Page 2 – TransAlta

TransAlta Reports Third Quarter 2023 Results

Posted on November 7, 2023November 7, 2023 by kevin_wick

Third Quarter 2023 Financial Highlights

Earnings before income taxes of $453 million, an improvement of $327 million from the same period in 2022
Net earnings attributable to common shareholders of $372 million, an increase of $311 million from the same period in 2022
Cash flow from operating activities of $681 million, an increase of $477 million from the same period in 2022
Adjusted EBITDA⁽¹⁾ of $453 million, a decrease of 18% over the same period in 2022. Year-to-date adjusted EBITDA of $1.34 billion reflects an increase of 23% over the same period in 2022, and is in line with our revised full year financial guidance
Free Cash Flow (“FCF”)⁽¹⁾of $228 million, or $0.87 per share, a decrease of 40% on a per-share basis from the same period in 2022. Year-to-date FCF of $769 million, or $2.90 per share, an increase of 19% over the same period in 2022, is in line with our revised FCF financial guidance

Other Business Highlights and Updates

Entered into a definitive share purchase agreement to acquire Heartland Generation and its entire business operations, which are located in Alberta and British Columbia
Completed the acquisition of TransAlta Renewables
Achieved commercial operations at the Garden Plain facility in August. The 130 MW wind facility is fully contracted with Pembina Pipeline Corporation and PepsiCo Canada
Topped list of Newsweek’s Most Trustworthy Companies for 2023
Commenced commissioning of Northern Goldfields Solar project. All major equipment has been installed and construction work is largely complete. Energization and testing processes have commenced and the facility is expected to achieve full commercial operations in the fourth quarter of 2023
Advanced the Kent Hills rehabilitation program towards completion with all 50 turbines now fully reassembled. Energization activities are underway and turbines are being returned to service as commissioning activities are completed. To date, 36 turbines have been fully returned to commercial operations and the remaining turbines are expected to return to service in the fourth quarter of 2023
Advanced the Mount Keith 132kV expansion project, which is nearing completion. The transmission line and transformer installation is complete and the project is expected to achieve commercial operations in the fourth quarter of 2023
Advanced the Horizon Hill wind project in Oklahoma with all major equipment now delivered to site. Turbine erection activities are complete with all 34 turbines fully assembled. Construction of the transmission interconnection is underway and commercial operations are expected in the first quarter of 2024
Advanced the White Rock East and West projects with all equipment deliveries complete and tower assembly well underway. Currently, 34 out of 51 turbines have been assembled and the construction of the transmission interconnection is in progress. Commercial operations are expected in the first quarter of 2024

TransAlta Corporation (TSX: TA) (NYSE: TAC) today reported its financial results for the three and nine months ended Sept. 30, 2023.

“Our third quarter results continue to demonstrate the value of our strategically diversified fleet, which benefited from our asset optimization and hedging activities. With strong performance across the fleet and our continuing positive expectations for the balance of year, we continue to track towards previously revised guidance,” said John Kousinioris, President and Chief Executive Officer of TransAlta.

“We are pleased to have completed the acquisition of TransAlta Renewables. Our combined company’s greater scale and enhanced strategic positioning will drive value for all of our shareholders as we continue to advance our growth plan. Within the quarter, we were also pleased to reach commercial operations at Garden Plain, our 27th wind facility. We are now delivering clean electricity to our customers, Pembina Pipeline and PepsiCo, helping them achieve their sustainability goals.”

“We also continue to progress our advanced stage pipeline and other potential opportunities in the context of the current market environment. We are focused on making disciplined capital allocation decisions to ensure we deliver project returns that are appropriate for the current market environment and enhance value for our shareholders. We have 418 MW of projects in advanced stage of development on which we are working to reach final investment decisions in the near term. The cash flows from our legacy fleet are positioning us well to realize our Clean Electricity Growth Plan”, added Mr. Kousinioris. “Finally, and more recently, we are pleased to have entered into an agreement to acquire Heartland Generation, which we believe will support our competitive positioning and diversify our generating portfolio in Alberta.”

Key Business Developments

TransAlta to Acquire Heartland Generation from Energy Capital Partners

On Nov. 2, 2023, the Company announced that it had entered into a definitive share purchase agreement with an affiliate of Energy Capital Partners, the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd. (collectively, “Heartland”), pursuant to which TransAlta will acquire Heartland and its entire business operations in Alberta and British Columbia. The acquisition will add 10 facilities to TransAlta’s fleet, totalling 1,844 MW of new capacity. Heartland owns and operates generation assets consisting of 507 MW of cogeneration, 387 MW of contracted and merchant peaking generation, 950 MW of gas-fired thermal generation, transmission capacity and a development pipeline that includes the 400 MW Battle River Carbon Hub. The transaction is expected to close in the first half of 2024, subject to customary closing conditions, including receipt of regulatory approvals.

The purchase price for the acquisition is $390 million, subject to working capital and other adjustments, as well as the assumption of $268 million of low-cost debt. The Company will finance the transaction using cash on hand and draws on its credit facilities.

The assets are expected to add approximately $115 million of average annual EBITDA including synergies. Approximately, 55 per cent of revenues are under contract with high creditworthy counterparties, which have a weighted-average remaining contract life of 16 years. Corporate pre-tax synergies are expected to exceed $20 million annually.

TransAlta Corporation Completes Acquisition TransAlta Renewables Inc. to Simplify Structure and Enhance Strategic Position

On Oct. 5, 2023, the Company announced the completion of the acquisition of TransAlta Renewables pursuant to the terms of the previously announced arrangement agreement between the parties (“the Arrangement”). TransAlta acquired all of the outstanding common shares of TransAlta Renewables (“RNW Shares”) not already owned, directly or indirectly, by TransAlta and certain of its affiliates, resulting in TransAlta Renewables becoming a wholly owned subsidiary of the Company. Prior to the Arrangement, TransAlta and its affiliates collectively held 160,398,217 RNW Shares, representing 60.1 per cent of the issued and outstanding RNW Shares, with the remaining 106,510,884 RNW Shares held by TransAlta Renewables shareholders (“RNW Shareholders”) other than TransAlta and its affiliates.

The Arrangement was approved by RNW Shareholders at a special meeting of shareholders held on Sept. 26, 2023, and by the Court of King’s Bench of Alberta on Oct. 4, 2023. The consideration paid totaled $1.3 billion, which consisted of $800 million of cash and approximately 46 million common shares of the Company.

The closing of the acquisition of TransAlta Renewables represents a key milestone for the Company and the simplified and unified corporate structure positions it well for future success. The combined company will unify our assets, capital, and capabilities to enhance cash flow predictability while enhancing our ability to realize future growth.

The RNW Shares were delisted from the Toronto Stock Exchange (“TSX”). Common shares of the Company will continue to trade on both the New York Stock Exchange (“NYSE”) and the TSX under the symbols “TAC” and “TA”, respectively.

TransAlta Tops List of Newsweek’s World’s Most Trustworthy Companies for 2023

On Sept. 14, 2023, the Company announced that it ranked first on Newsweek’s inaugural “World’s Most Trustworthy Companies 2023” list for the Energy and Utilities category. The list identifies the top 1,000 companies in 21 countries and across 23 industries. Newsweek’s 2023 World’s Most Trustworthy Companies have been chosen based on a holistic approach to evaluating trust across three pillars of public trust – customer, investor and employee. The list was compiled based on an extensive survey of over 70,000 participants, gathering 269,000 evaluations of companies that people trust as a customer, as an investor and as an employee.

Garden Plain Wind Facility Reaches Commercial Operations

In August 2023, the Garden Plain wind facility was commissioned adding 130 MW to our gross installed capacity. The facility is fully contracted with Pembina Pipeline Corporation and PepsiCo Canada, with a weighted average contract life of approximately 17 years.

Third Quarter 2023 Highlights

*$ millions, unless otherwise stated*	Three Months Ended		Nine Months Ended
*$ millions, unless otherwise stated*	Sept. 30, 2023	Sept. 30, 2022	Sept. 30, 2023	Sept. 30, 2022
Adjusted availability (%)	91.9	93.8	89.4	90.1
Production (GWh)	5,678	5,432	16,246	15,253
Revenues	1,017	929	2,731	2,122
Adjusted EBITDA⁽¹⁾	453	555	1,343	1,093
Funds from operations⁽¹⁾	357	488	1,122	887
Free cash flow⁽¹⁾	228	393	769	646
Earnings before income taxes	453	126	915	346
Net earnings attributable to common shareholders	372	61	728	167
Cash flow from operating activities	681	204	1,154	526
Net earnings per share attributable to common shareholders, basic and diluted	1.41	0.23	2.75	0.62
Dividends declared per common share⁽²⁾	0.0550	0.0500	0.1100	0.1000
Dividends declared per preferred share⁽²⁾	0.3316	0.2896	0.6627	0.5453
FFO per share^(1),(3)	1.36	1.80	4.23	3.27
FCF per share^(1),(3)	0.87	1.45	2.90	2.38

Third Quarter Financial Results Summary

During the third quarter of 2023, the Company continued to demonstrate strong performance in its Alberta Electricity Portfolio, led by the Alberta Gas and Hydro segments, which continue to benefit from higher than expected energy and ancillary service pricing in the Alberta market, lower than expected natural gas prices and favourable hedging impacts resulting in higher than expected gross margins.

For the nine months ended Sept. 30, 2023, the Company demonstrated stronger performance compared to the same period in 2022, mainly due to the continued strong market conditions in Alberta, higher hedged prices, higher hedged volumes and lower realized gas prices in the Gas segment and higher merchant pricing and production in the Energy Transition segment, partially offset by lower wind resources. For the three and nine months ended Sept. 30, 2023, the Energy Marketing segment’s performance was lower compared to the same periods in 2022 due to timing of realized settlements, but in line with segment expectations.

Production for the three months ended Sept. 30, 2023, was 5,678 gigawatt hours (“GWh”) compared to 5,432 GWh for the same period in 2022. The increase in production was primarily due to higher dispatch in Alberta and higher production in Ontario for the Gas segment. Hydro production for the three months ended was lower compared to the same period in 2022 due to higher water resource from delayed spring runoff in the third quarter of 2022 and lower than average water resource in the third quarter of 2023. Production for the nine months ended Sept. 30, 2023, was 16,246 GWh compared to 15,253 GWh for the same period in 2022. The increase in production was primarily due to stronger market conditions in Alberta and the Pacific Northwest in the Gas and Energy Transition segments, partially offset by lower production in the Wind and Solar segments due to lower wind and solar resources in all regions. Both the three and nine months ended Sept. 30, 2023, benefited from the addition of the Garden Plain wind facility.

Adjusted availability for the three and nine months ended Sept. 30, 2023, was 91.9 per cent and 89.4 per cent, respectively, compared to 93.8 per cent and 90.1 per cent, respectively, for the same periods in 2022. Adjusted availability for the three months ended Sept. 30, 2023 decreased primarily due to planned outages in the Gas segment and unplanned outages in the Energy Transition segment, partially offset by the partial return to service of the Kent Hills facilities. Adjusted availability for the nine months ended Sept. 30, 2023, was further impacted by planned outages in the Hydro segment.

Adjusted EBITDA⁽¹⁾ for the three months ended Sept. 30, 2023, exceeded our expectations for the period; however, decreased by $102 million compared to the same period in 2022. Energy prices and ancillary service prices for three months ended Sept. 30, 2023 were higher than our revised expected full year financial guidance provided in the second quarter of 2023. They were, however, lower than the comparative period due to the exceptional prices experienced in 2022 impacting adjusted EBITDA in both the Gas and Hydro segments. The Hydro segment’s adjusted EBITDA was further impacted by higher production due to higher water resource in 2022 from a delayed spring runoff. These decreases to adjusted EBITDA were further impacted by lower results in the Energy Marketing segment due to adjustments to revenues to account for the timing of realized gains and losses on closed exchange positions and unrealized mark-to-market gains and losses and lower merchant pricing in the Energy Transition segments, partially offset by the higher production in the Gas segment. For the nine months ended Sept. 30, 2023, adjusted EBITDA increased by $250 million, compared to the same period in 2022, largely due to higher realized prices and production from the gas facilities, lower natural gas prices and higher revenue in the Energy Transition segment due to higher merchant pricing and higher production. These increases were partially offset by higher carbon compliance costs in the Gas segment, higher OM&A and lower revenues in the Wind and Solar and Energy Marketing segments.

FCF⁽¹⁾ totaled $228 million and $769 million, respectively, for the three and nine months ended Sept. 30, 2023 compared to $393 million and $646 million, respectively, in the same periods in 2022. For the three months ended Sept. 30, 2023, FCF decreased $165 million, primarily due to lower adjusted EBITDA, higher current income tax expense, higher distributions paid to subsidiaries’ non-controlling interests and higher sustaining capital expenditures. For the nine months ended Sept. 30, 2023, FCF increased by $123 million, primarily due to higher adjusted EBITDA, lower interest expense mainly driven by higher interest income due to higher interest rates and higher interest capitalized on construction capital expenditures. This was partially offset by higher distributions paid to subsidiaries’ non-controlling interests, higher sustaining capital expenditures and higher current income tax expense compared to 2022.

Earnings before income taxes for the three and nine months ended Sept. 30, 2023, increased by $327 million and $569 million, respectively, compared to the same periods in 2022. Net earnings (attributable to common shareholders for the three and nine months ended Sept. 30, 2023, were $372 million and $728 million compared to $61 million and $167 million for the same periods in 2022. For the three and nine months ended Sept. 30, 2023, the Company benefited from higher revenues net of unrealized gains and losses from risk management activities and lower natural gas commodity prices, partially offset by higher carbon compliance costs. The Company also benefited from higher asset impairment reversals and lower net interest expense, partially offset by higher net earnings allocated to non-controlling interests. Depreciation decreased in the three months ended Sept. 30, 2023, due to the extension of useful lives on certain facilities, but was higher for the nine months ended Sept. 30, 2023, compared to the same period in 2022, due to the acceleration of useful lives on certain facilities in the prior period. The nine months ended Sept. 30, 2023, also benefited from lower income tax expense, partially offset by higher OM&A expenses.

Cash flow from operating activities for the three and nine months ended Sept. 30, 2023, increased by $477 million and $628 million, respectively, compared with the same periods in 2022, primarily due to higher revenues net of unrealized gains and losses from risk management activities, lower fuel and purchased power and favourable changes in working capital. This was partially offset by higher carbon compliance costs and for the nine months ended Sept. 30, 2023, higher OM&A.

Alberta Electricity Portfolio

For the three and nine months ended Sept. 30, 2023, the Alberta electricity portfolio generated 3,092 GWh and 8,771 GWh of energy, respectively. This was an increase of 226 GWh and 648 GWh, respectively, compared to the same periods in 2022. Higher production in the three and nine months ended Sept. 30, 2023, was primarily due to higher dispatch and higher hedged gas volumes from our merchant gas assets, partially offset by lower water and wind resources in Alberta.

Gross margin for the three and nine months ended Sept. 30, 2023, was $382 million and $1,033 million, respectively, a decrease of $42 million and increase of $277 million, respectively, compared to the same periods in 2022. Lower gross margin in the three months ended Sept. 30, 2023, was a result of lower energy production, lower ancillary service prices, lower ancillary services volumes and lower realized energy prices from the Hydro assets, partially offset by higher dispatch from the Gas assets. Higher gross margin for the nine months ended Sept. 30, 2023, was primarily due to merchant revenues and higher realized energy prices for our Gas assets. In 2023, more gas fuel costs were hedged and the natural gas prices were lower compared to 2022.

The realized merchant power price per MWh for the three and nine months ended Sept. 30, 2023 was $179 per MWh and $176 per MWh, respectively, compared to $253 per MWh and $164 per MWh in the same periods in 2022. For the three months ended Sept. 30, 2023, realized merchant power price per MWh was strong but lower than the comparative period, primarily due to lower natural gas prices. For the nine months ended Sept. 30, 2023, higher realized merchant power pricing for energy across the portfolio was primarily due to higher market prices and optimization of our available capacity across all fuel types.

Hedged volumes for the three and nine months ended Sept. 30, 2023 were 2,086 GWh and 5,800 GWh at an average price of $120 per MWh and $117 per MWh, respectively, compared to 1,681 GWh and 5,320 GWh at an average price of $80 per MWh and $79 per MWh, respectively, in 2022.

2023 Financial Guidance

In the second quarter, we revised our 2023 full year financial guidance upwards for both adjusted EBITDA and free cash flow to reflect stronger market conditions and solid operational performance. Our fleet remains well positioned to capture the ongoing strength that we see in the Alberta merchant market. The Company remains on track to meet its revised financial guidance and is focused on redeploying these cash flows towards growing our contracted clean electricity asset base.

The following table provides additional details pertaining to the Company’s hedging assumptions in the 2023 outlook:

Range of hedging assumptions	Q4 2023	Full year 2024
Hedged production (GWh)	1,697	6,642
Hedge price ($/MWh)	$89	$84
Hedged gas volumes (GJ)	17 million	59 million
Hedge gas prices ($/GJ)	$2.34	$2.73

Liquidity and Financial Position

The Company continues to maintain a strong financial position, in part due to long-term contracts and hedged positions. As at Sept. 30, 2023, TransAlta had access to $2.6 billion in liquidity, including $1.2 billion in cash; well in excess of the funds required for committed growth, sustaining capital and productivity projects. On Oct. 5, 2023, $800 million of cash was used for the TransAlta Renewables transaction. Refer to the Significant and Subsequent Events section of this news release for more details.

Segmented Financial Performance

($ millions)	Three Months Ended		Nine Months Ended
($ millions)	Sept. 30, 2023	Sept. 30, 2022	Sept. 30, 2023	Sept. 30, 2022
Hydro	150	245	403	394
Wind and Solar	37	42	175	219
Gas	254	195	660	365
Energy Transition	29	51	96	67
Energy Marketing	13	53	95	120
Corporate	(30)	(31)	(86)	(72)
Adjusted EBITDA⁽¹⁾	453	555	1,343	1,093
Earnings before income taxes	453	126	915	346

Hydro:

Adjusted EBITDA⁽¹⁾ for the three and nine months ended Sept. 30, 2023, have exceeded our expectations as energy and ancillary services prices were higher than originally anticipated. Adjusted EBITDA for the three months ended Sept. 30, 2023, decreased by $95 million compared to the same period in 2022, as 2022 was exceptional and benefited from a delayed spring runoff in the third quarter of 2022 and exceptional energy and ancillary service pricing in the Alberta market. Adjusted EBITDA for the nine months ended Sept. 30, 2023, increased by $9 million, compared to the same period in 2022, primarily due to higher realized energy and ancillary services prices in the Alberta market, and higher sales of environmental attributes, partially offset by higher OM&A costs. OM&A for the nine months ended Sept. 30, 2023, increased primarily due to higher legal fees, higher insurance costs, salary escalations and incentive accruals. For the three and nine months ended Sept. 30, 2023, the Company captured revenue by forward hedging for the Alberta Hydro Assets and realized gains from the hedging strategy.

Wind and Solar:

Adjusted EBITDA⁽¹⁾ for the three months ended Sept. 30, 2023, decreased by $5 million compared to the same period in 2022, primarily due to lower revenues driven by weaker wind resource across the operating fleet, partially offset by the addition of the Garden Plain wind facility and the partial return to service of the Kent Hills wind facilities. Adjusted EBITDA for the nine months ended Sept. 30, 2023, decreased by $44 million, compared to the same period in 2022, primarily due to lower production, weaker wind resource, lower environmental attribute revenues driven by a reduction to offsets and emission credit sales, and lower liquidated damages recognized at the Windrise wind facility. OM&A in both periods increased due to salary escalations, higher insurance costs and long-term service agreement escalations.

Gas:

Adjusted EBITDA⁽¹⁾ for the three and nine months ended Sept. 30, 2023, increased by $59 million and $295 million, respectively, compared to the same periods in 2022, mainly due to higher production from stronger market conditions in Alberta, lower natural gas prices and higher hedged gas volumes, partially offset by lower thermal revenues due to reduced customer demand in Ontario. The nine months ended Sept. 30, 2023, further benefited from higher realized energy prices for our Alberta gas merchant assets, net of hedging, partially offset by higher carbon costs and fuel usage related to production.

Energy Transition:

Adjusted EBITDA⁽¹⁾decreased by $22 million for the three months ended Sept. 30, 2023, compared to the same period in 2022, primarily due to lower merchant prices, partially offset by lower purchased power costs. Adjusted EBITDA increased by $29 million for the nine months ended Sept. 30, 2023, compared to the same period in 2022, primarily due to higher merchant pricing and higher production, partially offset by higher purchased power costs required to fulfill contractual obligations during planned and unplanned outages. Lower OM&A expenses also favourably impacted the period due to the retirement of Sundance Unit 4 in the first quarter of 2022.

Energy Marketing:

Adjusted EBITDA⁽¹⁾ for the three and nine months ended Sept. 30, 2023, decreased by $40 million and $25 million, respectively, compared to the same periods in 2022. Gross margin for the three and nine months ended Sept. 30, 2023, was above segment expectations but adjusted EBITDA was lower period over period due to adjustments to revenues to account for the timing of realized gains and losses on closed exchange positions and unrealized mark-to-market gains and losses which are expected to be realized in future quarters. OM&A increased mainly due to higher incentives related to revenues before adjustments. The Company was able to capitalize on volatility in the trading of both physical and financial power and gas products across North American deregulated markets while maintaining the overall risk profile of the business unit.

Corporate:

Adjusted EBITDA⁽¹⁾ for the three months ended Sept. 30, 2023, was consistent compared to the same period in 2022. Adjusted EBITDA for the nine months ended Sept. 30, 2023, decreased by $14 million, compared to the same period in 2022, primarily due to higher incentive accruals reflecting the Company’s performance, increased spending to support strategic and growth initiatives and increased costs due to inflationary pressures.

Conference call

TransAlta will hold a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, November 7, 2023, to discuss our third quarter 2023 results. The call will begin with a short address by John Kousinioris, President and Chief Executive Officer, and Todd Stack, EVP Finance and Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow.

Dial-in number – Third Quarter 2023 Conference Call
Toll-free North American participants call: 1-888-664-6392

A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 502345 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

Notes

(1)These items are not defined and have no standardized meaning under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings (loss) trends more readily in comparison with prior periods’ results. Please refer to the Non-IFRS Measures section of this earnings release for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.

(2)Funds from operations per share and free cash flow per share are calculated using the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for the three and nine months ended Sept. 30, 2023, was 263 million shares and 265 million shares, respectively (Sept. 30, 2022 – 271 million for both periods). Please refer to the Non-IFRS Measures section in this earnings release for the purpose of these non-IFRS ratios.

Non-IFRS financial measures and other specified financial measures

We use a number of financial measures to evaluate our performance and the performance of our business segments, including measures and ratios that are presented on a non-IFRS basis, as described below. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual 2022 consolidated financial statements and the unaudited interim condensed consolidated statements of earnings (loss) for the three and nine months ended Sept. 30, 2023, prepared in accordance with IFRS. We believe that these non-IFRS amounts, measures and ratios, read together with our IFRS amounts, provide readers with a better understanding of how management assesses results.

Non-IFRS amounts, measures and ratios do not have standardized meanings under IFRS. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, as an alternative to, or more meaningful than, our IFRS results.

Adjusted EBITDA

Each business segment assumes responsibility for its operating results measured by adjusted EBITDA. Adjusted EBITDA is an important metric for management that represents our core operational results. Interest, taxes, depreciation and amortization are not included, as differences in accounting treatments may distort our core business results. In addition, certain reclassifications and adjustments are made to better assess results, excluding those items that may not be reflective of ongoing business performance. This presentation may facilitate the readers’ analysis of trends.

Funds From Operations (“FFO”)

FFO is an important metric as it provides a proxy for cash generated from operating activities before changes in working capital and provides the ability to evaluate cash flow trends in comparison with results from prior periods. FFO is a non-IFRS measure.

Free Cash Flow (“FCF”)

FCF is an important metric as it represents the amount of cash that is available to invest in growth initiatives, make scheduled principal repayments on debt, repay maturing debt, pay common share dividends or repurchase common shares. Changes in working capital are excluded so FFO and FCF are not distorted by changes that we consider temporary in nature, reflecting, among other things, the impact of seasonal factors and timing of receipts and payments. FCF is a non-IFRS measure.

Non-IFRS Ratios

FFO per share, FCF per share and adjusted net debt to adjusted EBITDA are non-IFRS ratios that are presented in the MD&A. Refer to the Reconciliation of Cash Flow from Operations to FFO and FCF and Key Non-IFRS Financial Ratios sections of the MD&A for additional information.

FFO per share and FCF per share

FFO per share and FCF per share are calculated using the weighted average number of common shares outstanding during the period. FFO per share and FCF per share are non-IFRS ratios.

Reconciliation of these non-IFRS financial measures to the most comparable IFRS measure are provided below.

Reconciliation of Non-IFRS Measures on a Consolidated Basis

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the three months ended Sept. 30, 2023:

*Three months ended Sept. 30, 2023* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	163	62	522	188	86	—	1,021	(4)	—	1,017
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	—	4	(112)	5	(67)	—	(170)	—	170	—
Realized gain on closed exchange positions	—	—	4	—	8	—	12	—	(12)	—
Decrease in finance lease receivable	—	—	14	—	—	—	14	—	(14)	—
Finance lease income	—	—	2	—	—	—	2	—	(2)	—
Unrealized foreign exchange gain on commodity	—	—	—	—	(1)	—	(1)	—	1	—
Adjusted revenues	163	66	430	193	26	—	878	(4)	143	1,017
Fuel and purchased power	4	6	111	148	—	—	269	—	—	269
Reclassifications and adjustments:
Australian interest income	—	—	(1)	—	—	—	(1)	—	1	—
Adjusted fuel and purchased power	4	6	110	148	—	—	268	—	1	269
Carbon compliance	—	—	28	—	—	—	28	—	—	28
Gross margin	159	60	292	45	26	—	582	(4)	142	720
OM&A	9	20	45	15	13	30	132	(1)	—	131
Taxes, other than income taxes	—	4	3	1	—	—	8	—	—	8
Net other operating income	—	(1)	(10)	—	—	—	(11)	—	—	(11)
Adjusted EBITDA⁽²⁾	150	37	254	29	13	(30)	453
Finance lease income										2
Depreciation and amortization										(140)
Asset impairment reversals										58
Net interest expense										(53)
Foreign exchange loss										(5)
Loss on sale of assets and other										(1)
Earnings before income taxes										453

(1) The Skookumchuck wind facility has been included on a proportionate basis in the Wind and Solar segment.
(2) Adjusted EBITDA is not defined and has no standardized meaning under IFRS. Refer to the Non-IFRS financial measures and other specified financial measures section in this earnings release.

The following table reflects adjusted EBITDA by segment and provides reconciliation to loss before income taxes for the three months ended Sept. 30, 2022:

*Three months ended Sept. 30, 2022* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	265	14	372	231	54	(4)	932	(3)	—	929
Reclassifications and adjustments:
Unrealized mark-to-market loss	—	53	47	6	46	—	152	—	(152)	—
Realized loss on closed exchange positions	—	—	(4)	—	(38)	—	(42)	—	42	—
Decrease in finance lease receivable	—	—	12	—	—	—	12	—	(12)	—
Finance lease income	—	—	4	—	—	—	4	—	(4)	—
Adjusted revenues	265	67	431	237	62	(4)	1,058	(3)	(126)	929
Fuel and purchased power	7	6	167	167	—	1	348	—	—	348
Reclassifications and adjustments:
Australian interest income	—	—	(1)	—	—	—	(1)	—	1	—
Adjusted fuel and purchased power	7	6	166	167	—	1	347	—	1	348
Carbon compliance	—	—	26	2	—	(5)	23	—	—	23
Gross margin	258	61	239	68	62	—	688	(3)	(127)	558
OM&A	12	19	49	17	9	30	136	(1)	—	135
Taxes, other than income taxes	1	1	5	—	—	1	8	—	—	8
Net other operating income	—	(1)	(10)	—	—	—	(11)	—	—	(11)
Adjusted EBITDA⁽²⁾	245	42	195	51	53	(31)	555
Equity income										1
Finance lease income										4
Depreciation and amortization										(179)
Asset impairment charges										(70)
Net interest expense										(66)
Foreign exchange gain										6
Gain on sale of assets and other										4
Earnings before income taxes										126

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the nine months ended Sept. 30, 2023:

*Nine months ended Sept. 30, 2023* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	456	263	1,268	576	181	1	2,745	(14)	—	2,731
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	(2)	(4)	(120)	(12)	42	—	(96)	—	96	—
Realized loss on closed exchange positions	—	—	(13)	—	(95)	—	(108)	—	108	—
Decrease in finance lease receivable	—	—	40	—	—	—	40	—	(40)	—
Finance lease income	—	—	10	—	—	—	10	—	(10)	—
Adjusted revenues	454	259	1,185	564	128	1	2,591	(14)	154	2,731
Fuel and purchased power	14	22	326	419	—	1	782	—	—	782
Reclassifications and adjustments:
Australian interest income	—	—	(3)	—	—	—	(3)	—	3	—
Adjusted fuel and purchased power	14	22	323	419	—	1	779	—	3	782
Carbon compliance	—	—	85	—	—	—	85	—	—	85
Gross margin	440	237	777	145	128	—	1,727	(14)	151	1,864
OM&A	35	55	136	46	33	86	391	(2)	—	389
Taxes, other than income taxes	2	11	11	3	—	—	27	(1)	—	26
Net other operating income	—	(4)	(30)	—	—	—	(34)	—	—	(34)
Adjusted EBITDA⁽²⁾	403	175	660	96	95	(86)	1,343
Equity income										1
Finance lease income										10
Depreciation and amortization										(489)
Asset impairment reversals										74
Net interest expense										(168)
Gain on sale of assets and other										4
Earnings before income taxes										915

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the nine months ended Sept. 30, 2022:

*Nine months ended Sept. 30, 2022* *$ millions*	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	447	205	933	433	116	(2)	2,132	(10)	—	2,122
Reclassifications and adjustments:
Unrealized mark-to-market loss	—	81	13	17	—	—	111	—	(111)	—
Realized gain (loss) on closed exchange positions	—	—	(11)	—	27	—	16	—	(16)	—
Decrease in finance lease receivable	—	—	34	—	—	—	34	—	(34)	—
Finance lease income	—	—	15	—	—	—	15	—	(15)	—
Adjusted revenues	447	286	984	450	143	(2)	2,308	(10)	(176)	2,122
Fuel and purchased power	17	20	445	332	—	3	817	—	—	817
Reclassifications and adjustments:
Australian interest income	—	—	(3)	—	—	—	(3)	—	3	—
Adjusted fuel and purchased power	17	20	442	332	—	3	814	—	3	817
Carbon compliance	—	1	56	(1)	—	(5)	51	—	—	51
Gross margin	430	265	486	119	143	—	1,443	(10)	(179)	1,254
OM&A	33	50	138	50	23	71	365	(1)	—	364
Taxes, other than income taxes	3	7	13	2	—	1	26	(1)	—	25
Net other operating income	—	(18)	(30)	—	—	—	(48)	—	—	(48)
Reclassifications and adjustments:
Insurance recovery	—	7	—	—	—	—	7	—	(7)	—
Adjusted net other operating income	—	(11)	(30)	—	—	—	(41)	—	(7)	(48)
Adjusted EBITDA⁽²⁾	394	219	365	67	120	(72)	1,093
Equity income										5
Finance lease income										15
Depreciation and amortization										(411)
Asset impairment charges										(4)
Net interest expense										(195)
Foreign exchange gain										17
Gain on sale of assets and other										6
Earnings before income taxes										346

Reconciliation of Cash flow from operations to FFO and FCF

The table below reconciles our cash flow from operating activities to our FFO and FCF:

	Three Months Ended		Nine Months Ended
$ millions unless otherwise stated	Sept. 30, 2023	Sept. 30, 2022	Sept. 30, 2023	Sept. 30, 2022
Cash flow from (used in) operating activities⁽¹⁾	681	204	1,154	526
Change in non-cash operating working capital balances	(355)	276	11	252
Cash flow from operations before changes in working capital	326	480	1,165	778
Adjustments
Share of adjusted FFO from joint venture⁽¹⁾	2	2	10	7
Decrease in finance lease receivable	14	12	40	34
Clean energy transition provisions and adjustments⁽²⁾	—	27	7	35
Realized gain (loss) on closed positions with same counterparty	12	(42)	(108)	16
Other⁽³⁾	3	9	8	17
FFO⁽⁴⁾	357	488	1,122	887
Deduct:
Sustaining capital⁽¹⁾	(36)	(27)	(100)	(75)
Productivity capital	(1)	(1)	(2)	(3)
Dividends paid on preferred shares	(14)	(11)	(39)	(31)
Distributions paid to subsidiaries’ non-controlling interests	(75)	(54)	(204)	(126)
Principal payments on lease liabilities	(3)	(2)	(8)	(6)
FCF⁽⁴⁾	228	393	769	646
Weighted average number of common shares outstanding in the period	263	271	265	271
FFO per share⁽⁴⁾	1.36	1.80	4.23	3.27
FCF per share⁽⁴⁾	0.87	1.45	2.90	2.38

(1) Includes our share of amounts for Skookumchuck wind facility, an equity accounted joint venture.
(2) Includes amounts related to onerous contracts recognized in 2021.
(3) Other consists of production tax credits, which is a reduction to tax equity debt, less distributions from equity accounted joint venture.
(4) These items are not defined and have no standardized meaning under IFRS. Refer to the Non-IFRS Measures section in this earnings release.

The table below provides a reconciliation of our adjusted EBITDA to our FFO and FCF:

	Three Months Ended		Nine Months Ended
	Sept. 30, 2023	Sept. 30, 2022	Sept. 30, 2023	Sept. 30, 2022
Adjusted EBITDA⁽¹⁾⁽³⁾	453	555	1,343	1,093
Provisions	(4)	(5)	—	5
Interest expense	(40)	(47)	(123)	(151)
Current income tax recovery (expense)⁽²⁾	(37)	(11)	(55)	(36)
Realized foreign exchange gain (loss)	(7)	3	(13)	18
Decommissioning and restoration costs settled	(6)	(9)	(22)	(23)
Other non-cash items	(2)	2	(8)	(19)
FFO⁽²⁾⁽³⁾	357	488	1,122	887
Deduct:
Sustaining capital⁽⁴⁾	(36)	(27)	(100)	(75)
Productivity capital	(1)	(1)	(2)	(3)
Dividends paid on preferred shares	(14)	(11)	(39)	(31)
Distributions paid to subsidiaries’ non-controlling interests	(75)	(54)	(204)	(126)
Principal payments on lease liabilities	(3)	(2)	(8)	(6)
FCF⁽³⁾	228	393	769	646

(1) Adjusted EBITDA is defined in the Non-IFRS financial measures and other specified financial measures section in this earnings release and reconciled to earnings (loss) before income taxes above.
(2) These items are not defined and have no standardized meaning under IFRS. FFO and FCF are defined in the Non-IFRS financial measures and other specified financial measures section of in this earnings release and reconciled to cash flow from operating activities above.
(3) Includes our share of amounts for Skookumchuck wind facility, an equity accounted joint venture.

TransAlta is in the process of filing its unaudited interim Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (“MD&A”). These documents will be available today on the Investors section of TransAlta’s website at www.transalta.com or through SEDAR at www.sedarplus.ca.

About TransAlta Corporation:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 112 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and AA from MSCI.

For more information about TransAlta, visit our web site at transalta.com.

Cautionary Statement Regarding Forward-Looking Information

The forward-looking statements contained in this news release are based on many assumptions including, but not limited to, the following material assumptions: realization of expected benefits from the acquisition by the Company of all of the outstanding common shares of TransAlta Renewables Inc. (“TransAlta Renewables”) not already owned by TransAlta pursuant to the definitive arrangement agreement dated July 10, 2023; no significant changes to applicable laws and regulations beyond those that have already been announced; merchant power prices in Alberta and the Pacific Northwest; the Alberta hedge position, including price and volume of hedged power; the availability and cost of labour, services and infrastructure; and the satisfaction by third parties of their obligations, including under our power purchase agreements. Forward-looking statements are subject to a number of significant risks, uncertainties and assumptions that could cause actual plans, performance, results or outcomes to differ materially from current expectations. Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this news release include, but are not limited to: realization of expected benefits from the acquisition by the Company of all of the outstanding common shares of TransAlta Renewables; fluctuations in merchant power prices, including lower pricing in Alberta, Ontario and Mid-Columbia; changes in demand for electricity and capacity; our ability to contract or hedge our electricity generation for prices and at volumes that will provide expected returns; risks relating to our early stage development projects, including interconnection, offtake contracts and geotechnical and environmental conditions of such projects; long term commitments on gas transportation capacity that may not be fully utilized over time; our ability to replace or renew contracts as they expire; risks associated with our projects under construction and projects in development, namely as it pertains to capital costs, permitting, land rights, engineering risks, and delays in the construction or commissioning of such projects; any difficulty raising needed capital in the future, including debt, equity and tax equity, as applicable, on reasonable terms or at all; changes to the legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; operational risks involving our facilities, including unplanned outages; disruptions in the transmission and distribution of electricity, including congestion and basis risk; restricted access to capital and increased borrowing costs; changes in short-term and/or long-term electricity supply and demand; reductions in production; increased costs; a higher rate of losses on our accounts receivables due to credit defaults; impairments and/or write-downs of assets; adverse impacts on our information technology systems and our internal control systems, including increased cybersecurity threats; commodity risk management and energy trading risks, including the effectiveness of the Company’s risk management tools associated with hedging and trading procedures to protect against significant losses; reduced labour availability and ability to continue to staff our operations and facilities; disruptions to our supply chains, including our ability to secure necessary equipment on the expected timelines or at all; the effects of weather, including man made or natural disasters, as well as climate-change related risks; unexpected increases in cost structure; reductions to our generating units’ relative efficiency or capacity factors; disruptions in the source of fuels, including natural gas and coal, as well as the extent of water, solar or wind resources required to operate our facilities; general economic risks, including deterioration of equity markets, increasing interest rates or rising inflation; failure to meet financial expectations; general domestic and international economic and political developments, including armed hostilities, the threat of terrorism, diplomatic developments or other similar events; equipment failure and our ability to carry out or have completed the repairs in a cost-effective manner timely manner or at all, including if the rehabilitation at the Kent Hills wind facilities is more costly than expected; industry risk and competition; public health crises and the impacts of any restrictive directives of government and public health authorities; fluctuations in the value of foreign currencies; structural subordination of securities; counterparty credit risk; inadequacy or unavailability of insurance coverage; our provision for income taxes; legal, regulatory and contractual disputes and proceedings involving the Company; reliance on key personnel; labour relations matters and other risks and uncertainties discussed in the Company’s materials filed with the securities regulatory authorities from time to time and as also set forth in the Company’s MD&A and Annual Information Form for the year ended December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless otherwise indicated.

*Investor Inquiries:*	*Media Inquiries:*
Phone: 1-800-387-3598 in Canada and U.S.	Phone: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

TransAlta to Acquire Heartland Generation from Energy Capital Partners for $658 million

Posted on November 2, 2023November 2, 2023 by kevin_wick

Highlights

Highly accretive to free cash flow and cash yield upon closing with approximately 55% of revenues contracted with a weighted-average remaining life of 16 years
Transaction valued at approximately $658 million, inclusive of the assumption of $268 million of low-cost debt, with an expected EBITDA multiple of approximately 5.5x
Corporate pre-tax synergies expected to exceed $20 million annually
Adds 1,844 MW (net interest) of complementary flexible capacity including contracted cogeneration, peaking generation, transmission capacity and development opportunities in hydrogen, which will be needed to support the energy transition and reliability in the Alberta electricity market
Augments and further diversifies TransAlta’s portfolio in Alberta’s energy-only market
Enhances TransAlta’s competitive positioning in the highly dynamic and shifting electricity landscape in Alberta

TransAlta Corporation (TSX: TA; NYSE: TAC) (“TransAlta” or “the Company”) announced that it has entered into a definitive share purchase agreement (the “Agreement”) with an affiliate of Energy Capital Partners (“ECP”), the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd. (collectively, “Heartland”), pursuant to which TransAlta will acquire Heartland and its entire business operations in Alberta and British Columbia. Heartland owns and operates generation assets consisting of 507 megawatts (MW) of cogeneration, 387 MW of contracted and merchant peaking generation, 950 MW of gas-fired thermal generation, transmission capacity and a development pipeline that includes the 400 MW Battle River Carbon Hub. The purchase price for the acquisition is $390 million, subject to working capital and other adjustments, as well as the assumption of $268 million of low-cost debt. The Company will finance the transaction using cash on hand and draws on its credit facilities. The Agreement provides that economic benefits arising after October 31, 2023 will be to the account of TransAlta.

“With this acquisition we are pleased to announce the addition of highly flexible and complementary assets to our Alberta portfolio. As the energy transition continues to drive new investment in renewables in the Province, our assessment is that the market will require low-cost, highly flexible and fast-responding generation, which will be supportive to grid reliability over the coming years. This transaction will support us in maintaining our competitive positioning and ensure we have a robust and diversified portfolio, which together with our marketing capabilities, can complement and support a cleaner grid,” said John Kousinioris, President and Chief Executive Officer of TransAlta.

“The Heartland portfolio is low cost and will contribute meaningful cash flows with significant value from synergies. It will also support the energy transition until other zero-emitting solutions are developed. We remain committed to our Clean Electricity Growth Plan and net-zero targets. The acquisition of this set of assets represents a strategic investment in our home market with a strong return profile which continues to be aligned with our longer term decarbonization goals,” added Mr. Kousinioris.

“ECP is proud of the transition progress that Heartland has made since its acquisition in 2019 through our early coal conversions and the advancements of the Battle River Carbon Hub, all the while consistently delivering reliable electricity to the Province. We are excited for TransAlta to continue advancing the energy transition and meeting the reliability and electricity needs of Alberta,” said Andrew Gilbert, ECP Partner.

Investment Highlights

The transaction is strategically attractive to TransAlta and provides the following benefits:

Expands Flexible Generation Capabilities: Augments and diversifies TransAlta’s portfolio in Alberta’s energy-only market by expanding its flexible and fast-ramping capacity and marketing capabilities to be able to better respond to changes in market conditions stemming from the intermittency of increasing renewable generation.
Enhances TransAlta’s Competitive Positioning: The acquisition will competitively position TransAlta in response to the changing dynamics in Alberta given the expected significant increase in renewables and other large baseload generation coming online in the next several years in the highly dynamic and shifting electricity landscape in the province.
Aligned with TransAlta’s Alberta Strategy: The portfolio delivers a highly-responsive, flexible and fast-ramping fleet (peaking units) which will be supportive to responsible energy transition and deliver reliability in the Alberta electricity market for the next 10 to 15 years.
Attractive Transaction Metrics: The acquisition is highly accretive to free cash flow with an attractive multiple and strong cash yield. The transaction acquires a portfolio of assets at approximately $357 per kW, which is well below replacement cost of current and other forms of reliable generation, providing a low-cost expansion of our ability to deliver reliable generation to the market demands of Alberta.
Highly Contracted Cash Flow: Post-closing, the assets are expected to add approximately $115 million of average annual EBITDA including synergies. Approximately, 55 per cent of revenues are under contract with high creditworthy counterparties which have a weighted-average remaining contract life of 16 years.
Near-term Synergies: TransAlta will have the opportunity to leverage corporate costs within our existing business which will provide estimated corporate pre-tax synergies of $20 million annually. In addition, the combined portfolio will enable the Company to further optimize operations and supply chains through scale to achieve additional synergies in the future.
Retains Ownership Presence in Alberta and Builds On Regional Expertise: The Company is well positioned to deliver significant value through our deep technical gas and cogeneration local operational experience which, together with our 112-year history in Alberta, will ensure continuing safe and reliable generation in a dynamic and evolving landscape.
Battle River Carbon Hub Project: This project is a first-of-its-kind 400 MW integrated clean energy project, combining clean hydrogen, production and carbon sequestration, to create a zero-carbon baseload electricity solution. The project would retrofit the existing generation facility at Battle River and utilize the existing transmission infrastructure, which will minimize development costs for a zero-carbon power solution.
Maintains Leadership in Decarbonization: TransAlta remains among Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. The Clean Electricity Growth Plan continues to be at the heart of our strategy and is dedicated to meeting the future needs of our customers with clean electricity solutions. TransAlta’s ability to meet its 2026 GHG emissions reduction target and carbon net zero by 2045 remain on track.  This acquisition adds to TransAlta’s 4.6 GW development pipeline with the addition of a 400 MW hydrogen carbon hub opportunity.

Additional Information on the Agreement

The Agreement is subject to customary closing conditions, including receipt of regulatory approvals. The transaction is expected to close in the first half of 2024.

Investor Call

A conference call with the investment community will take place on November 2 at 9:00 a.m. MST (11:00 a.m. EST). The call will begin with a short address by John Kousinioris, President and Chief Executive Officer followed by a question-and-answer period for analysts and media.

Dial-in number – TransAlta to Acquire Heartland Generation
Toll-free North American participants call: 1-888-664-6392

A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 522257 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

About TransAlta Corporation:

For more information about TransAlta, visit our web site at transalta.com.

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking information”, within the meaning of applicable Canadian securities laws, and “forward-looking statements”, within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking statements). In some cases, forward-looking statements can be identified by terminology such as “plans”, “expects”, “proposed”, “will”, “anticipates”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to: TransAlta’s acquisition of Heartland; the anticipated benefits arising from such transaction, including that the transaction will be accretive to free cash flow and cash yield, that Heartland’s assets will be supportive to grid reliability for the next 10 to 15 years, and the amount of pre-tax synergies; the acquisition EBITDA multiple of 5.5x; the Company’s Clean Electricity Growth Plan and the Company’s expectations relating to meeting the future needs of our customers with clean electricity solutions; TransAlta’s ability to meet its GHG emissions reduction and net zero targets; the 400 MW hydrogen carbon hub opportunity, including the project’s continued development; and the ability to obtain regulatory approval and the timing thereof. These forward-looking statements are not historical facts but are based on TransAlta’s belief and assumptions based on information available at the time the assumptions were made, including, but not limited to: the political and regulatory environments; the price of power in Alberta; and the condition of the financial markets not changing significantly. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: operational risks involving Heartland’s facilities; changes in market power and gas prices in Alberta; supply chain disruptions impacting major maintenance and growth projects; failure to obtain necessary regulatory approvals in a timely fashion, or at all; inability to economically or technologically advance the Battle River Carbon Hub Project to final investment decision or commercial operation; any loss of value in the Heartland portfolio during the interim period prior to closing; cybersecurity breaches; negative impacts to our credit ratings; legislative or regulatory developments and their impacts; increasingly stringent environmental requirements and their impacts; increased competition; global capital markets activity (including our ability to access financing at a reasonable cost or at all); changes in prevailing interest rates, currency exchange rates and inflation levels; armed hostilities; general economic conditions in the geographic areas in which TransAlta operates; and other risks and uncertainties discussed in the Company’s materials filed with the securities regulatory authorities from time to time and as also set forth in the Company’s MD&A and Annual Information Form for the year ended Dec. 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. The purpose of the financial outlooks contained in this news release are to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes and is given as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless otherwise indicated.

Investor Inquiries:
Phone: 1-800-387-3598 in Canada and U.S. Email: investor_relations@transalta.com

Media Inquiries: Toll-free media number: 1-855-255-9184 Email: ta_media_relations@transalta.com

TransAlta Declares Dividends

Posted on October 30, 2023October 30, 2023 by Ben Harris

The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) declared a quarterly dividend of $0.055 per common share payable on January 1, 2024 to shareholders of record at the close of business on December 1, 2023.

The Board of Directors also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including September 30, 2023, up to but excluding December 31, 2023:

Preferred Shares	TSX Stock Symbol	Dividend Rate	Dividend Per Share	Record Date	Payment Date
Series A	TA.PR.D	2.877%	$0.17981	December 1, 2023	December 31, 2023
Series B*	TA.PR.E	7.187%	$0.45288	December 1, 2023	December 31, 2023
Series C	TA.PR.F	5.854%	$0.36588	December 1, 2023	December 31, 2023
Series D*	TA.PR.G	8.257%	$0.52030	December 1, 2023	December 31, 2023
Series E	TA.PR.H	6.894%	$0.43088	December 1, 2023	December 31, 2023
Series G	TA.PR.J	4.988%	$0.31175	December 1, 2023	December 31, 2023

*Please note the quarterly floating rate on the Series B and Series D Preferred Shares will be reset every quarter.

All currency is expressed in Canadian dollars except where noted. When the dividend payment date falls on a weekend or holiday, the payment is made the following business day.

About TransAlta Corporation:

For more information about TransAlta, visit its website at transalta.com.

For more information:

Investor Inquiries:
Phone: 1-800-387-3598 in Canada and U.S. Email: investor_relations@transalta.com

Media Inquiries: Toll-free media number: 1-855-255-9184 Email: ta_media_relations@transalta.com

TransAlta to Host 2023 Investor Day

Posted on October 19, 2023October 19, 2023 by Ben Harris

TransAlta Corporation (TSX: TA) (NYSE: TAC) (“TransAlta”) is pleased to announce that it will hold an Investor Day in Toronto on Tuesday, November 21, 2023. The event will be a hybrid format, with in-person and live webcast attendance options available. The formal presentations will commence at 9:30 a.m. (ET) (7:30 a.m. MT) and are expected to conclude by approximately 12:00 p.m. (ET) (10:00 a.m. MT).

The event will feature presentations from John Kousinioris, President and Chief Executive Officer, Todd Stack, Executive Vice President and Chief Financial Officer, and other members of the executive leadership team. The team will provide an in-depth view of the company’s strategic plan and priorities, long-term growth and financial outlook.

The Investor Day is open to the investment community and registration for in-person attendance closes on Wednesday, November 15, 2023. Attendees can register to receive information for the live event below or on the Investor Centre of TransAlta’s website.

2023 Hybrid Investor Day Webcast Registration Link:

Investor Day 2023

Event details:

TransAlta 2023 Investor Day

November 21, 2023

Start time: 9:30 a.m. ET / 7:30 a.m. MT

For those unable to view the event live, a recording of the video webcast and corresponding presentation will be made available on the Investor Centre section of TransAlta’s website at http://www.transalta.com/investors/events-and-presentations.

About TransAlta Corporation:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and AA from MSCI.

For more information about TransAlta, visit our web site at transalta.com.

For more information:

*Investor Inquiries:*	*Media Inquiries:*
Phone: 1-800-387-3598 in Canada and U.S.	Phone: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

Media Advisory: TransAlta Third Quarter 2023 Results and Conference Call

Posted on October 11, 2023October 11, 2023 by Ben Harris

TransAlta Corporation (“TransAlta”) (TSX: TA) (NYSE: TAC) will release its third quarter 2023 results before markets open on Tuesday, November 7, 2023. A conference call and webcast to discuss the results will be held for investors, analysts, members of the media and other interested parties the same day beginning at 9:00 a.m. Mountain Time (11:00 a.m. ET). The media will be invited to ask questions following analysts.

Third Quarter 2023 Conference Call:

Toll-free North American participants call: 1-888-664-6392
Webcast link: https://app.webinar.net/6okKz0o9jM0

Related materials will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 502345 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

About TransAlta:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and AA from MSCI.

For more information about TransAlta, visit its website at transalta.com.

For more information:

Investor Inquiries:
Phone: 1-800-387-3598 in Canada and U.S. Email: investor_relations@transalta.com

Media Inquiries:
Phone: 1-855-255-9184 Email: ta_media_relations@transalta.com

TransAlta Corporation Announces Closing of the Acquisition of TransAlta Renewables Inc. and Final Pro Ration

Posted on October 5, 2023October 5, 2023 by kevin_wick

TransAlta Corporation (“TransAlta” or the “Company”) (TSX: TA) (NYSE: TAC) and TransAlta Renewables Inc. (“RNW”) (TSX: RNW) are pleased to announce the completion of the acquisition of RNW by TransAlta pursuant to the terms of the previously announced arrangement agreement between the parties (the “Arrangement”). Under the Arrangement, TransAlta acquired all of the outstanding common shares of RNW (each, a “RNW Share”) not already owned, directly or indirectly, by TransAlta and certain of its affiliates, resulting in RNW becoming a wholly owned subsidiary of TransAlta.

“The closing of the acquisition of TransAlta Renewables represents a key milestone for TransAlta with our simplified and unified corporate structure positioning the company well for future success,” said John Kousinioris, President and Chief Executive Officer of TransAlta. “The combined company will unify our assets, capital, and capabilities to enhance cash flow predictability while enhancing our ability to realize future growth.”

The RNW Shares will be delisted from the Toronto Stock Exchange and RNW will submit an application to cease to be a reporting issuer in each of the provinces of Canada under National Policy 11-206 Process for Cease to be a Reporting Issuer Applications promptly upon the delisting of the RNW Shares. Common shares of TransAlta (the “TransAlta Shares”) will continue to trade on both the New York Stock Exchange and the Toronto Stock Exchange under the symbols “TAC” and “TA”,respectively.

As a result of the Arrangement, certain RNW directors have resigned, and TransAlta has appointed two of its employees to serve on the board of directors of RNW.

Results of RNW Shareholders Election

Prior to the Arrangement, TransAlta and its affiliates collectively held 160,398,217 RNW Shares, representing 60.1% of the issued and outstanding RNW Shares, with the remaining 106,510,884 RNW Shares held by RNW Shareholders other than TransAlta and its affiliates.

The Arrangement was approved by RNW shareholders (the “RNW Shareholders”) at a special meeting of shareholders held on September 26, 2023, and by the Court of King’s Bench of Alberta on October 4, 2023. Under the Arrangement, the maximum aggregate amount of cash payable to holders of RNW Shares is $800 million and the maximum aggregate number of TransAlta Shares issuable to RNW Shareholders is 46,441,779 (excluding any TransAlta Shares issuable in connection with the settlement of deferred share units of RNW). Pursuant to the Arrangement, RNW Shareholders had the option to receive (i) 1.0337 TransAlta Shares; or (ii) $13.00 in cash, subject to the terms and conditions of the Arrangement, including pro-rationing.

RNW Shareholders holding 69,707,018 RNW Shares elected (or were deemed to have elected) to receive an aggregate of 72,056,140 TransAlta Shares as consideration and will receive 46,441,764 TransAlta Shares following pro-rationing; whereas RNW Shareholders holding 36,758,506 RNW Shares elected to receive aggregate cash consideration of $477,860,578 and this will be increased to approximately $800 million following pro rationing.

The closing price of a TransAlta Share on the Toronto Stock Exchange on the last trading day prior to the completion of the Arrangement was $12.01 per share.

Section 85 Election

TransAlta has agreed, in accordance with the procedures and within the time limits set out in the plan of arrangement, to make a joint election (a “Joint Tax Election”) under subsection 85(1) or subsection 85(2) of the Income Tax Act (Canada) (and any similar provision of any applicable provincial tax legislation) with eligible RNW Shareholders who dispose of RNW Shares in exchange for consideration that includes TransAlta Shares. For more information concerning the Joint Tax Election, please refer to the Management Information Circular (the “Circular”) that was filed and provided to RNW Shareholders in connection with the Arrangement (see the discussion in the Circular under the heading, Certain Canadian Federal Income Tax Considerations – Joint Tax Election). The Circular can be found at https://transaltarenewables.com/wp-content/uploads/sites/2/2023/08/TransAlta-Renewables-Transaction-Management-Information-Circular.pdf.

Eligible RNW Shareholders who wish to make a Joint Tax Election must submit the information and complete the documentation made available on TransAlta’s website at www.transalta.com/RNWacquisition. Upon receipt of a completed Joint Tax Election from TransAlta, the electing shareholder must sign the Joint Tax Election form and submit the signed form to the relevant tax authorities within the time limits prescribed by the relevant tax legislation. The Joint Tax Elections are required to be submitted to TransAlta on or before January 3, 2024. Eligible RNW Shareholders considering making a Joint Tax Election should consult their investment and tax advisors. Additional information can be found at www.transalta.com/RNWacquisition.

About TransAlta Corporation

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and AA from MSCI.

TransAlta was incorporated under the Canada Business Corporations Act. Its head office is located at 1400, 1100 1st Street S.E., Calgary, Alberta T2G 1B1. RNW’s head office is located at 1400, 1100 – 1st Street S.E. Calgary, Alberta T2G 1B1.

For more information about TransAlta, visit our website at transalta.com.

Cautionary Statement Regarding Forward-Looking Information

This news release contains “forward-looking information”, within the meaning of applicable Canadian securities laws. In some cases, forward-looking statements can be identified by terminology such as “plans”, “expects”, “proposed”, “will”, “anticipates”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to post-closing RNW filings and the timing thereof. The forward-looking statements contained in this news release are based on many assumptions and are subject to a number of significant risks, uncertainties and assumptions that could cause actual plans, performance, results or outcomes to differ materially from current expectations. Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this news release include, but are not limited to risks and uncertainties discussed in the Company’s materials filed with the securities regulatory authorities from time to time and as also set forth in the Company’s and TransAlta’s MD&A and Annual Information Form for the year ended December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company’s expectations only as of the date of this news release. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless otherwise indicated.

For more information:

*Investor Inquiries:*	*Media Inquiries:*
Phone: 1-800-387-3598 in Canada and U.S.	Phone: Toll-free media number: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

This press release includes information required under section 3.1 of National Instrument 62-103 The Early Warning System and Related Take-Over Bid and Insider Reporting Issues. An early warning report will be filed on RNW’s SEDAR+ profile within two days of the closing of the Arrangement. A copy of the early warning report can be obtained from RNW’s SEDAR+ profile at www.sedarplus.ca or by contacting TransAlta’s Investor Relations team at 1-800-387-3598.

TransAlta tops list of Newsweek’s World’s Most Trustworthy Companies for 2023

Posted on September 14, 2023September 14, 2023 by kevin_wick

TransAlta Corporation (TSX: TA) (NYSE: TAC) (the “Company” or “TransAlta”) announced today that it has ranked first on Newsweek’s inaugural “World’s Most Trustworthy Companies 2023” list for the Energy and Utilities category. The list identifies the top 1,000 companies in 21 countries and across 23 industries.

Newsweek’s 2023 World’s Most Trustworthy companies have been chosen based on a holistic approach to evaluating trust across three pillars of public trust – customer, investor, and employee. The list was compiled based on an extensive survey of over 70,000 participants, gathering 269,000 evaluations of companies that people trust as a customer, as an investor and as an employee.

“We are extremely proud to be recognized as a notable and trusted brand amongst this list of respected international leaders across our sector and others. This is not only an honour for TransAlta, but also a testament to the hard work of our employees in ensuring we are true to our core values of “respect” and “integrity” and are delivering on our commitment of being a leader in clean electricity,” said John Kousinioris, President and CEO of TransAlta.

“We stress the importance of our core values in all that we do and have been focusing our efforts on being a leader in our customer centric focus and on building a culture of purpose, learning and results. We’re so proud to see how this intentional work is garnering international recognition, building trust and elevating our reputation with our employees, our customers, and our investors,” said Jane Fedoretz, Executive Vice President, People, Talent and Transformation at TransAlta.

For more information about the awards, please visit https://www.newsweek.com/rankings/worlds-most-trustworthy-companies-2023

About TransAlta Corporation

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and AA from MSCI.

For more information about TransAlta, visit our web site at transalta.com.

For more information about TransAlta’s recognition, please contact:

*Investor Inquiries:*	*Media Inquiries:*
Phone: 1-800-387-3598 in Canada and U.S.	Phone: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

TransAlta Reports Second Quarter 2023 Results and Raises 2023 Financial Guidance

Posted on August 4, 2023August 4, 2023 by kevin_wick

Second Quarter 2023 Financial Highlights

Adjusted EBITDA⁽¹⁾ of $387 million, an increase of 39 per cent over the same period in 2022
Free Cash Flow (“FCF”)⁽¹⁾of $278 million, or $1.05 per share, an increase of 94 per cent on a per-share basis from the same period in 2022
Earnings before income taxes of $79 million, an improvement of $101 million from the same period in 2022
Net earnings attributable to common shareholders of $62 million, an increase of $142 million from the same period in 2022
Cash flow from operating activities of $11 million, an increase of $140 million from the same period in 2022

Other Business Highlights

Entered into a definitive arrangement agreement with TransAlta Renewables to acquire all of the outstanding common shares of TransAlta Renewables subject to the approval of TransAlta Renewables shareholders
Entered into an automatic share purchase plan (“ASPP”) to facilitate repurchases of common shares through the normal course issuer bid during blackout period. The Company returned $71 million of capital to common shareholders in the first and second quarter of 2023 through buybacks of 6.1 million common shares
Kent Hills rehabilitation program on track with 27 turbines fully reassembled. Turbines are being returned to service as commissioning activities are completed and, to date, 10 turbines have been fully placed back in operation. The remaining turbines are expected to return to service in the second half of 2023
Northern Goldfields Solar project has entered its commissioning phase. All major equipment has been installed and construction work is largely complete. Energization and testing processes have commenced and the facility is expected to achieve full commercial operations in the second half of 2023
Mount Keith 132kV expansion project is well advanced. The gas-insulated switchgear will be installed in August and the project will achieve commercial operations in the second half of 2023
Construction at the Horizon Hill wind project in Oklahoma is advancing well with all major equipment now delivered to site. Turbine erection activities are underway with 27 of the 34 wind turbines fully assembled. Construction of the transmission interconnection is also underway. Based on the schedule to complete the transmission line, we have updated our schedule to reflect commercial operations in the first half of 2024
Equipment deliveries at White Rock East and West projects are well advanced with the final blade sets due to arrive in August. Tower assembly has commenced as well as the construction of the transmission interconnection
Acquired a 50 per cent interest in the 320 MW Tent Mountain early-stage pumped hydro development project

2023 Revised Outlook

Increased 2023 annual financial guidance as set out below:
- Adjusted EBITDA range of $1.7 billion to $1.8 billion, an increase of 17 per cent at the midpoint of prior guidance
- FCF range of $850 million to $950 million, an increase of 29 per cent at the midpoint of prior guidance

TransAlta Corporation (“TransAlta” or the “Company”) (TSX: TA) (NYSE: TAC) today reported its financial results for the three and six months ended June 30, 2023.

“Our second quarter results continue to demonstrate the value of our strategically diversified fleet, which benefited from our strong asset optimization and hedging activities. With our performance across the fleet and our continuing positive expectations for the balance of year, we have revised our 2023 full year financial guidance upwards for both adjusted EBITDA and free cash flow, with revised midpoints exceeding the top end of our original targets to reflect stronger market conditions and solid operational performance,” said John Kousinioris, President and Chief Executive Officer of TransAlta.

“We continue to advance our growth plan and are progressing several opportunities, with 418 MW of projects in an advanced stage of development and set to reach final investment decisions. The cash flows from our legacy fleet are positioning us well to realize our Clean Electricity Growth Plan.”

“As we continue the execution of our Clean Electricity Growth Plan, I am pleased that we have reached an agreement with TransAlta Renewables for the acquisition of the common shares of TransAlta Renewables not already owned by TransAlta. It is clear that the strategies of both TransAlta and TransAlta Renewables have converged and we are excited to bring these two companies back together. The combined company’s greater scale and enhanced positioning will drive value for all of our shareholders,” added Mr. Kousinioris.

Key Business Developments

TransAlta Corporation to Acquire TransAlta Renewables Inc. to Simplify Structure and Enhance Strategic Position

On July 10, 2023, the Company and TransAlta Renewables entered into a definitive arrangement agreement (the “Arrangement Agreement”) under which the Company will acquire all of the outstanding common shares of TransAlta Renewables not already owned, directly or indirectly, by TransAlta and certain of its affiliates, subject to the approval of TransAlta Renewables shareholders.

The transaction will provide shareholders of the combined company with a single strategy and a clear and compelling opportunity for long-term growth, with greater clarity around the execution of the Clean Electricity Growth Plan. TransAlta Renewables shareholders will benefit from a fair offer reflecting an attractive premium, a clear and sustainable path going forward, ownership in an expanded pool of assets and exposure to the Alberta electricity market. For TransAlta shareholders, the transaction will provide an enhanced strategic position, sustainable and attractive transition metrics, and increased liquidity and synergies, while maintaining the Company’s financial strength.

Under the terms of the Agreement, each TransAlta Renewables share will be exchanged for, at the election of each holder of TransAlta Renewables shares, (i) 1.0337 common shares of TransAlta or (ii) $13.00 in cash. The consideration payable to TransAlta Renewables shareholders is subject to pro-rationing based on a maximum aggregate number of TransAlta shares that may be issued to TransAlta Renewables shareholders of 46,441,779 and a maximum aggregate cash amount of $800 million.

The consideration payable to TransAlta Renewables shareholders represents an 18.3 per cent premium based on the closing price of TransAlta Renewables shares on the Toronto Stock Exchange (“TSX”) as of July 10, 2023, and a 13.6 per cent premium relative to TransAlta Renewables’ 20-day volume-weighted average price per share as of July 10, 2023. The total consideration paid to TransAlta Renewables shareholders is valued at $1.4 billion on July 10, 2023, of which $800 million will be paid in cash, and the remaining balance in common shares of TransAlta. The combined company will operate as TransAlta and remain listed on the TSX and the New York Stock Exchange (“NYSE”), under the symbols “TA” and “TAC”, respectively.

The TransAlta Renewables Board (with abstentions by TransAlta-nominated directors) unanimously determined that the Agreement is in the best interests of TransAlta Renewables and is fair to its shareholders, approved the execution and delivery of the Agreement and unanimously recommends that TransAlta Renewables shareholders vote in favour of the Agreement.

A special meeting for TransAlta Renewables shareholders to consider the transaction will be held on or about Sept. 26, 2023. If all approvals are received and other closing conditions satisfied, the transaction is expected to be completed in early October 2023.

Normal Course Issuer Bid

On May 26, 2023, the TSX accepted the notice filed by the Company to implement a normal course issuer bid (“NCIB”) for a portion of its common shares. Pursuant to the NCIB, TransAlta may repurchase up to a maximum of 14,000,000 common shares, representing approximately 7.29 per cent of its public float of common shares as at May 17, 2023. Purchases under the NCIB may be made through open market transactions on the TSX and any alternative Canadian trading platforms on which the common shares are traded, based on the prevailing market price. Any common shares purchased under the NCIB will be cancelled. The period during which TransAlta is authorized to make purchases under the NCIB commenced on May 31, 2023 and ends on May 30, 2024, or such earlier date on which the maximum number of common shares are purchased under the NCIB or the NCIB is terminated at the Company’s election.

The NCIB provides the Company with a capital allocation alternative with a view to ensuring long-term shareholder value. TransAlta’s Board of Directors and management believe that, from time to time, the market price of the common shares might not be reflective of the underlying value and purchases of common shares for cancellation under the NCIB may provide an opportunity to enhance shareholder value.

Tent Mountain Pumped Hydro Development Project

On April 24, 2023, the Company acquired a 50 per cent interest in the Tent Mountain Renewable Energy Complex (“Tent Mountain”), an early-stage 320 MW pumped hydro energy storage development project, located in southwest Alberta, from Montem Resources Limited (“Montem”). The acquisition includes the land rights, fixed assets and intellectual property associated with the pumped hydro development project. The Company paid Montem approximately $8 million on closing of the transaction and additional contingent payments of up to $17 million (approximately $25 million total) may become payable to Montem based on the achievement of specific development and commercial milestones. The Company and Montem own the Tent Mountain project within a special purpose partnership that is jointly managed, with the Company acting as project developer. The partnership is actively seeking an offtake agreement for the energy and environmental attributes generated by the facility.

Second Quarter 2023 Highlights

*$ millions, unless otherwise stated*	Three Months Ended		Six Months Ended
*$ millions, unless otherwise stated*	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Adjusted availability (%)	84.6	87.3	88.2	88.2
Production (GWh)	4,596	4,461	10,568	9,820
Revenues	625	458	1,714	1,193
Adjusted EBITDA⁽¹⁾	387	279	890	538
FFO⁽¹⁾	391	220	765	399
FCF⁽¹⁾	278	145	541	253
Earnings (loss) before income taxes	79	(22)	462	220
Net earnings (loss) attributable to common shareholders	62	(80)	356	106
Cash flow from (used in) operating activities	11	(129)	473	322
Net earnings (loss) per share attributable to common shareholders, basic and diluted	0.23	(0.30)	1.34	0.39
FFO per share^(1),(2)	1.48	0.81	2.88	1.47
FCF per share^(1),(2)	1.05	0.54	2.03	0.93

Second Quarter Financial Results Summary

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, increased by $108 million and $352 million, respectively, compared to the same periods in 2022. These results were largely due to higher revenue from the Alberta Electricity Portfolio, as a result of higher merchant prices realized primarily by the gas and hydro facilities. The Hydro segment also benefited from higher ancillary service prices in the Alberta market. Adjusted EBITDA was further improved by higher revenue in the Energy Transition segment due to higher merchant pricing and higher production, and lower input costs in the Gas segment. These increases were partially offset by higher carbon compliance costs in the Gas segment, lower production in the Wind and Solar segment and higher OM&A in the Corporate segment.

FCF⁽¹⁾ for the three and six months ended June 30, 2023, totaled $278 million and $541 million, respectively, compared to $145 million and $253 million, respectively, in the same periods in 2022. For the three and six months ended June 30, 2023, this represented an increase of $133 million and $288 million, respectively, primarily due to higher adjusted EBITDA, lower interest expense mainly driven by higher interest income due to higher interest rates, higher interest capitalized on construction capital expenditures and lower income tax expense due to a current income tax recovery in the second quarter of 2023. This was partially offset by higher distributions paid to subsidiaries’ non-controlling interests, higher sustaining capital expenditures and higher realized foreign exchange losses compared to 2022.

Net earnings (loss) attributable to common shareholders for the three and six months ended June 30, 2023, were $62 million and $356 million compared to a net loss of $80 million and net earnings of $106 million in the same periods in 2022. For the three and six months ended June 30, 2023, the Company benefited from higher revenues, lower natural gas prices, higher income tax recoveries, largely due to realized current income tax benefits from an internal reorganization that occurred in the second quarter and higher asset impairment reversals. This was partially offset by higher depreciation due to the acceleration of useful lives on certain facilities in the third quarter of 2022, higher carbon compliance costs resulting from the previous years obligation being settled partially with emission credits, higher OM&A costs related to the Corporate and Energy Marketing segments and higher net earnings allocated to non-controlling interests. In the six months ended June 30, 2023, the Gas segment had higher production which resulted in higher fuel usage and higher carbon compliance costs and the Energy Transition segment had higher power purchases during planned outages.

Cash flow from operating activities for the three and six months ended June 30, 2023, increased by $140 million and $151 million, respectively, compared with the same periods in 2022, primarily due to higher revenues net of unrealized gains and losses from risk management activities. This was partially offset by higher unfavourable changes in working capital and higher fuel and purchased power, OM&A and carbon compliance costs.

Alberta Electricity Portfolio

For the three and six months ended June 30, 2023, the Alberta electricity portfolio generated 2,525 GWh and 5,680 GWh of energy, respectively. This was a decrease of 157 GWh and an increase of 422 GWh, respectively, compared to the same periods in 2022. Lower production in the three months ended June 30, 2023, was primarily due to lower wind resources and slightly lower merchant production from the Gas assets due to lower availability, partially offset by strong generation from the Hydro assets due to precipitation and snowpack melt. For the six months ended June 30, 2023, generation was higher overall due to increased merchant production in the Gas segment driven by market opportunities as well as higher production from the Hydro segment in the second quarter of 2023.

Gross margin for the three and six months ended June 30, 2023, was $302 million and $651 million, respectively, an increase of $134 million and $319 million compared to the same periods in 2022. Higher gross margin was the result of higher merchant prices for our Gas segment, strong production and realized prices from the Hydro assets, as well as hedging contributions. The six months ended June 30, 2023, benefited from increased merchant production from our Gas assets.

For the three and six months ended June 30, 2023, the realized merchant power price per MWh of production increased by $70 per MWh and $68 per MWh, respectively, compared with the same periods in 2022. The realized merchant power price per MWh of production for the three and six months ended was $175 per MWh and $174 per MWh, respectively, compared to $105 per MWh and $106 per MWh, for the same periods in 2022. Higher realized merchant power pricing for energy across the portfolio was due to higher market prices and optimization of our available capacity across all fuel types. The segment spot prices exclude gains and losses from hedging positions that are entered into in order to mitigate the impact of unfavourable market pricing.

For the three and six months ended June 30, 2023, the fuel and purchased power cost per MWh of production decreased by $26 per MWh and $12 per MWh, respectively, compared with the same periods in 2022 primarily due to lower natural gas prices.

For the three and six months ended June 30, 2023, carbon compliance costs per MWh of production increased by $7 per MWh, compared with the same periods in 2022, due to an increase in carbon compliance prices from $50 per tonne in 2022 to $65 per tonne in 2023. In 2023, the 2022 carbon compliance obligation was settled with cash. In 2022, the Company utilized emission credits to settle a portion of the 2021 carbon compliance obligation resulting in a lower carbon cost per MWh.

Hedged volumes for the three and six months ended June 30, 2023 were 1,667 GWh and 3,713 GWh at an average price of $91 per MWh and $116 per MWh, respectively, compared to 1,901 GWh and 3,639 GWh at an average price of $73 per MWh and $78 per MWh, respectively, in 2022.

Increased 2023 Financial Guidance

The Company increased its 2023 outlook for adjusted EBITDA to between $1.7 billion and $1.8 billion. The midpoint of the range represents a 17 per cent increase over the Company’s previous revised 2023 outlook as at the first quarter of 2023 of $1.45 billion and $1.55 billion.

FCF outlook has also been increased and is now expected to be between $850 million and $950 million. The midpoint of the range represents a 29 per cent increase over the Company’s previous 2023 revised outlook of $650 to $750 million.

The following table provides additional details pertaining to the 2023 outlook:

Measure	Updated Target 2023	Original Target 2023	2022 Actuals
Adjusted EBITDA⁽¹⁾	$1,700 million – $1,800 million	$1,200 million -$1,320 million	$1,634 million
FCF⁽¹⁾	$850 million – $950 million	$560 million – $660 million	$961 million

Range of key 2023 power and gas price assumptions:

Market	Updated 2023 Assumptions	2023 Original Assumptions
Alberta Spot ($/MWh)	$150 to $170	$105 to $135
Mid-C Spot (US$/MWh)	US$90 to US$100	US$75 to US$85
AECO Gas Price ($/GJ)	$2.50	$4.60

Alberta spot price sensitivity: a +/- $1 per MWh change in spot price is expected to have a +/- $4 million impact on adjusted EBITDA for 2023.

Range of Alberta hedging assumptions:

Range of hedging assumptions	Q3 2023	Q4 2023	Full year 2024	Full year 2025
Hedged production (GWh)	2,012	1,558	4,506	2,423
Hedge price ($/MWh)	$116	$84	$82	$83
Hedged gas volumes (GJ)	18 million	15 million	44 million	22 million
Hedge gas prices ($/GJ)	$2.27	$2.26	$2.64	$3.62

Liquidity and Financial Position

The Company continues to maintain a strong financial position in part due to long-term contracts and hedged positions. As at June 30, 2023, TransAlta had access to $2.3 billion in liquidity, including $0.9 billion in cash and cash equivalents.

Normal Course Issuer Bid

During the three and six months ended June 30, 2023, the Company purchased and cancelled a total of 6,112,900 common shares, including those purchased under the ASPP, at an average price of $11.62 per common share, for a total cost of $71 million.

Segmented Financial Performance

($ millions)	Three Months Ended		Six Months Ended
($ millions)	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Hydro	147	88	253	149
Wind and Solar	50	88	138	177
Gas	166	65	406	170
Energy Transition	13	11	67	16
Energy Marketing	43	50	82	67
Corporate	(32)	(23)	(56)	(41)
Adjusted EBITDA⁽¹⁾	387	279	890	538
Earnings (loss) before income taxes	79	(22)	462	220

Hydro:

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, increased by $59 million and $104 million, respectively, compared to the same periods in 2022, primarily due to higher realized energy and ancillary service prices in the Alberta market and higher production. The three months ended June 30, 2023, further benefited from higher energy production, partially offset by lower revenues from lower ancillary service volumes. The six months ended June 30, 2023, benefited from higher sales of environmental attributes and the Company captured revenue through forward hedging for the Alberta hydro assets and realized gains from the hedging strategy. OM&A in both periods increased primarily due to higher insurance costs, salary escalations and incentive accruals, and higher legal fees.

Wind and Solar:

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, decreased by $38 million and $39 million, respectively, compared to the same periods in 2022, primarily due to lower production due to lower wind resource, lower environmental attribute revenue, lower realized merchant prices in Alberta in the second quarter, and lower liquidated damages recognized at the Windrise wind facility. During the six months ended June 30, 2023, lower adjusted EBITDA was partially offset by higher realized merchant prices in Alberta. OM&A in both periods increased due to salary escalations, higher insurance costs and long-term service agreement escalations.

Gas:

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, increased by $101 million and $236 million, respectively, compared to the same periods in 2022, mainly due to higher realized energy prices for our Alberta gas merchant assets, net of hedging, and lower natural gas prices, partially offset by higher carbon compliance costs and higher OM&A from higher contract labour related to planned major maintenance in Australia. The six months ended June 30, 2023, benefited from higher production due to stronger market conditions in Alberta partially offset by higher carbon costs and fuel usage related to production.

Energy Transition:

Adjusted EBITDA⁽¹⁾ increased by $2 million and $51 million, respectively, for the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily due to higher merchant pricing and higher production, partially offset by higher fuel usage. During the six months ended June 30, 2023, adjusted EBITDA was negatively impacted by higher purchased power costs required to fulfill contractual obligations during planned outages. OM&A decreased due to the retirement of Sundance Unit 4 in the first quarter of 2022.

Energy Marketing:

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, , decreased by $7 million and increased by $15 million, respectively, compared to the same periods in 2022. Year-to-date results exceeded segment expectations from short-term trading of both physical and financial power and gas products across all North American deregulated markets. The Company was able to capitalize on short-term volatility in the trading markets while maintaining the overall risk profile of the business unit.

Corporate:

Adjusted EBITDA⁽¹⁾ for the three and six months ended June 30, 2023, decreased by $9 million and $15 million, respectively, compared to the same periods in 2022, primarily due to higher incentive accruals reflecting the Company’s performance, increased spending to support strategic and growth initiatives and increased costs due to inflationary pressures.

Conference call

TransAlta will hold a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, August 4, 2023, to discuss our second quarter 2023 results. The call will begin with a short address by John Kousinioris, President and Chief Executive Officer, and Todd Stack, EVP Finance and Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow.

Dial-in number – Second Quarter 2023 Conference Call

Toll-free North American participants call: 1-888-664-6392

A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 650793 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

Notes

(2)Funds from operations per share and free cash flow per share are calculated using the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for June 30, 2023, was 266 million shares (June 30, 2022 – 271 million). Please refer to the Non-IFRS Measures section in this earnings release for the purpose of these non-IFRS ratios.

Non-IFRS financial measures and other specified financial measures

We use a number of financial measures to evaluate our performance and the performance of our business segments, including measures and ratios that are presented on a non-IFRS basis, as described below. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual 2022 consolidated financial statements and the unaudited interim condensed consolidated statements of earnings (loss) for the three and six months ended June 30, 2023, prepared in accordance with IFRS. We believe that these non-IFRS amounts, measures and ratios, read together with our IFRS amounts, provide readers with a better understanding of how management assesses results.

Adjusted EBITDA

Each business segment assumes responsibility for its operating results measured by adjusted EBITDA. Adjusted EBITDA is an important metric for management that represents our core business profitability. Interest, taxes, depreciation and amortization are not included, as differences in accounting treatments may distort our core business results. In addition, certain reclassifications and adjustments are made to better assess results, excluding those items that may not be reflective of ongoing business performance. This presentation may facilitate the readers’ analysis of trends.

Funds From Operations (“FFO”)

Free Cash Flow (“FCF”)

Non-IFRS Ratios

FFO per share and FCF per share

FFO per share and FCF per share are calculated using the weighted average number of common shares outstanding during the period. FFO per share and FCF per share are non-IFRS ratios.

Reconciliation of these non-IFRS financial measures to the most comparable IFRS measure are provided below.

Reconciliation of Non-IFRS Measures on a Consolidated Basis

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the three months ended June 30, 2023:

*Three months ended June 30, 2023* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	168	86	251	121	3	1	630	(5)	—	625
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	(1)	(8)	56	(3)	93	—	137	—	(137)	—
Realized loss on closed exchange positions	—	—	(4)	—	(48)	—	(52)	—	52	—
Decrease in finance lease receivable	—	—	13	—	—	—	13	—	(13)	—
Finance lease income	—	—	4	—	—	—	4	—	(4)	—
Unrealized foreign exchange loss on commodity	—	—	—	—	1	—	1	—	(1)	—
Adjusted revenues	167	78	320	118	49	1	733	(5)	(103)	625
Fuel and purchased power	5	7	85	90	—	1	188	—	—	188
Reclassifications and adjustments:
Australian interest income	—	—	(1)	—	—	—	(1)	—	1	—
Adjusted fuel and purchased power	5	7	84	90	—	1	187	—	1	188
Carbon compliance	—	—	25	—	—	—	25	—	—	25
Gross margin	162	71	211	28	49	—	521	(5)	(104)	412
OM&A	14	18	50	14	6	32	134	—	—	134
Taxes, other than income taxes	1	4	4	1	—	—	10	(1)	—	9
Net other operating income	—	(1)	(9)	—	—	—	(10)	—	—	(10)
Adjusted EBITDA⁽²⁾	147	50	166	13	43	(32)	387
Equity income										(1)
Finance lease income										4
Depreciation and amortization										(173)
Asset impairment reversals										13
Net interest expense										(56)
Foreign exchange loss										8
Gain on sale of assets and other										5
Earnings before income taxes										79

The following table reflects adjusted EBITDA by segment and provides reconciliation to loss before income taxes for the three months ended June 30, 2022:

*Three months ended June 30, 2022* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	105	96	127	96	36	1	461	(3)	—	458
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	—	15	128	—	(56)	—	87	—	(87)	—
Realized gain (loss) on closed exchange positions	—	—	(10)	—	75	—	65	—	(65)	—
Decrease in finance lease receivable	—	—	11	—	—	—	11	—	(11)	—
Finance lease income	—	—	6	—	—	—	6	—	(6)	—
Unrealized foreign exchange loss on commodity	—	—	—	—	2	—	2	—	(2)	—
Adjusted revenues	105	111	262	96	57	1	632	(3)	(171)	458
Fuel and purchased power	6	6	147	71	—	1	231	—	—	231
Reclassifications and adjustments:
Australian interest income	—	—	(1)	—	—	—	(1)	—	1	—
Adjusted fuel and purchased power	6	6	146	71	—	1	230	—	1	231
Carbon compliance	—	1	12	(4)	—	—	9	—	—	9
Gross margin	99	104	104	29	57	—	393	(3)	(172)	218
OM&A	10	15	45	17	7	23	117	—	—	117
Taxes, other than income taxes	1	4	4	1	—	—	10	(1)	—	9
Net other operating income	—	(10)	(10)	—	—	—	(20)	—	—	(20)
Reclassifications and adjustments:
Insurance recovery	—	7	—	—	—	—	7	—	(7)	—
Adjusted net other operating income	—	(3)	(10)	—	—	—	(13)	—	(7)	(20)
Adjusted EBITDA⁽²⁾	88	88	65	11	50	(23)	279
Equity income										2
Finance lease income										6
Depreciation and amortization										(115)
Asset impairment reversals										24
Net interest expense										(62)
Foreign exchange gain										9
Gain on sale of assets and other										2
Loss before income taxes										(22)

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the six months ended June 30, 2023:

*Six months ended June 30, 2023* $ millions	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	293	201	746	388	95	1	1,724	(10)	—	1,714
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	(2)	(8)	(8)	(17)	109	—	74	—	(74)	—
Realized loss on closed exchange positions	—	—	(17)	—	(103)	—	(120)	—	120	—
Decrease in finance lease receivable	—	—	26	—	—	—	26	—	(26)	—
Finance lease income	—	—	8	—	—	—	8	—	(8)	—
Unrealized foreign exchange loss on commodity	—	—	—	—	1	—	1	—	(1)	—
Adjusted revenues	291	193	755	371	102	1	1,713	(10)	11	1,714
Fuel and purchased power	10	16	215	271	—	1	513	—	—	513
Reclassifications and adjustments:
Australian interest income	—	—	(2)	—	—	—	(2)	—	2	—
Adjusted fuel and purchased power	10	16	213	271	—	1	511	—	2	513
Carbon compliance	—	—	57	—	—	—	57	—	—	57
Gross margin	281	177	485	100	102	—	1,145	(10)	9	1,144
OM&A	26	35	91	31	20	56	259	(1)	—	258
Taxes, other than income taxes	2	7	8	2	—	—	19	(1)	—	18
Net other operating income	—	(3)	(20)	—	—	—	(23)	—	—	(23)
Adjusted EBITDA⁽²⁾	253	138	406	67	82	(56)	890
Equity income										1
Finance lease income										8
Depreciation and amortization										(349)
Asset impairment reversals										16
Net interest expense										(115)
Foreign exchange loss										5
Gain on sale of assets and other										5
Earnings before income taxes										462

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the six months ended June 30, 2022:

*Six months ended June 30, 2022* *$ millions*	Hydro	Wind & Solar⁽¹⁾	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments⁽¹⁾	Reclass adjustments	IFRS financials
Revenues	182	191	561	202	62	2	1,200	(7)	—	1,193
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss	—	28	(34)	11	(46)	—	(41)	—	41	—
Realized gain (loss) on closed exchange positions	—	—	(7)	—	65	—	58	—	(58)	—
Decrease in finance lease receivable	—	—	22	—	—	—	22	—	(22)	—
Finance lease income	—	—	11	—	—	—	11	—	(11)	—
Adjusted revenues	182	219	553	213	81	2	1,250	(7)	(50)	1,193
Fuel and purchased power	10	14	278	165	—	2	469	—	—	469
Reclassifications and adjustments:
Australian interest income	—	—	(2)	—	—	—	(2)	—	2	—
Adjusted fuel and purchased power	10	14	276	165	—	2	467	—	2	469
Carbon compliance	—	1	30	(3)	—	—	28	—	—	28
Gross margin	172	204	247	51	81	—	755	(7)	(52)	696
OM&A	21	31	89	33	14	41	229	—	—	229
Taxes, other than income taxes	2	6	8	2	—	—	18	(1)	—	17
Net other operating income	—	(17)	(20)	—	—	—	(37)	—	—	(37)
Reclassifications and adjustments:
Insurance recovery	—	7	—	—	—	—	7	—	(7)	—
Adjusted net other operating income	—	(10)	(20)	—	—	—	(30)	—	(7)	(37)
Adjusted EBITDA⁽²⁾	149	177	170	16	67	(41)	538
Equity income										4
Finance lease income										11
Depreciation and amortization										(232)
Asset impairment reversals										66
Net interest expense										(129)
Foreign exchange gain										11
Gain on sale of assets and other										2
Earnings before income taxes										220

Reconciliation of Cash flow from operations to FFO and FCF

The table below reconciles our cash flow from operating activities to our FFO and FCF:

	Three Months Ended		Six Months Ended
$ millions unless otherwise stated	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Cash flow from (used in) operating activities⁽¹⁾	11	(129)	473	322
Change in non-cash operating working capital balances	408	260	366	(24)
Cash flow from operations before changes in working capital	419	131	839	298
Adjustments
Share of adjusted FFO from joint venture⁽¹⁾	5	2	8	5
Decrease in finance lease receivable	13	11	26	22
Clean energy transition provisions and adjustments⁽²⁾	7	8	7	8
Realized gain (loss) on closed positions with same counterparty	(52)	65	(120)	58
Other⁽³⁾	(1)	3	5	8
FFO⁽⁴⁾	391	220	765	399
Deduct:
Sustaining capital⁽¹⁾	(44)	(31)	(64)	(48)
Productivity capital	(1)	(1)	(1)	(2)
Dividends paid on preferred shares	(12)	(10)	(25)	(20)
Distributions paid to subsidiaries’ non-controlling interests	(53)	(30)	(129)	(72)
Principal payments on lease liabilities	(3)	(3)	(5)	(4)
FCF⁽⁴⁾	278	145	541	253
Weighted average number of common shares outstanding in the period	264	271	266	271
FFO per share⁽⁴⁾	1.48	0.81	2.88	1.47
FCF per share⁽⁴⁾	1.05	0.54	2.03	0.93

The table below provides a reconciliation of our adjusted EBITDA to our FFO and FCF:

	Three Months Ended		Six Months Ended
	June 30, 2023	June 30, 2022	June 30, 2023	June 30, 2022
Adjusted EBITDA⁽¹⁾⁽⁴⁾	387	279	890	538
Provisions	1	—	4	10
Interest expense	(38)	(50)	(83)	(104)
Current income tax recovery (expense)⁽²⁾	42	(13)	(18)	(25)
Realized foreign exchange gain (loss)	1	13	(6)	15
Decommissioning and restoration costs settled	(9)	(7)	(16)	(14)
Other non-cash items	7	(2)	(6)	(21)
FFO⁽³⁾⁽⁴⁾	391	220	765	399
Deduct:
Sustaining capital⁽⁴⁾	(44)	(31)	(64)	(48)
Productivity capital	(1)	(1)	(1)	(2)
Dividends paid on preferred shares	(12)	(10)	(25)	(20)
Distributions paid to subsidiaries’ non-controlling interests	(53)	(30)	(129)	(72)
Principal payments on lease liabilities	(3)	(3)	(5)	(4)
FCF⁽³⁾	278	145	541	253

(1) Adjusted EBITDA is defined in the Non-IFRS financial measures and other specified financial measures section in this earnings release and reconciled to earnings (loss) before income taxes above.
(2) The Company incurred lower current tax expense for 2023, due to the Company completing an internal reorganization during the second quarter of 2023, which allowed the Company to apply tax attributes, previously unavailable due to Canadian tax limitations, against taxable income in Canada.
(3) These items are not defined and have no standardized meaning under IFRS. FFO and FCF are defined in the Non-IFRS financial measures and other specified financial measures section of in this earnings release and reconciled to cash flow from operating activities above.
(4) Includes our share of amounts for Skookumchuck wind facility, an equity accounted joint venture.

About TransAlta Corporation:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and A from MSCI.

For more information about TransAlta, visit our web site at transalta.com.

Cautionary Statement Regarding Forward-Looking Information

The forward-looking statements contained in this news release are based on many assumptions including, but not limited to, the following material assumptions: no significant changes to applicable laws and regulations beyond those that have already been announced; merchant power prices in Alberta and the Pacific Northwest; the Alberta hedge position, including price and volume of hedged power; the availability and cost of labour, services and infrastructure; and the satisfaction by third parties of their obligations, including under our power purchase agreements. Forward-looking statements are subject to a number of significant risks, uncertainties and assumptions that could cause actual plans, performance, results or outcomes to differ materially from current expectations. Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this news release include, but are not limited to: the completion and timing of the arrangement with TransAlta Renewables; the ability of the Company and TransAlta Renewables to receive, in a timely manner, the necessary regulatory, court, shareholder, stock exchange and other third-party approvals and to satisfy the other conditions to closing of the arrangement; fluctuations in merchant power prices, including lower pricing in Alberta, Ontario and Mid-Columbia; changes in demand for electricity and capacity; our ability to contract or hedge our electricity generation for prices and at volumes that will provide expected returns; risks relating to our early stage development projects, including interconnection, offtake contracts and geotechnical and environmental conditions of such projects; long term commitments on gas transportation capacity that may not be fully utilized over time; our ability to replace or renew contracts as they expire; risks associated with our projects under construction and projects in development, namely as it pertains to capital costs, permitting, land rights, engineering risks, and delays in the construction or commissioning of such projects; any difficulty raising needed capital in the future, including debt, equity and tax equity, as applicable, on reasonable terms or at all; changes to the legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; operational risks involving our facilities, including unplanned outages; disruptions in the transmission and distribution of electricity, including congestion and basis risk; restricted access to capital and increased borrowing costs; changes in short-term and/or long-term electricity supply and demand; reductions in production; increased costs; a higher rate of losses on our accounts receivables due to credit defaults; impairments and/or write-downs of assets; adverse impacts on our information technology systems and our internal control systems, including increased cybersecurity threats; commodity risk management and energy trading risks, including the effectiveness of the Company’s risk management tools associated with hedging and trading procedures to protect against significant losses; reduced labour availability and ability to continue to staff our operations and facilities; disruptions to our supply chains, including our ability to secure necessary equipment on the expected timelines or at all; the effects of weather, including man made or natural disasters, as well as climate-change related risks; unexpected increases in cost structure; reductions to our generating units’ relative efficiency or capacity factors; disruptions in the source of fuels, including natural gas and coal, as well as the extent of water, solar or wind resources required to operate our facilities; general economic risks, including deterioration of equity markets, increasing interest rates or rising inflation; failure to meet financial expectations; general domestic and international economic and political developments, including armed hostilities, the threat of terrorism, diplomatic developments or other similar events; equipment failure and our ability to carry out or have completed the repairs in a cost-effective manner timely manner or at all, including if the rehabilitation at the Kent Hills wind facilities is more costly than expected; industry risk and competition; public health crises and the impacts of any restrictive directives of government and public health authorities; fluctuations in the value of foreign currencies; structural subordination of securities; counterparty credit risk; inadequacy or unavailability of insurance coverage; our provision for income taxes; legal, regulatory and contractual disputes and proceedings involving the Company; reliance on key personnel; labour relations matters and other risks and uncertainties discussed in the Company’s materials filed with the securities regulatory authorities from time to time and as also set forth in the Company’s MD&A and Annual Information Form for the year ended December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. TransAlta disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless otherwise indicated.

For more information:

*Investor Inquiries:*	*Media Inquiries:*
Phone: 1-800-387-3598 in Canada and U.S.	Phone: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com

TransAlta Declares Dividends

Posted on July 27, 2023July 27, 2023 by kevin_wick

CALGARY, Alberta (July 27, 2023) – The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) declared a quarterly dividend of $0.055 per common share payable on October 1, 2023 to shareholders of record at the close of business on September 1, 2023.

The Board of Directors also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including June 30, 2023 up to but excluding September 30, 2023:

Preferred Shares	TSX Stock Symbol	Dividend Rate	Dividend Per Share	Record Date	Payment Date
Series A	TA.PR.D	2.877%	$0.17981	September 1, 2023	September 30, 2023
Series B*	TA.PR.E	6.593%	$0.41545	September 1, 2023	September 30, 2023
Series C	TA.PR.F	5.854%	$0.36588	September 1, 2023	September 30, 2023
Series D*	TA.PR.G	7.663%	$0.48287	September 1, 2023	September 30, 2023
Series E	TA.PR.H	6.894%	$0.43088	September 1, 2023	September 30, 2023
Series G	TA.PR.J	4.988%	$0.31175	September 1, 2023	September 30, 2023

*Please note the quarterly floating rate on the Series B and Series D Preferred Shares will be reset every quarter.

All currency is expressed in Canadian dollars except where noted. When the dividend payment date falls on a weekend or holiday, the payment is made the following business day.

About TransAlta Corporation:

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where our employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and A from MSCI.

For more information about TransAlta, visit its website at transalta.com.

For more information:

Investor Inquiries:
Phone: 1-800-387-3598 in Canada and U.S. Email: investor_relations@transalta.com

Media Inquiries:
Phone: 1-855-255-9184 Email: ta_media_relations@transalta.com

TransAlta Corporation to Acquire TransAlta Renewables Inc. to Simplify Structure and Enhance Strategic Position

Posted on July 11, 2023July 11, 2023 by kevin_wick

Business combination creates a unified, large-scale clean electricity leader to serve customers with clean and reliable electricity
Creates a single, publicly-traded entity with one strategy and a simplified governance structure that facilitates growth, and provides greater clarity around the execution of the Clean Electricity Growth Plan
The combined company enhances diversification, increases public float and trading liquidity, with attractive transaction metrics that unlocks value to the benefit of all shareholders
10.99 per common share of TransAlta Renewables Inc. as of July 10, 2023
1.0337 common shares of TransAlta Corporation or $13.00 in cash, subject to pro-rationing based on a maximum aggregate issuance of 46,441,779 common shares of TransAlta Corporation and maximum aggregate cash consideration of $800 million
A special committee of independent directors of TransAlta Renewables Inc., who conducted an independent and comprehensive review process, supported by the receipt of two fairness opinions, unanimously recommends that the shareholders of TransAlta Renewables Inc. vote in favour of the transaction

TransAlta Corporation (TSX: TA; NYSE: TAC) (“TransAlta”) and TransAlta Renewables Inc. (TSX: RNW) (“RNW”) today announced that they have entered into a definitive arrangement agreement (the “Agreement”) under which TransAlta will acquire all of the outstanding common shares of RNW (each, a “RNW Share”) not already owned, directly or indirectly, by TransAlta and certain of its affiliates, subject to the approval of RNW shareholders.

“With the execution of our Clean Electricity Growth Plan well underway, it is clear that the strategies of both TransAlta and RNW have converged. Now is the right time to bring these two companies together to create a single clean electricity leader. The combined company’s greater scale and enhanced positioning will drive benefits and unlock value for all of our shareholders. The combination of the two companies will be underpinned by a single strategy that provides greater clarity to investors and will support future growth,” said Mr. John Kousinioris, President and Chief Executive Officer of TransAlta.

“We are pleased to announce that this transaction provides RNW shareholders with an immediate premium and greater growth and cash flow certainty going forward. It resolves significant risks associated with maintaining RNW’s current dividend level given challenges with RNW’s cash available for distribution due to near-term contract expiries, significant increases to cash taxes and other factors,” said Mr. David Drinkwater, Chair of the Board of Directors of RNW. “A special committee of independent directors of RNW undertook a comprehensive process with its own independent advisors to negotiate the Agreement to ensure fair value for RNW, and we are pleased to recommend this Agreement to our shareholders.”

Under the terms of the Agreement, each RNW Share will be exchanged for, at the election of each holder of RNW Shares (“RNW Shareholders”):

1.0337 common shares of TransAlta (each, a “TransAlta Share”), or
$13.00 in cash.

The consideration payable to RNW Shareholders is subject to pro-rationing based on a maximum aggregate number of TransAlta Shares that may be issued to RNW Shareholders of 46,441,779and a maximum aggregate amount of cash of $800 million. The transaction will be effected by way of an arrangement under the Canada Business Corporations Act (the “Arrangement”).

The consideration payable to RNW Shareholders represents an 18.3% premium based on the closing price of RNW Shares on the Toronto Stock Exchange (“TSX”) as of July 10, 2023.The total consideration paid to RNW Shareholders is valued at $1,384,051,812 on July 10, 2023, of which $800 million will be paid in cash. The combined company will operate as TransAlta and remain listed on the TSX and the New York Stock Exchange (“NYSE”), under the symbols “TA” and “TAC”, respectively.

Key Highlights and Rationale for Arrangement

The Arrangement provides shareholders of the combined company with a single strategy and a clear and compelling opportunity for long-term growth:

Alignment and Execution of a Single Strategy: The combined company will share a common strategic path to achieve its clean electricity growth objectives and be more competitive as a single, streamlined, publicly-listed entity. It will align, clarify and enhance management’s strategic focus and efforts in the marketing, development, construction, operation and maintenance of generation assets to serve customers with clean and reliable electricity.

Accretive Transaction and Attractive Dividend, while Supporting Future Growth: Following the transaction, shareholders of the combined company will benefit from an accretive transaction and receive a sustainable quarterly dividend while ensuring the combined company retains sufficient cash flow for reinvestment in future growth projects.

Direct Ownership in One of Canada’s Largest Independent Power Producers: The combined company will have unified and direct ownership interests in a diversified portfolio of wind, hydro, solar, storage and natural gas generation assets, all backed by an aligned strategy that allows shareholders of the combined company to benefit from future growth.

Increased Scale, Public Float and Liquidity: The combined company will have a larger market capitalization and will provide stronger access to capital markets while providing increased trading liquidity. The reduced corporate complexity will provide greater transparency and understanding of the combined company’s business, which is expected to enable investment in TransAlta’s growing clean electricity portfolio.

Synergies: The combined company will benefit from greater efficiencies and corporate synergies under a single entity.The combined company will create opportunities for further capital efficiencies by funding growth in a single simplified entity, providing a higher retention of cash flows, and resulting in lower corporate and administration costs.

Benefits to RNW Shareholders

The transaction offers RNW Shareholders a compelling investment proposition and is expected to provide the following benefits:

Fair Offer Reflecting Attractive Premium: The terms of the offer represent an 18.3% premium based on the closing price of RNW Shares on the TSX as of July 10, 2023, and a 13.6% premium relative to RNW’s 20-day volume-weighted average price per share as of July 10, 2023.
Clear and Sustainable Path Going Forward: The combined company will provide resilience and mitigate near-term risks associated with maintaining RNW’s current dividend level given its challenges with contract expiries and increased cash taxes. This combined company will provide stronger dividend sustainability and payout coverage, and it will be better positioned to realize growth as compared to RNW as a standalone entity.
Expanded Pool of Assets: The combined company will offer an expanded pool of assets and business capabilities. RNW Shareholders who elect to receive TransAlta shares as consideration will become owners of TransAlta’s high-quality Alberta assets, which total 3.3 GW in the combined company. It will also provide exposure to TransAlta’s energy marketing division that delivers industry-leading trading capability and market insights to generate strong cash flows driving further portfolio diversification.
Simplified Structure and Synergies: The simplified structure provides clarity of ownership and enhanced transparency, including through the elimination of tracking shares, which will enhance the investment analysis and decision-making process for investors. The combined company will also optimize the use of capital to fund growth more efficiently as compared to RNW as a standalone entity.
Immediate Exposure to Alberta Electricity Market: RNW Shareholders will benefit from upside due to the current strong power price environment in Alberta and TransAlta’s position in the Alberta market to generate significant cash flows through the capabilities and expertise of TransAlta’s leading asset optimization team, while continuing to benefit from a strong underlying base of contracted cashflows.
Enhanced Growth Opportunities: RNW Shareholders who elect to receive TransAlta Shares as consideration will be able to directly participate in the benefits of the combination including a consolidated development pipeline of 4.3 GW of clean electricity projects and early-stage investments in new technologies, along with access to business development expertise and innovation capabilities to enhance growth potential that will support capital appreciation.

Benefits to TransAlta Shareholders

The Arrangement is strategically and economically attractive to holders of TransAlta Shares (“TransAlta Shareholders”) and provides the following benefits:

Enhanced Strategic Position: The combined company will leverage scale, assets and capabilities in all markets, while retaining greater exposure to the growth in clean electricity opportunities. The Arrangement will provide economic contribution from an incremental 1,187 MW of generating capacity, being 39.9% of the generating capacity at RNW not currently owned by TransAlta (directly or indirectly). The Arrangement also increases the proportion of TransAlta’s contractedness and diversifies the impact of TransAlta’s merchant market exposure.
Sustainable, Attractive Transaction Metrics: The Arrangement is accretive to free cash flow and provides greater financial flexibility by increasing the retention of cash, which will support the combined company’s growth plan.
Execution of a Single Strategy: The Arrangement provides clarity and will result in the execution of a single strategy. All future growth will be pursued in the combined company and funded with greater capital efficiency, while the combined company retains access to future growth in contracted opportunities.
Increased Liquidity and Synergies: The combined company will have an increased public float and trading liquidity, and have access to more efficient capital, along with corporate synergies.
Maintains Financial Strength: The simplified structure and funding of the Arrangement is expected to have a neutral impact to the credit rating of TransAlta.

Additional Information on the Arrangement

TransAlta owns 160,398,217 RNW Shares, representing approximately 60.1% of the outstanding RNW Shares. As a result of the Arrangement, TransAlta would issue an estimated 46,441,779 TransAlta Shares, representing approximately 15% of the total number of outstanding TransAlta Shares.

The Arrangement is subject to the approval by: (i) 66 2/3% of the votes cast by RNW Shareholders present in person or by proxy at a special meeting of RNW Shareholders (the “RNW Meeting”) called to consider the Arrangement; and (ii) a majority of the votes cast by RNW Shareholders present in person or by proxy at the RNW Meeting after excluding the votes attached to RNW Shares that, to the knowledge of RNW and its directors and senior officers, after reasonable inquiry, are beneficially owned or over which control or direction is exercised by TransAlta, the directors and senior officers of TransAlta, any TransAlta Shareholder holding more than 10% of the issued and outstanding TransAlta Shares and any other person who is an “interested party” or a “related party” of an “interested party” in relation to RNW with respect to the Arrangement within the meaning of Canadian securities laws.

The exchange of RNW Shares for TransAlta Shares will generally be tax deferred, while the exchange of RNW Shares for cash will generally be a taxable disposition, in each case, for Canadian income tax purposes. Any RNW Shareholder who receives a combination of TransAlta Shares and cash for its RNW Shares will be able to file a joint tax election that may, depending on the RNW Shareholders’ own circumstances, allow for the exchange of its RNW Shares to occur on a fully tax-deferred basis for Canadian income tax purposes.

The Agreement provides for, among other things, a non-solicitation covenant of RNW, subject to a customary “fiduciary out” provision that entitles RNW to consider and accept a superior proposal if TransAlta does not match the superior proposal within a five-business day period. If the Agreement is terminated in certain circumstances, including if RNW enters into an agreement with respect to a superior proposal, TransAlta is entitled to a termination payment of $95.4 million.

In addition to the required approvals of RNW Shareholders, closing of the Arrangement is also subject to obtaining the approval of the Court of King’s Bench of Alberta, required regulatory approvals and other customary closing conditions.

Further details regarding the Arrangement will be contained in a management information circular (the “Circular”) for the RNW Meeting to be sent to RNW Shareholders in connection with the RNW Meeting. The Circular is expected to be mailed on or about August 25, 2023, and the RNW Meeting is expected to be held on or about September 26, 2023.

If all approvals are received and other closing conditions satisfied, the Arrangement is expected to be completed early in the fourth quarter of 2023.

Copies of the Agreement will be filed by TransAlta with the U.S. Securities and Exchange Commission and the Canadian securities regulators and will be available for viewing at www.sec.gov and www.sedar.com. The Circular, as well as other filings containing information about the Arrangement including the Agreement, will also be available for viewing under RNW’s profile on www.sedar.com. All RNW Shareholders are urged to read the Circular once available as it will contain additional important information concerning the Arrangement.

Support for the Arrangement

The Arrangement is the result of an independent and comprehensive review process. The Board of Directors of RNW (the “RNW Board”) delegated to a special committee consisting solely of independent directors of RNW (the “RNW Special Committee”) the authority to, among other things, review, evaluate and negotiate the Arrangement on behalf of RNW.

National Bank Financial Inc. (“NBF”) and TD Securities Inc. (“TD”), acting as independent financial advisors to the RNW Special Committee, have each provided their verbal opinions to the RNW Special Committee (subject to certain assumptions and qualifications) that the Arrangement is fair from a financial point of view to the RNW Shareholders (the “RNW Opinions”) without consideration to TransAlta and any affiliate thereof. NBF has also prepared a formal valuation of the RNW Shares (the “Formal Valuation”), and based upon their analysis and subject to the various assumptions, qualifications, and limitations to be set forth in its written valuation report, in addition to other factors that it considered relevant, the fair market value of a RNW Share as of July 10, 2023 was in the range of $12.25 and $13.60. The RNW Special Committee, after considering the terms of the Arrangement, the RNW Opinions, the Formal Valuation, advice of its independent financial and legal advisors and other relevant matters, recommended to the RNW Board that it determine that the Arrangement is in the best interests of RNW and fair to RNW Shareholders (without consideration to TransAlta and any affiliate thereof), approve the execution and delivery of the Agreement and recommend that RNW Shareholders vote in favour of the Arrangement.

After considering, among other things, the recommendation of the RNW Special Committee and its receipt of the RNW Opinions and the Formal Valuation, the RNW Board (with four directors who are not independent abstaining) unanimously determined that the Arrangement is in the best interests of RNW and is fair to the RNW shareholders (without consideration to TransAlta and any affiliate thereof), approved the execution and delivery of the Agreement and unanimously recommends that RNW Shareholders vote in favour of the Arrangement.

RBC Dominion Securities Inc. (“RBC Capital Markets”), acting as financial advisor to TransAlta, provided a verbal opinion, as of July 10, 2023, to the Board of Directors of TransAlta (subject to assumptions and qualifications) that the consideration to be paid by TransAlta pursuant to the Arrangement is fair from a financial point of view to TransAlta (the “TransAlta Fairness Opinion”). After considering, among other things, the TransAlta Fairness Opinion, the TransAlta Board determined that the Arrangement is in the best interests of TransAlta and approved the execution and delivery of the Agreement.

All of the directors of RNW have entered into support agreements with TransAlta pursuant to which they have agreed to vote their respective RNW Shares in favour of the Arrangement at the RNW Meeting. Additionally, TransAlta, holding approximately 60.1% of the RNW Shares, intends to vote its RNW Shares in favour of the Arrangement at the RNW Meeting.

Investor Call

A conference call with the investment community will take place on July 11 at 9:00 a.m. MST (11:00 a.m. EST). The call will begin with a short address by John Kousinioris, President and Chief Executive Officer, and Todd Stack, President of TransAlta Renewables and Executive Vice President, Finance and Chief Financial Officer of TransAlta, followed by a question-and-answer period for analysts and media.

Dial-in number – TransAlta Corporation Acquires TransAlta Renewables Conference Call

Toll-free North American participants call: 1-888-664-6392

A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/ and on the Investors section of TransAlta Renewable’s website at https://transaltarenewables.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 181225 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s and RNW’s website once it becomes available.

Additional Information Relating to the Transaction

TransAlta’s website includes details of the transaction at www.transalta.com/RNWacquisition. Details of the transaction may also be accessed through the Investor Centre section of TransAlta’s website at https://transalta.com/investors/presentations-and-events/.

Advisors

RBC Capital Markets is acting as financial advisor to TransAlta. Norton Rose Fulbright Canada LLP is acting as legal advisor to TransAlta.

NBF and TD are acting as financial advisors to the RNW Special Committee. Stikeman Elliott LLP is acting as legal advisor to the RNW Special Committee.

About TransAlta Corporation

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 111 years, TransAlta has been a responsible operator and a proud community member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and its climate change strategy with CDP (formerly Climate Disclosure Project) and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 68 per cent reduction in GHG emissions or 22 million tonnes since 2015 and has received scores of A- from CDP and A from MSCI.

For more information about TransAlta, visit our website at transalta.com.

About TransAlta Renewables Inc.

TransAlta Renewables Inc. is among the largest of any publicly traded renewable independent power producers (“IPP”) in Canada. TransAlta Renewables’ asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 26 wind facilities, 11 hydroelectric facilities, eight natural gas generation facilities, two solar facilities, one natural gas pipeline, and one battery storage project, representing an ownership interest of 2,965 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the States of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington, North Carolina, and the State of Western Australia.

For more information about RNW, visit its website at transaltarenewables.com.

Additional Disclosures

This press release does not constitute an offer to buy or sell or the solicitation of an offer to sell or buy any securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with registration and other requirements under applicable law.

Cautionary Note – Forward-Looking Statements

This news release contains “forward-looking information” within the meaning of applicable Canadian securities laws, and “forward-looking statements”, within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking statements”). Forward-looking statements are predictive in nature, depend upon or refer to future events or conditions, or include words such as “expects”, “plans”, “estimates”, “intends”, “targets”, “result”, “future” or negative versions thereof and other similar expressions or future or conditional verbs such as “may”, “can”, “will”, and “would”. These statements may include, without limitation, statements regarding: expectations with respect to the business, financial prospects and future opportunities for the combined company, including its broader platform with enhanced diversification and simplified governance structure; the combined company’s stronger access to capital markets; the complementary nature of the combined company’s asset base and that the combined company will share a common strategic path; increased competitiveness of the combined company; enhancement of management’s efforts in serving customers with low-cost clean electricity; increased trading liquidity of the combined company’s shares and that such shares will remain listed on the TSX and the NYSE; the combined company’s enhanced access to operational, tax and corporate synergies; the combined company’s dividend plans following closing of the Arrangement; the expected benefits of the Arrangement to the RNW Shareholders, including stronger dividend sustainability, directly participating in the upside of TransAlta’s development pipeline of renewable energy projects and other corporate synergies; the expected benefits of the Arrangement to TransAlta Shareholders, including that the combined company will leverage scale, assets and capabilities in all markets, that the transaction is expected to be accretive to free cash flow, all future growth will be pursued in the combined company and funded with greater capital efficiency, and greater access to contracted cash flows through the acquisition of the remaining 39.9% interest of RNW; the expectation that the transaction will have a neutral impact to TransAlta’s credit rating; the tax implications of the Arrangement and the ability of a RNW Shareholder to file a joint tax election; the anticipated date of the RNW Meeting, the Circular sent in connection therewith and the expected mailing date thereof; the anticipated closing conditions and regulatory approvals pursuant to the Agreement; and the anticipated timing and completion of the Arrangement, including the expected closing date of the Arrangement.

Forward-looking statements are based upon, among other things, factors, expectations and assumptions that TransAlta and RNW have made as at the date of this news release regarding, among other things: the satisfaction of the conditions to closing of the Arrangement in a timely manner, if at all, including the receipt of all necessary approvals; the combined company’s ability to successfully integrate the businesses of TransAlta and RNW; TransAlta’s ability to issue TransAlta Shares pursuant to the Arrangement; sources of funding that each of TransAlta and RNW have relied upon in the past continue to be available to the combined company on terms favourable to the combined company; the combined company will have access to sufficient capital to pursue future development plans; there will be increases to the combined company’s share price and market capitalization over the long term; and that the combined company will have the ability to return capital to its shareholders.

Forward-looking statements involve significant known and unknown risk and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. These risks include, but are not limited to: the completion and timing of the Arrangement; the ability of TransAlta and RNW to receive, in a timely manner, the necessary regulatory, court, shareholder, stock exchange and other third-party approvals and to satisfy the other conditions to closing of the Arrangement; the ability of the parties to complete the Arrangement on the terms contemplated by TransAlta and RNW or at all; the ability of the combined company to realize the anticipated benefits of, and synergies and savings from, the Arrangement; consequences of not completing the Arrangement, including the volatility of the share prices of TransAlta and RNW, negative reactions from the investment community, and the required payment of certain costs related to the termination of the Arrangement; the accuracy of the pro forma financial information of the combined company; and the focus of management’s time and attention on the Arrangement and other disruptions arising from the Arrangement. Additional risk factors relating to TransAlta and RNW are described in further detail in TransAlta’s management’s discussion and analysis and annual information form for the year ended December 31, 2022, and in RNW management’s discussion and analysis and annual information form for the year ended December 31, 2022, and in TransAlta’s management’s discussion and analysis and RNW’s management discussion analysis, each for the three months ended March 31, 2023, which are available on SEDAR at www.sedar.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta and RNW’s expectations only as of the date of this news release, as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements. TransAlta and RNW disclaim any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The TSX and NYSE have not reviewed and do not accept responsibility for the adequacy or accuracy of this release. No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

For Further Information Please Contact:

Investor Inquiries:
Phone: 1-800-387-3598 in Canada and U.S. Email: investor_relations@transalta.com

Media Inquiries:
Phone: 1-855-255-9184 Email: ta_media_relations@transalta.com

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