to have a material impact on the company.

3.           Use of judgments and estimates

The preparation of the Partnership’s consolidated financial statements in accordance with IFRS requires management to make judgements, estimates and assumptions that affect the reported amounts of income, expenses, assets and liabilities as well as the disclosure of contingent assets and liabilities at the date of the consolidated financial statements.

The Partnership reviews its estimates and assumptions on an ongoing basis and uses the most current information available and exercises careful judgement in making these estimates and assumptions. Adjustments to previous estimates, which may be material, will be recorded in the period they become known. Actual results may differ from these estimates.

Critical judgments in applying accounting policies

The main assumptions, estimates and judgements that were used in preparing the Partnership’s consolidated financial statements relate to:

Non-financial assets

The determination of CGUs was based on management’s judgment, giving consideration to geographic proximity and shared risk exposure and risk management. Identifying events or changes in circumstances that may indicate or cause an asset’s carrying amount to exceed its recoverable amount requires judgment in assessing what events or circumstances would have such an impact.

Classification of arrangements which contain a lease

As noted in note 2(p), the Partnership has exercised judgement in determining whether the risks and rewards of its generation assets which are subject to a PPA are transferred to the PPA buyer, in determining whether a lease exists and if so, whether the lease should be treated as a finance or operating lease. Details of those PPAs which contain either finance or operating leases are provided in note 10.

Key sources of estimation uncertainty

Financial instruments

The valuation of the Partnership’s derivative instruments and certain other financial instruments requires estimation of the fair value of each instrument at the reporting date. Details of the basis on which fair value is estimated is provided in note 21.

Non-financial assets

Depreciation is an estimate to allocate the cost of an asset less its estimated residual value over its estimated useful life on a systematic and rational basis. Depreciation is recognized in income on a straight-line basis over the estimated service lives of each separately determined component of property, plant and equipment, since this most closely reflects the expected usage of the assets. Land and construction work in progress is not depreciated.

Estimating the appropriate useful lives of each part of an asset requires significant judgment and is generally based on estimates of common life characteristics of common assets. The estimated useful lives used are provided in note 2(f).

For determining purchase price allocations for business combinations, the Partnership is required to estimate the fair value of acquired assets and obligations. Goodwill is measured as the excess of the fair value of the consideration transferred less the fair value of the identifiable assets acquired and liabilities assumed. Goodwill acquired in an acquisition is, from the date of acquisition, allocated to each of the CGUs that are expected to benefit from the acquisition.

19

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

Estimates of fair value for the recoverable amount of CGUs undergoing impairment testing, and for purchase price allocations for business combinations, are primarily based on discounted cash flow projection techniques employing estimated future cash flows based on assumptions regarding the expected market outlook and cash flows from each CGU or asset. The cash flow estimates will vary with the circumstances of the particular assets or CGU and will be based on, among other things, the lives of the assets, contract prices, estimated future prices, revenues and expenses, including growth rates and inflation, and required capital expenditures. Details of the key estimates used in assessing the recoverable amount of each CGU at the last impairment review date are provided in note 12. Market capitalization and comparative market multiples, where available, are used to corroborate management’s discounted cash flow projections.

Decommissioning provisions

Measurement of the Partnership’s provisions and the related accretion require the use of estimates with respect to the amount and timing of decommissioning, the extent of site remediation required and related future cash flows for the decommissioning provisions. The key assumptions used in determining these provisions are provided in note 16. Adjustments to the decommissioning provisions will arise as a result changes in future cash flow estimates and/or changes in discount rates.

Deferred taxes

Income taxes are determined based on estimates of the Partnership’s current income taxes and estimates of deferred income taxes resulting from temporary tax differences. Deferred income tax assets are assessed to determine the likelihood that they will be realized from future taxable income.

4.           Sale of the Partnership

On November 5, 2011, Atlantic Power acquired all of the outstanding limited partnership units of the Partnership pursuant to the terms and conditions of an Arrangement Agreement, dated June 20, 2011, as amended by Amendment No. 1, dated July 15, 2011 (the “Arrangement Agreement”), by and among Atlantic Power, the Partnership, CPI Income Services, Ltd., the general partner of the Partnership and CPI Investments, Inc., a unitholder of the Partnership that was then owned by EPCOR Utilities Inc. and Capital Power Corporation (“CPC”). The transactions contemplated by the Arrangement Agreement were effected through a court-approved plan of arrangement under the Canada Business Corporations Act (the “Plan of Arrangement”). The Plan of Arrangement was approved by the unitholders of the Partnership, and the issuance of Atlantic Power common shares to the Partnership unit holders pursuant to the Plan of Arrangement was approved by Atlantic Power shareholders, at respective special meetings held on November 1, 2011. A Final Order approving the Plan of Arrangement was granted by the Court of Queen’s Bench of Alberta on November 1, 2011. In connection with this transaction, the management contracts between Capital Power Corporation and the Partnership were terminated. The Partnership incurred $30.3 million of costs (including $10.0 million for termination of the management contracts) related to the sale of the Partnership that are recorded in administrative and other expenses in the consolidated statements of income at December 31, 2011. Prior to the acquisition of all the outstanding limited partnership units by Atlantic Power, the Partnership sold its Roxboro and Southport facilities located in North Carolina to an affiliate of Capital Power Corporation, for approximately $121.4 million (net cash proceeds of $116.7 million). The Partnership recorded a gain on disposal of $0.5 million.

The Partnership has determined the above purchase of its outstanding units by Atlantic Power in November 2011 is an allowable re-measurement event in accordance with IFRS 1.D8 (b) and has elected this event driven fair value exemption. By applying this exemption, the Partnership is permitted to use an event driven fair value measurement that occurred subsequent to its date of transition to IFRS as deemed cost for some or all of its assets and liabilities when the revaluation occurred during the periods covered by its first IFRS financial statements and the fair values would have otherwise been recognized in the Partnership’s financial statements under previous GAAP. Only identifiable assets and liabilities revalued in the acquisition that meet the recognition criteria under IFRSs have been recognized as adjustments as part of this exemption. The event-driven fair value measurement is determined at the date when the event triggering the revaluation occurred, which is November 5, 2011 for the Partnership. In accordance with the exemption, the Partnership recognized the resulting adjustments directly in deficit at the measurement date.

The determination of fair value used to re-measure certain assets and liabilities of the Partnership was based on the amount for which the assets could be exchanged or liabilities settled, between knowledgeable, willing parties in an arm’s length transaction. The Parent of the Partnership engaged a third party to perform an independent valuation of assets acquired and liabilities assumed in the acquisition of the Partnership. The fair values were

20

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

estimated, primarily, by applying the income approach using the discounted cash flow (“DCF”) methodology. The primary value drivers and assumptions that affected the DCF analysis for the acquired generating facilities included the following: operational characteristics of the generating facilities, gross margin forecasts, fixed and variable operating expenses and capital expenditure forecasts, tax rates, the tax impact of depreciation associated with past and future capital expenditures, net working capital requirements, discount rates and remaining useful lives. Under the income approach, the cash flows expected to be generated by the Partnership were discounted to their present value equivalent using a weighted average cost of capital ranging from 6.5% to 10.0% depending on the type of asset to be valued. These assumptions were based on significant inputs not observable in the market and thus represent level 3 fair value measurements.

As a result of electing this event-driven fair value exemption, the Partnership adjusted the carrying amount of certain assets and liabilities to fair value prior to the sale of the Partnership as follows:

5.           Expenses by Nature

6.           Finance Expense

21

Atlantic Power Limited Partnership

Notes to Consolidated Financial Statements

(tabular amounts in millions of Canadian dollars)

7.           Income taxes

Income taxes differ from the amount that would be computed by applying the federal and provincial income tax rates as follows:

Deferred tax assets and liabilities are attributable to the following: