Fourth Quarter 2021 Financial Highlights

• Adjusted EBITDA^(1),(2) of $270 million, an increase of 15% over the same period in 2020
• Free Cash Flow (FCF)⁽¹⁾ of $106 million, or $0.39 per share, an increase of 105% on a per-share basis from the same period in 2020
• Loss before income taxes of $32 million, an improvement of $136 million from the same period in 2020
• Cash flow from operating activities of $54 million, a decrease of 51% from the same period in 2020

Full Year 2021 Financial Highlights

• Adjusted EBITDA^(1),(2) of $1.263 billion, an increase of 36% from the same period in 2020
• FCF⁽¹⁾ of $562 million, or $2.07 per share, an increase of 59% on a per-share basis from the same period in 2020
• Loss before income taxes of $380 million, an increase of $77 million from the same period in 2020
• Cash flow from operating activities of $1.0 billion, an increase of 43% from the same period in 2020

Other Business and ESG Highlights

• Announced 600 MW of renewables growth projects, securing 30% of our 5-year 2 GW growth target
• Achieved full phase-out of coal in Canada, with completed coal-to-gas conversions at Sundance Unit 6 and Keephills Units 2 and 3, and ceased mining activities at the Highvale mine
• Reduced annual carbon emissions by 3.9 million tonnes, a 24% reduction compared to 2020
• Acquired a fully contracted 122 MW portfolio of solar assets in North Carolina
• Achieved commercial operations at the 206 MW Windrise wind facility
• Joined the Powering Past Coal Alliance, a global organization of governmental and private sector organizations working to take action on reducing greenhouse gas emissions from coal-fired electricity generation and accelerating the energy transition
• Enhanced and accelerated our near term GHG emissions target to a 75% reduction over 2015 levels
• Reduced our operational waste by 55% compared to 2020 levels
• Reduced our SO₂ and NO_x emissions by 42% and 29%, respectively, compared to 2020 levels
• Increased our common share dividend by 11% to an annualized dividend of 20 cents per share

 TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its financial results for the fourth quarter and full year ended Dec. 31, 2021.

“2021 was a record year for TransAlta. We achieved outstanding financial results, with exceptional performance from our Alberta Hydro and Gas fleets, as well as our Energy Marketing business. On the growth front, we secured 600 MW of renewables growth projects, a great first year for our Clean Electricity Growth Plan, with growth in each of our core geographies. We also reached an important milestone with the completion of the final coal-to-gas conversion, and are now fully off coal in Canada”, – said John Kousinioris, President and Chief Executive Officer.

Set out below are additional highlights from the quarter on TransAlta’s business activities, including the Company’s progress on advancing its Clean Electricity Growth Plan as well as details regarding the Company’s financial performance and liquidity.

Key Business Developments

Announced 300 MW White Rock Wind Project and Fully Executed Corporate PPAs

On Dec. 22, 2021, TransAlta executed two long-term Power Purchase Agreements (PPAs) with  a new customer at its 300 MW White Rock East and White Rock West Wind Power Projects located in Caddo County, Oklahoma. The PPA is with a new customer with an AA credit rating from S&P Global Ratings. The White Rock Wind Projects will consist of 51 Vestas turbines.  Construction is expected to begin in late 2022 with a target commercial operation date in the second half of 2023. TransAlta will construct, operate and own the facility. Total construction capital is estimated at approximately US$460 million to US$470 million and is expected to be financed with a combination of existing liquidity and tax equity financing. Over 90 per cent of the project costs are captured under executed fixed price turbine supply agreements and fixed price engineering, procurement, and construction agreements.  The project is expected to generate average annual EBITDA⁽¹⁾ of approximately US$42 million to US$46 million including production tax credits.

Acquired 122MW North Carolina Solar Portfolio

On Nov. 5, 2021, the Company closed its previously announced acquisition of a 122 MW portfolio of 20 solar photovoltaic sites located in North Carolina (collectively, “North Carolina Solar”) for approximately US$99 million (including working capital adjustments) and the assumption of existing tax equity obligations. The acquisition was funded using existing liquidity. 

At the closing of the acquisition, TransAlta Renewables Inc. acquired a 100 per cent economic interest in North Carolina Solar from a wholly owned subsidiary of TransAlta through a tracking share structure for aggregate consideration of approximately US$102 million.    

The sites are all operational and were commissioned between November 2019 and May 2021. The facilities are secured by long-term PPAs with Duke Energy, which have an average remaining term of 12 years. Under the PPAs, Duke Energy receives the renewable electricity, capacity, and environmental attributes from each facility. North Carolina Solar is expected to generate an average annual EBITDA⁽¹⁾ of approximately US$9 million.

Construction Commenced on Northern Goldfields Solar and Battery Storage Project

On July 29, 2021, TransAlta Renewables announced that Southern Cross Energy (SCE), a subsidiary of the Company and an entity in which TransAlta Renewables owns an indirect economic interest, had reached an agreement to provide BHP Nickel West Pty Ltd. (BHP) with renewable electricity to its Goldfields-based operations through the construction of the Northern Goldfields Solar Project. The project consists of the 27 MW Mount Keith Solar Farm, 11 MW Leinster Solar Farm, 10 MW/5MWh Leinster Battery Energy Storage System and interconnecting transmission infrastructure, all of which will be integrated into our existing 169 MW Southern Cross Energy North remote network in Western Australia. Construction activities began in the first quarter of 2022, with target completion of the projects expected in the second half of 2022. Total construction capital for the project is estimated at approximately AU$69 million to AU$73 million. The project is expected to generate average annual EBITDA⁽¹⁾ of approximately AU$9 million to AU$10 million.

Executed Long-term PPA with Pembina and Commenced Construction on Garden Plain Wind

On May 3, 2021, the Company announced that it entered into a long-term PPA with Pembina Pipeline Corporation (Pembina) pursuant to which Pembina has contracted for the renewable electricity and environmental attributes for 100 MW of the 130 MW Garden Plain project. Garden Plain will be located approximately 30 km north of Hanna, Alberta. Construction activities started in the fall of 2021 with target completion of the project expected in the second half of 2022. Total construction capital for the project is estimated at approximately $190 million to $200 million.  The project is expected to contribute between $14 million and $18 million of average annual EBITDA⁽¹⁾.

Alberta Electricity Portfolio

On Dec. 31, 2020, the Alberta Power Purchase Arrangements (Alberta PPAs) expired and, effective Jan. 1, 2021, the applicable facilities began operating on a fully merchant basis in the Alberta market, forming a core part of the Alberta electricity portfolio optimization activities. 

The Alberta electricity portfolio generated gross margin of $864 million, an increase of $405 million compared to the same period in 2020. This performance was driven by strengthened power prices in the province, optimization of production during periods of favourable pricing, partially offset by higher natural gas and carbon pricing and higher transmission costs. Optimization of facilities is driven by the diversity in fuel types, which enables portfolio management and allows for maximization of operating margins. A portion of the baseload generation in the portfolio is hedged to provide cash flow certainty.

Alberta’s annual demand for electricity expanded by approximately 3% from 2020 to 2021.  Electricity demand was supported by the economic recovery following the impacts of the COVID-19 pandemic and due to stronger market conditions for energy commodities. The average pool price increased from $47/MWh in 2020 to $102/MWh in 2021. Pool prices were higher in each quarter compared to 2020, generally as a result of competition among generators, higher demand in the province,  tighter supply conditions due to higher planned outages, and higher natural gas and carbon prices. In addition, in 2021, Alberta experienced very strong weather-driven demand in February, June, July and December.

For the year ended Dec. 31, 2021, the Alberta Electricity Portfolio achieved a realized power price of $109 per MWh, compared to the Alberta spot pool price which averaged $102 per MWh. The Company was able to benefit during higher-priced periods by optimizing dispatch of each of the Alberta Hydro, Gas and Energy Transition fleet, ensuring high availability during peak demand, while hedged positions at Alberta Gas and Energy Transition minimized unfavourable market pricing during lower-priced hours in the quarter.

Hedged production for the fiscal year 2022 is 6,278 GWh at an average price of $75 per MWh.

Kent Hills Wind Facility Outage and Rehabilitation of Foundations

On Sept. 27, 2021, the Company’s subsidiary, Kent Hills Wind LP, experienced a single tower failure at its 167 MW Kent Hills wind facility in Kent Hills, New Brunswick. Following extensive independent engineering assessments, the root cause failure analysis indicated that deficiencies in the original design of the foundations at Kent Hills 1 and 2 had led to crack propagation within the foundations and that all 50 turbine foundations must be replaced. Foundation replacements will require expenditures of approximately $75 million to $100 million. The remediation plan is expected to commence mid-year and be implemented though 2022 and 2023.  The plan is to return turbines to service as each foundation is completed.

TransAlta and New Brunswick Power Corporation continue discussions to enable the safe return to service of the facilities.

The Company has also provided notice to BNY Trust Company of Canada (the “Trustee”) that events of default may have occurred under the trust indenture governing the terms of the non-recourse project bonds (the “Bonds”). The Company is in discussions with the Trustee and holders of the Bonds to negotiate required waivers and amendments while the Company works to remedy the matters described in the notice. Although the Company expects that it will reach agreement with the Trustee and holders of the Bonds with respect to terms of an acceptable waiver and amendment, there can be no assurance that the Company will receive such waivers and amendments. 

Achieved Phase-Out of Coal in Canada

During the year, the Company completed the full conversion of Keephills Unit 2, Keephills Unit 3 and Sundance Unit 6 from thermal coal to natural gas. Keephills Unit 2, Keephills Unit 3 and Sundance Unit 6 retained the same generator nameplate capacity of 395 MW, 463 MW and 401 MW, respectively.  Conversion to gas reduces our CO₂ emissions intensity by more than half, contributing to the 3.9 million tonnes of annual emissions reductions achieved in 2021 and advancing us toward our target of 75 per cent emissions reduction over 2015 levels by 2026. This also resulted in the end of mining activities at the Highvale mine and, effective Dec. 31, 2021, the mine entered its reclamation phase. As of Dec. 31, 2021, the Company has fully transitioned to natural gas in Canada.

Fortescue Metals Group Ltd. Dispute at South Hedland Power Station

The Company has been engaged in a dispute with Fortescue Metals Group Ltd. (FMG) as a result of FMG’s purported termination of the South Hedland PPA. On May 2, 2021, the Company entered into a conditional settlement with FMG.  The settlement was concluded and the actions were formally dismissed in the Supreme Court of Western Australia on Dec. 7, 2021. The settlement amount has been recorded as revenue in the fourth quarter of 2021, while all other balances previously provided for have been reversed. The settlement has resulted in FMG continuing as a customer of the South Hedland facility.

Liquidity and Financial Position

The Company continues to maintain a strong financial position in part due to long-term contracts and hedged positions. At the end of the fourth quarter, TransAlta had access to $2.2 billion in liquidity, including $947 million in cash and cash equivalents.

Fourth Quarter and Year Ended 2021 Highlights

$ millions, unless otherwise stated	3 Months Ended Dec. 31, 2021	3 Months Ended Dec. 31, 2020	Year Ended Dec. 31, 2021	Year Ended Dec. 31, 2020
Adjusted availability (%)	83.8 %	87.1 %	86.6 %	90.7 %
Production (GWh)	5,823	7,704	22,105	24,980
Revenues	610	544	2,721	2,101
Adjusted EBITDA(1),(2)	270	234	1,263	927
Loss before income taxes	(32)	(168)	(380)	(303)
Net loss attributable to common shareholders	(78)	(167)	(576)	(336)
Cash flow from operating activities	54	110	1,001	702
FFO(1)	213	161	971	685
FCF(1)	106	52	562	358
Net loss per share attributable to common shareholders, basic and diluted	$ (0.29)	$ (0.61)	$ (2.13)	$ (1.22)
FFO per share(1),(5)	$ 0.79	$ 0.59	$ 3.58	$ 2.49
FCF per share(1),(5)	$ 0.39	$ 0.19	$ 2.07	$ 1.30
Dividends declared per common share(3)	$ 0.10	$ 0.09	$ 0.19	$ 0.22
Dividends declared per preferred share(4)	$ 0.25	$ 0.50	$ 1.02	$ 1.27

Fourth Quarter Financial Results Summary

Adjusted EBITDA^(1),(2) for the three months ended Dec. 31, 2021, was $270 million, an increase of $36 million, or 15 per cent compared to the same period in 2020, largely due to higher adjusted EBITDA in our Hydro and Gas segments, which was driven by higher realized prices in the Alberta market, partially offset by lower production at Centralia Unit 2 within our Energy Transition segment due to a transformer failure that has now been resolved and an unplanned outage at the Kent Hills 1 and 2 wind facilities. 

Net loss attributable to common shareholders for the three months ended Dec. 31, 2021, was $78 million compared to a net loss of $167 million in the same period of 2020, an improvement of $89 million. The net loss in 2021 was favourably impacted by lower depreciation and amortization expense related to asset retirements and impairments in our Gas and Energy Transition segments and higher adjusted EBITDA.

Cash flow from operating activities for the three months ended Dec. 31, 2021, was $54 million, a decrease of $56 million compared with 2020, primarily due to changes in non-cash working capital.

FCF⁽¹⁾ for the three months ended Dec. 31, 2021, was $106 million compared to $52 million for 2020, as a result of higher adjusted EBITDA due to higher realized prices in Alberta, settlement of provisions and lower sustaining capital expenditures, partially offset by higher distributions paid to subsidiaries non-controlling interests.

Full Year 2021 Financial Results Summary

Adjusted EBITDA^(1),(2) for the full year ended Dec. 31, 2021, was $1.263 billion, an increase of $336 million compared to 2020. Adjusted EBITDA increased largely due to higher gross margin, driven by higher realized prices and dispatch optimization in the Alberta market from our merchant facilities residing in the Alberta Electricity Portfolio across the Hydro, Wind and Solar, Gas, and Energy Transition segments. In addition, the Energy Marketing segment also increased adjusted EBITDA due to favourable short-term trading of both physical and financial power and natural gas products across North American markets. This increase was partially offset by  the retirement of Centralia Unit 1, unplanned outages at Centralia Unit 2 in the Energy Transition segment and the extended site outage at the Kent Hills 1 and 2 wind facilities. 

Loss before income taxes for the full year ended Dec. 31, 2021, was $380 million, compared to $303 million for 2020, an increase of $77 million. Net loss attributable to common shareholders for 2021 was $576 million compared to a loss of $336 million in 2020. The higher loss before income taxes and the higher net loss attributable to common shareholders in 2021 was largely driven by higher asset impairments related to decisions to shut down the Highvale mine, suspend the Sundance 5 repowering project and planned retirements of Sundance Unit 4 and Keephills Unit 1. These higher asset impairments were partially offset by higher adjusted EBITDA largely resulting from the strong performance of the Alberta Electricity Portfolio across all of our fuel segments, higher gains on sale of assets due to the sale of equipment in the Energy Transition segment,  the sale of the Pioneer Pipeline in the Gas segment, and lower depreciation. The higher net loss attributable to common shareholders was also impacted by higher income tax expense in 2021 due to the higher earnings from the Energy Marketing segment and the Alberta Electricity Portfolio.

Cash flow from operating activities for the full year ended Dec. 31, 2021, was $1,001 million, compared to $702 million for 2020, an increase of $299 million, primarily due to higher revenues being realized in Alberta on the merchant assets and changes in non-cash working capital, partially offset by higher fuel and purchased power and OM&A costs as the Company transitioned off coal.

FCF⁽¹⁾ for the full year ended Dec. 31, 2021, was $562 million, an increase of $204 million compared to $358 million for 2020, driven primarily by higher adjusted EBITDA, partially offset by an increase in sustaining capital spending related to higher planned maintenance and facility turnarounds, settlement of provisions and higher distributions paid to subsidiaries non-controlling interests.

Segmented Results For the year ended Dec. 31 ($ millions)	Adjusted EBITDA(1),(2) 2021	Adjusted EBITDA(1),(2) 2020
Hydro	$ 322	$ 105
Wind and Solar	$ 262	$ 248
Gas	$ 494	$ 367
Energy Transition	$ 133	$ 175
Energy Marketing	$ 137	$ 113
Corporate	$ (85)	$ (81)
Total	$ 1,263	$ 927

Hydro:

• Adjusted EBITDA^(1),(2) for the year ended Dec. 31, 2021, increased by $217 million compared to Effective Jan. 1, 2021, with the expiration of the Alberta PPA for our Alberta Hydro Assets, these facilities began operating on a merchant basis in the Alberta power market. This eliminated the net payment obligations under the Alberta PPA. With strong availability during periods of market volatility, the Company captured higher energy and ancillary service revenue, partially offset by increased costs related to portfolio management services, dam safety staffing, dredging and station services.

Wind and Solar:

• Adjusted EBITDA^(1),(2) for the year ended Dec. 31, 2021, increased by $14 million compared to 2020, primarily due to higher merchant pricing in Alberta, a full year of operations from the Skookumchuck wind facility and the WindCharger battery storage facility as well as incremental value from the newly commissioned or acquired assets in 2021: consisting of the Windrise wind facility and the North Carolina Solar facility. Also, fuel and purchased power costs were lower in 2021 due to the AESO transmission line loss recorded in 2020. Adjusted EBITDA was negatively impacted by lower wind resources in Eastern Canada and the US, the unplanned outage at the Kent Hills 1 and 2 wind facilities and the weakening US dollar relative to the Canadian dollar

Gas:

• Adjusted EBITDA^(1),(2) for the year ended Dec. 31, 2021, increased by $127 million compared to 2020, primarily due to higher merchant pricing in the Alberta market, the South Hedland PPA contract settlement and incremental production from a full year of operations at our Ada cogeneration facility, partially offset by an increase in fuel, unplanned short-term steam supply outages at our Sarnia cogeneration facility, higher OM&A costs related to the BHP pass-through projects and legal fees related to the South Hedland PPA contract settlement.

Energy Transition:

• Adjusted EBITDA^(1),(2) for the year ended Dec. 31, 2021, decreased by $42 million compared to 2020, primarily due the planned retirement of Centralia Unit 1, higher fuel and purchased power due to unplanned outages at Centralia Unit 2, higher carbon compliance costs for the Alberta assets primarily due to an increase in carbon prices and the weakening of the US dollar relative to the Canadian dollar throughout the year, partially offset by dispatch optimization of the Alberta assets and lower OM&A as a result the planned retirement of Centralia Unit 1.

Energy Marketing:

• Adjusted EBITDA^(1),(2) for the year ended Dec. 31, 2021, increased by $24 million compared to 2020 Results were better primarily due to favourable short-term trading of both physical and financial power and natural gas products across all North American markets. This was partially offset by OM&A increases due to higher incentives related to stronger performance. The Energy Marketing team was able to capitalize on short-term market volatility in the markets in which we trade without materially changing the risk profile of the business unit.

Corporate:

• Our Corporate overhead costs for the year ended Dec. 31, 2021, increased by $4 million compared to 2020, primarily due to higher incentive payments, higher employee costs, higher insurance costs, and higher legal fees for settlement of outstanding legal issues, partially offset by the receipt of CEWS funding and realized gains from the total return swap. A portion of the settlement costs of our employee share-based payment plans is hedged by entering into total return swaps, which are cash settled every quarter. Excluding the impact of the total return swap, staffing costs increased due to additional headcount to support growth initiatives. As previously committed, the CEWS funding is being used to support incremental employment within the Company.

Conference call

TransAlta will hold a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, February 24, 2022, to discuss our fourth quarter and full year 2021 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 numbers Fourth Quarter and Full Year 2021 Results:

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 983771 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 trends more readily in comparison with prior periods results.

(2) In the fourth quarter of 2021, Comparable EBITDA was relabelled as adjusted EBITDA to align with industry standard terminology.

(3) No dividends were declared in first quarter of 2021 as the quarterly dividend related to the period covering the first quarter of 2021 was declared in December 2020.

(4) Weighted average of the Series A, B, C, E, and G preferred share dividends declared. Dividends declared vary year over year due to timing of dividend declarations.

(5) 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 at Dec. 31, 2021 was 271 million shares (2020 275 million shares).

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 consolidated financial statements 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, or as an alternative for, or more meaningful than our IFRS results.

Adjusted EBITDA

In the fourth quarter of 2021, comparable EBITDA was relabelled as adjusted EBITDA to align with industry standard terminology. Each business segment assumes responsibility for its operating results measured to 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.  Adjusted EBITDA is a non-IFRS measure.

Average Annual EBITDA

Average annual EBITDA is a non-IFRS financial measure that is forward-looking, used to show the average annual EBITDA that the project currently under construction is expected to generate upon completion.

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, FFO before interest to adjusted interest coverage and adjusted net debt to adjusted EBITDA are non-IFRS ratios that are presented in the MD&A. See 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 is a non-IFRS ratio.

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 and provides reconciliation to earnings (loss) before income taxes for the year ended Dec. 31, 2021 and Dec. 31, 2020:

Year ended Dec. 31, 2021 – Attributable to common shareholders

$ millions	Hydro	Wind & Solar(1)	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments(1)	Reclass Adjustments	IFRS Financials
Revenues	383	323	1,109	709	211	4	2,739	(18)		2,721
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss		25	(40)	19	(38)		(34)		34
Decrease in finance lease receivable			41				41		(41)
Finance lease income			25				25		(25)
Unrealized foreign exchange gain on commodity			(3)				(3)		3
Adjusted Revenues	383	348	1,132	728	173	4	2,768	(18)	(29)	2,721
Fuel and purchased power	16	17	457	560		4	1,054			1,054
Reclassifications and adjustments:
Australian interest income			(4)				(4)		4
Mine depreciation			(79)	(111)			(190)		190
Coal inventory write-down				(17)			(17)		17
Adjusted fuel and purchased power	16	17	374	432		4	843		211	1,054
Carbon compliance			118	60			178			178
Gross margin	367	331	640	236	173		1,747	(18)	(240)	1,489
OM&A	42	59	175	117	36	84	513	(2)		511
Reclassifications and adjustments:
Parts and materials write-down			(2)	(26)			(28)		28
Curtailment gain				6			6		(6)
Adjusted OM&A	42	59	173	97	36	84	491	(2)	22	511
Taxes, other than income taxes	3	10	13	6		1	33	(1)		32
Net other operating expense (income)			(40)	48			8			8
Reclassifications and adjustments:
Royalty onerous contract and contract termination penalties				(48)			(48)		48
Adjusted net other operating income			(40)				(40)		48	8
Adjusted EBITDA	322	262	494	133	137	(85)	1,263
Equity income										9
Finance lease income										25
Depreciation and amortization										(529)
Asset impairment										(648)
Net interest expense										(245)
Foreign exchange loss										16
Gain on sale of assets and other										54
Loss before income taxes										(380)

Year ended Dec.31, 2020 – Attributable to common shareholders

$ millions	Hydro	Wind & Solar(1)	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments(1)	Reclass Adjustments	IFRS Financials
Revenues	152	332	787	704	122	7	2104	(3)		2,101
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss		2	33	(14)	21		42		(42)
Decrease in finance lease receivable			17				17		(17)
Finance lease income			7				7		(7)
Unrealized foreign exchange gain on commodity			4				4		(4)
Adjusted Revenues	152	334	848	690	143	7	2,174	(3)	(70)	2,101
Fuel and purchased power	8	25	325	435		12	805			805
Reclassifications and adjustments:
Mine depreciation			(100)	(46)			(146)		146
Coal inventory write-down				(37)			(37)		37
Australian interest income			(4)				(4)		4
Adjusted fuel and purchased power	8	25	221	352		12	618		187	805
Carbon compliance			120	48		(5)	163			163
Gross margin	144	309	507	290	143		1,393	(3)	(257)	1,133
OM&A	37	53	166	106	30	80	472			472
Taxes, other than income taxes	2	8	13	9		1	33			33
Net other operating expense (income)			(11)				(11)			(11)
Reclassifications and adjustments:
Impact of Sheerness going off-coal			(28)				(28)		28
Adjusted net other operating income			(39)				(39)		28	(11)
Adjusted EBITDA	105	248	367	175	113	(81)	927
Equity income from associate										1
Finance lease income										7
Depreciation and amortization										(654)
Asset impairment										(84)
Net interest expense										(238)
Foreign exchange loss										17
Gain on sale of assets and other										9
Loss before income taxes										(303)

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings (loss) before income taxes for the three months ended Dec. 31, 2021:

Attributable to common shareholders

$ millions	Hydro	Wind & Solar(1)	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments(1)	Reclass Adjustments	IFRS Financials
Revenues	84	98	172	238	26	(2)	616	(6)		610
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss		3	82	(8)	(12)		65		(65)
Decrease in finance lease receivable			11				11		(11)
Finance lease income			6				6		(6)
Unrealized foreign exchange (gain) loss on commodity
Adjusted Revenues	84	101	271	230	14	(2)	698	(6)	(82)	610
Fuel and purchased power	9	6	110	149		(2)	272			272
Reclassifications and adjustments:
Australian interest income			(1)				(1)		1
Mine depreciation				(11)			(11)		11
Coal inventory write-down				(1)			(1)		1
Adjusted fuel and purchased power	9	6	109	137		(2)	259		13	272
Carbon compliance			14	25			39			39
Gross margin	75	95	148	68	14		400	(6)	(95)	299
OM&A	7	17	46	20	5	29	124			124
Reclassifications and adjustments:
Parts and materials write-down				3			3		(3)
Curtailment gain				6			6		(6)
Adjusted OM&A	7	17	46	29	5	29	133		(9)	124
Taxes, other than income taxes	1	2	2	1			6			6
Net other operating income			(10)	(8)			(18)			(18)
Reclassifications and adjustments:
Royalty onerous contract and contract termination penalties				9			9		(9)
Adjusted net other operating income			(10)	1			(9)		(9)	(18)
Adjusted EBITDA	67	76	110	37	9	(29)	270
Equity income										4
Finance income from subsidiaries										6
Depreciation and amortization										(134)
Asset impairment										(28)
Net interest expense										(59)
Foreign exchange loss										(6)
Gain on sale of assets and other										(2)
Loss before income taxes										(32)

The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings (loss) before income taxes for the three months ended Dec. 31, 2020:

Attributable to common shareholders

$ millions	Hydro	Wind & Solar(1)	Gas	Energy Transition	Energy Marketing	Corporate	Total	Equity accounted investments(1)	Reclass Adjustments	IFRS Financials
Revenues	31	92	167	230	19	8	547	(3)		544
Reclassifications and adjustments:
Unrealized mark-to-market (gain) loss		10	34	(10)	10		44		(44)
Decrease in finance lease receivable			6				6		(6)
Finance lease income			3				3		(3)
Australian interest income			4				4		(4)
Adjusted Revenues	31	102	214	220	29	8	604	(3)	(57)	544
Fuel and purchased power	(1)	11	98	166		8	282			282
Reclassifications and adjustments:
Mine depreciation			(40)	(18)			(58)		58
Coal inventory write-down				(15)			(15)		15
Adjusted fuel and purchased power	(1)	11	57	133		8	208		74	282
Carbon compliance			30	15			45			45
Gross margin	32	91	127	72	29		351	(3)	(131)	217
OM&A	9	13			6	21	118			118
Taxes, other than income taxes	1	1				1	8			8
Net other operating expense (income)							19			19
Adjusted EBITDA	22	77	92	42	23	(22)	234
Equity income										1
Finance income from subsidiaries										4
Depreciation and amortization										(173)
Asset impairment										(17)
Net interest expense										(64)
Foreign exchange loss										2
Gain on sale of assets and other										7
Loss before income taxes										(168)

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:

$ millions unless otherwise stated	3 Months Ended Dec. 31, 2021	3 Months Ended Dec. 31, 2020	Year Ended Dec. 31, 2021	Year Ended Dec. 31, 2020
Cash flow from operating activities(1)	54	110	1,001	702
Change in non-cash operating working capital balances	148	25	(174)	(89)
Cash flow from operations before changes in working capital	202	135	827	613
Adjustments
Share of adjusted FFO from joint venture(1)	6	3	13	3
Decrease in finance lease receivable	11	6	41	17
Clean energy transition provisions and adjustments(2)	(6)	15	79	37
Other(3)		2	11	15
FFO(4)	213	161	971	685
Deduct:
Sustaining capital(1)	(55)	(58)	(199)	(157)
Productivity capital	(2)	(3)	(4)	(4)
Dividends paid on preferred shares	(10)	(9)	(39)	(39)
Distributions paid to subsidiaries non-controlling interests	(38)	(29)	(159)	(102)
Principal payments on lease liabilities(1)	(2)	(10)	(8)	(25)
FCF(4)	106	52	562	358
Weighted average number of common shares outstanding in the period	271	273	271	275
FFO per share(4)	0.79	0.59	3.58	2.49
FCF per share(4)	0.39	0.19	2.07	1.30

The table below bridges our adjusted EBITDA to our FFO and FCF for the three months and year ended Dec. 31, 2021 and 2020:

	3 Months Ended Dec. 31, 2021	3 Months Ended Dec. 31, 2020	Year ended Dec. 31, 2021	Year ended Dec. 31, 2020
Adjusted EBITDA(1)	270	234	1,263	927
Provisions	(18)	(10)	(43)	7
Interest expense(2)	(51)	(56)	(200)	(192)
Current income tax expense(2)	3	5	(55)	(35)
Realized foreign exchange gain (loss)	(4)	(1)	(2)	8
Decommissioning and restoration costs settled(2)	(5)	(5)	(18)	(18)
Other non-cash items(3)	18	(6)	26	(12)
FFO(4)	213	161	971	685
Deduct:
Sustaining capital(2)	(55)	(58)	(199)	(157)
Productivity capital	(2)	(3)	(4)	(4)
Dividends paid on preferred shares	(10)	(9)	(39)	(39)
Distributions paid to subsidiaries non-controlling interests	(38)	(29)	(159)	(102)
Principal payments on lease liabilities(2)	(2)	(10)	(8)	(25)
FCF(4)	106	52	562	358

TransAlta is in the process of filing its Annual Information Form, Audited 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 transalta.com or through SEDAR at www.sedar.com.

TransAlta will also be filing its Form 40-F with the U.S. Securities and Exchange Commission. The form will be available through their website at www.sec.gov. Paper copies of all documents are available to shareholders free of charge upon request.

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 hydroelectric power. For over 100 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.

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: the construction of the 300 MW White Rock East and White Rock West Wind Power Projects, including timing, amount of construction capital, securing tax equity financing, and expected range of average annual EBITDA; the average annual adjusted EBITDA expected for the North Carolina solar portfolio;  the Northern Goldfields solar and battery project, including timing for commercial operation, amount of construction capital and average annual EBITDA; the Garden Plain wind project, including the timing for commercial operation, total construction capital and average annual EBITDA; the Kent Hills facility outage, including the timing and cost of remediation, and ability to reach agreement with the Trustee and holders of Bonds in respect of any related waivers and amendments; the utilization of CEWS funding; and our ability to achieve our sustainability targets.

The forward-looking statements contained in this news release are based on many assumptions including, but not limited to, the following material assumptions: impacts arising from COVID-19 not becoming significantly more onerous on the Company, which includes the Company being permitted to continue as an essential service; merchant power prices in Alberta and the Pacific Northwest;  our proportionate ownership of TransAlta Renewables not changing materially; no material decline in the dividends expected to be received from TransAlta Renewables; the expected life extension of the coal fleet and anticipated financial results generated on conversion; assumptions regarding the ability of the converted units to successfully compete in the Alberta energy-only market; and assumptions regarding our current strategy and priorities, including as it pertains to our ability to realize the full economic benefit from the capacity, energy and ancillary services from our Alberta hydro assets. 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 impact of COVID-19, including more restrictive directives of government and public health authorities; increased force majeure claims; 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 and to obtain regulatory approvals on the expected timelines or at all in respect of our growth projects; restricted access to capital and increased borrowing costs; changes in short-term and/or long-term electricity supply and demand; fluctuations in market prices, including lower merchant pricing in Alberta, Ontario or Mid-Columbia; 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 cyber security 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; changes in demand for electricity and capacity and our risk relating to our ability to contract our generation for prices that will provide expected returns and replace contracts as they expire; 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; the effects of weather, including man made or natural disasters and other 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, 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, cyberattacks, diplomatic developments or other similar events; equipment failure and our ability to carry out or have completed the repairs in a cost-effective manner or timely manner, or at all, including if the remediation at the Kent Hills wind facilities is more costly than expected; the holders of the Kent Hills Bonds declaring the principal and interest on the bonds and all other amounts, together with any make-whole amount due thereunder, to be immediately due and payable; industry risk and competition; fluctuations in the value of foreign currencies; structural subordination of securities; counterparty credit risk; changes to our relationship with, or ownership of, TransAlta Renewables; changes in the payment or receipt of future dividends, including from TransAlta Renewables; risks associated with development projects and acquisitions, including capital costs, permitting, labour and engineering risks, and delays in the construction or commissioning of projects; 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, 2021. 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 Corporation (TransAlta) (TSX: TA) (NYSE: TAC) will release its fourth quarter 2021 results before markets open on Thursday, February 24, 2022. 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.

TransAlta Renewables Inc. (TransAlta Renewables) (TSX: RNW) will release its fourth quarter 2021 results before markets on Thursday, February 24, 2022. Any questions regarding TransAlta Renewables may be asked on the TransAlta conference call.

Please contact the conference operator five minutes prior to the call, noting TransAlta Corporation€ as the company.

Fourth Quarter 2021 Conference Call:

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

Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1525768&tp_key=5fe076820e

Related materials will be available on the Investor Centre section of TransAlta’s website at http://transalta.com/investors/events-and-presentations. 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 983771 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

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 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 hydroelectric power. For over 100 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.

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

About TransAlta Renewables Inc.:

TransAlta Renewables is among the largest of any publicly traded renewable independent power producers (IPP) in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 27 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities, two solar facilities, one natural gas pipeline, and one battery storage project, representing an ownership interest of 2,966 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, North Carolina, Washington and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.

For more information about TransAlta Renewables, visit its web site at transaltarenewables.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

Third Quarter 2021 Highlights

• Comparable EBITDA⁽¹⁾ of $381 million, an increase of $125 million or 49 per cent compared to the same period in 2020
• Free cash flow (FCF)⁽¹⁾ of $189 million or $0.70 per share compared to $106 million or $0.39 per share, a 79 per cent increase on a per-share basis over the same period in 2020
• Hydro segment delivered $82 million of comparable EBITDA, an increase of $54 million compared to the same period in 2020
• Alberta Thermal segment delivered $104 million of comparable EBITDA, an increase of $57 million compared to the same period in 2020
• Adjusted availability was 89.2 per cent compared to 91.5 per cent for the same period in 2020, largely impacted by outages in the Alberta fleet

Other Highlights

• Announced Clean Electricity Growth Plan, establishing targets to deliver 2 GW of incremental renewables capacity with investment of $3 billion by 2025
• Announced an 11 per cent increase to its common share dividend and declared a dividend of $0.05 per common share to be payable on Jan. 1, 2022 to shareholders of record at the close of business on Dec. 1, 2021
• Announced the development of the 48 MW Northern Goldfields Solar and Storage Project for BHP Billiton Nickel West, with full notice to proceed issued to the EPC contractor and construction activities expected to commence in the first quarter of 2022
• Announced the decision to suspend the Sundance Unit 5 repowering project and the retirements of Keephills Unit 1 at the end of 2021, and Sundance Unit 4 in 2022, retiring approximately 1,200 MW of coal-fired capacity

Subsequent Events & Updates

• Closed the previously announced acquisition of the economic interest of a 122 MW portfolio of operating solar facilities located in North Carolina for approximately US$99 million and the assumption of tax equity obligations
• Completion of all construction activities at Windrise and on-track to reach commercial operations in November of 2021

2021 Revised Outlook

With exceptional year-to-date results, the Company has increased its 2021 outlook as set out below:

• Comparable EBITDA range of $1.2 to $1.3 billion
• FCF range of $500 to $560 million
• Energy Marketing gross margin contribution range of $195 to $210 million

 TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its financial results for the three and nine months ended Sept. 30, 2021.

“We are pleased to report TransAlta delivered another exceptional quarter.  Our third quarter results continue to exceed expectations with strong performance from our Alberta Hydro and Thermal fleets, and from our Energy Marketing segment”,- said John Kousinioris, President and Chief Executive Officer. “With these results and continuing price strength and demand and supply fundamentals in Alberta, we have the confidence to further revise our outlook upwards for free cash flow  in  the range of $500 and $560 million, exceeding  our previous 2021 guidance range.”

“On the growth front, we are also extremely pleased with the closing of the North Carolina Solar acquisition. The portfolio expands our solar footprint in a region where we see significant growth opportunities as the state looks to decarbonize”,- said Mr. Kousinioris.

Set out below are additional highlights from the quarter, as well as more details regarding the Company’s financial results, liquidity and financial position.

Consolidated Financial Highlights

In C$ millions, unless otherwise stated	3 Months Ended Sept. 30, 2021	3 Months Ended Sept. 30, 2020	9 Months Ended Sept. 30, 2021	9 Months Ended Sept. 30, 2020
Comparable EBITDA(1)	$381	$256	$993	$693
Free cash flow(1)	$189	$106	$456	$306
Adjusted availability (%)(2)	89.2	91.5	87.5	92.0
Production (GWh)	6,053	6,184	16,282	17,276
Revenues	$850	$514	$2,111	$1,557
Fuel and purchased power(3)	$327	$214	$782	$523
Carbon compliance(3)	$47	$38	$139	$118
Operations, maintenance and administration	$131	$114	$387	$354
Net loss attributable to common shareholders	$(456)	$(136)	$(498)	$(169)
Cash flow from operating activities	$610	$257	$947	$592
Funds from operations(1)	$297	$193	$758	$524
Net loss per share attributable to common shareholders, basic and diluted	$(1.68)	$(0.50)	$(1.84)	$(0.61)
Funds from operations per share(1)	$1.10	$0.70	$2.80	$1.90
Free cash flow per share(1)	$0.70	$0.39	$1.68	$1.11
Dividends declared per common share(4)	$0.0450	$0.0425	$0.0900	$0.1275
Dividends declared per preferred share(5)	$0.2484	$0.2593	$0.5075	$0.7645

The Company reported exceptional third quarter 2021 results with comparable EBITDA⁽¹⁾ of $381 million compared to $256 million in the same period of 2020. Funds from operations (FFO)⁽¹⁾ were $297 million for the quarter compared to $193 million in the same period of 2020.

Comparable EBITDA for the three and nine months ended Sept. 30, 2021 increased by $125 million and $300 million, respectively, compared with the same periods in 2020, largely due to higher merchant prices in Alberta realized by the  Alberta Electricity Portfolio, and strong performance in the Energy Marketing segment, which was partially offset by the retirement of Centralia Unit 1 that occurred on Dec. 31, 2020.  For the nine months ended Sept. 30, 2021, comparable EBITDA was also partially offset by the unplanned short-term steam supply outages at the North American Gas segment.

 FCF, one of the Company’s key financial metrics, totaled $189 million and $456 million, respectively, for the three and nine months ended Sept. 30, 2021, an increase of $83 million and  $150 million compared to the same periods in 2020, driven primarily by higher comparable EBITDA, partially offset by an increase in sustaining capital, settlement of provisions and higher distributions paid to subsidiaries non-controlling interests.

 Operations, maintenance and administration (OM&A) expenses for the three and nine months ended Sept. 30, 2021 increased by $17 million and $33 million, respectively, compared to the same periods in 2020.  For the  three and nine months ended Sept. 30, 2021, a writedown of $5 million and $30 million, respectively, was recorded on parts and material inventory related to the Highvale mine and coal operations at the gas-converted facilities.  In addition, for the three and nine months ended Sept. 30, 2021, variability caused by the total return swap resulted in an unfavourable change of $1 million and a favourable change of $12 million, respectively.  During the first quarter of 2021, we also received a Canada Emergency Wage Subsidy (CEWS) payment of $8 million. Excluding the impact of the total return swap, CEWS funding and inventory writedowns, OM&A expenses were  higher for the  three and nine months ended Sept. 30, 2021, compared to the same periods in 2020, primarily due to increased staffing costs for growth and strategic initiatives, higher incentive costs and additional costs associated with the settlement of provisions. As previously committed, the CEWS funding continues to be used to support incremental employment within the Company.

 Net loss attributable to common shareholders, for the three and nine months ended Sept. 30, 2021 was $456 million and $498 million, respectively, compared to net losses of $136 million and $169 million, respectively, in the same periods in 2020. For the three and nine months ended June 30, 2021, net losses attributable to common shareholders increased by $320 million and $329 million, respectively, from the same periods in 2020, due to greater asset impairments and expenses being incurred as a direct result of decisions to suspend the Sundance 5 repowering project, planned retirements of Sundance Unit 4 and Keephills Unit 1, the final execution of our clean energy transition plan and higher interest expense. These decisions were made based on our assessment of future market conditions, the age and condition of the units and the Company’s strategic focus toward customer-centered renewable energy solutions. In addition, on a year-to-date basis, there were higher income taxes. This was partially offset by higher comparable EBITDA, the gain on the sale of equipment at Alberta Thermal, lower depreciation, an increase in finance lease income and higher foreign exchange gains. In addition, on a year-to-date basis, there was a gain on the sale of the Pioneer Pipeline.

 Total year-to-date sustaining capital expenditures of $144 million were $45 million higher compared to 2020 primarily due to a higher level of  planned major maintenance  across the segments.

 Liquidity and Financial Position

The Company continues to maintain a strong financial position in part due to long-term contracts and hedged positions. At the end of the third quarter, TransAlta had access to $2.3 billion of liquidity, including $1.1 billion of cash and cash equivalents.

 Alberta Electricity Portfolio

On Dec. 31, 2020, the Alberta power purchase agreements (PPAs) expired and effective Jan. 1, 2021, the applicable facilities began operating on a fully merchant basis in the Alberta market, forming a core part of the Alberta electricity portfolio optimization activities. Optimization of facilities is driven by the diversity in  fuel types, which enables portfolio management and allows for maximization of operating margins. The Alberta portfolio includes hydro, wind, energy storage and thermal units. A portion of the baseload generation in the portfolio is hedged to provide cash flow certainty.

 For the nine months ended Sept. 30, 2021, the Hydro and Alberta Thermal segments achieved realized power prices of $122 per MWh and $94 per MWh, respectively, compared to the Alberta spot price which averaged $100 per MWh. The Company was able to benefit during higher-priced periods by optimizing dispatch in the Hydro and Alberta Thermal fleet, ensuring high availability during peak demand, while hedged positions at Alberta Thermal minimized unfavourable market pricing during lower-priced hours in the quarter.

 Hedged production at Sept. 30, 2021 for the fourth quarter is 1,407 GWh at $76 per MWh, and for the fiscal year 2022, hedged production is 4,387 GWh at $71 per MWh.

 2021 Outlook

 The Company is revising its 2021 outlook with comparable EBITDA estimated to be between $1.2 and $1.3 billion. The midpoint of the range representing an additional 9 per cent increase over the Company’s previous 2021 outlook as at the second quarter.

 FCF is now expected to be between $500 and $560 million. The midpoint of the range represents an additional 11 per cent increase over the Company’s previous 2021 outlook.

 The following table provides additional details pertaining to the 2021 outlook:

Measure (C$ millions unless otherwise noted)	Revised Outlook	Previous Outlook as of Q2 2021
Comparable EBITDA	$1,200 to $1,300	$1,100 to $1,200
FCF	$500 to $560	$440 to $515

Range of key power price assumptions:

Market	Updated Power Prices ($/MWh)	Previous Power Prices ($/MWh)
Alberta Spot	$95 to $105	$80 to $100
Mid-C Spot (US$)	$50 to $60	$45 to $55

Other assumptions relevant to 2021 financial outlook:

Sustaining capital	$200 to $225	$200 to $225
Energy marketing gross margin	$195 to $210	$170 to $200

Other Activities

Clean Electricity Growth Plan

On Sept. 28, 2021, TransAlta held its 2021 Investor Day and announced its Clean Electricity Growth Plan. The Company has established targets to deliver 2 GW of incremental renewables capacity with a targeted investment of $3 billion by 2025. TransAlta will accelerate its growth with a focus on customer-centred renewables and storage through the execution of its 3 GW development pipeline.

 Increase in Common Share Dividend

On Sept. 28, 2021, the Company announced an 11 per cent increase on its common share dividend and declared a dividend of $0.05 per common share to be payable on Jan. 1, 2022 to shareholders of record at the close of business on Dec. 1, 2021. The quarterly dividend of $0.05 per common share represents an annualized dividend of $0.20 per common share. 

 North Carolina Solar

On Nov. 5, 2021, the Company  closed the previously announced acquisition of a 122 MW portfolio of operating solar facilities located in North Carolina (collectively, “North Carolina Solar”) for US$99 million (including working capital adjustments) and the assumption of existing tax equity obligations. The acquisition was funded using existing liquidity. At the closing of the acquisition, TransAlta Renewables Inc. (TransAlta Renewables) acquired a 100 per cent economic interest in North Carolina Solar from a wholly-owned subsidiary of TransAlta  through a tracking share structure.  The portfolio consists of 20 operating facilities that were commissioned between November 2019 and May 2021. The facilities are secured by long-term PPAs with two subsidiaries of Duke Energy Corporation (Duke Energy), with an average remaining term of 12 years. Under the PPAs, Duke Energy receives the renewable electricity, capacity, and environmental attributes.  Income distributions to the TransAlta Renewables will be net of cash and tax attributes provided to the tax equity investors. North Carolina Solar is expected to generate an average annual EBITDA of approximately US$9 million.

 Northern Goldfields Solar and Storage Project

On July 29, 2021, TransAlta Renewables  announced that Southern Cross Energy, a subsidiary of the Company and an entity in which TransAlta Renewables owns an indirect economic interest, had reached an agreement to provide BHP Billiton Nickel West Pty Ltd. with renewable electricity to its Goldfields-based operations through the construction of the Northern Goldfields Solar and Storage Project. The project comprises the 27 MW Mount Keith Solar Farm, 11 MW Leinster Solar Farm, 10 MW/5MWh Leinster battery energy storage system and interconnecting transmission infrastructure, all of which will be integrated into the 169 MW Southern Cross Energy North remote network in Western Australia. The project has reached full notice to proceed, and construction activities are scheduled to start in the first quarter of 2022 with completion of the project expected in the second half of 2022. Total construction capital of the project is estimated at approximately AU$73 million. The project is expected to contribute between $8 and $9 million of annual EBITDA.

 Garden Plain Wind Project

The 130 MW Garden Plain project, located approximately 30 km north of Hanna, Alberta has a long-term PPA with Pembina Pipeline Corporation (Pembina) pursuant to which Pembina has contracted for the renewable electricity and environmental attributes of 100 MW of the 130 MW Garden Plain wind project (Garden Plain). Initial construction activities are now underway and completion of the project is expected in the second half of 2022. Total construction capital of the project is estimated at approximately $195 million.  The project is expected to contribute between $14 and $18 million of annual EBITDA.

 Windrise Wind

All turbine erection activities have now been completed at the 206 MW Windrise Wind project, with final commissioning activities currently underway, and commercial operation is tracking to be achieved in November 2021.

 Clean Energy Transition

On July 19, 2021, the Company announced the completion of the full conversion of Keephills Unit 2 from thermal coal to natural gas. In February 2021, the Company also completed the coal-to-gas conversion of Sundance Unit 6.  Both Keephills Unit 2 and Sundance Unit 6 maintain the same generator nameplate capacity of 395 MW and 401 MW, respectively. The non-operated Sheerness Units 1 and 2 have also been converted to gas. These conversion to gas projects will reduce the CO₂ emissions from these units by more than half.

 The Keephills Unit 3 coal-to-gas conversion began during the third quarter of 2021, with expected completion in  November. We continue to progress the off-coal transition plan and are on track to eliminate coal as a fuel source in Alberta by the end of 2021.

 Suspension of Sundance Unit 5 Repowering Project and Retirement of Alberta Coal Capacity

On Sept. 28, 2021, the Company announced the decision to suspend the Sundance Unit 5 repowering project, retire Keephills Unit 1 effective Dec. 31, 2021 and retire Sundance Unit 4 effective April 1, 2022.

 During the quarter, the Company recorded a number of asset impairment charges related to the Alberta Thermal segment including:

• $190 million related to the suspension of the Sundance Unit 5 Repowering Project, with an additional $27 million provision recorded for supplier settlements related to certain committed equipment purchases, and a further $10 million impairment related to a supplier credit
• $78 million related to the planned retirement of Keephills Unit 1, with an additional $6 million expensed for amounts due to contractors for not proceeding with the construction of equipment
• $56 million related to the planned retirement of Sundance Unit 4
• $185 million related to the expected shut down the Highvale Mine at the end of 2021

 Sarnia Recontracting

On May 12, 2021, the Company executed an Amended and Restated Energy Supply Agreement with one of its large industrial customers at the Sarnia cogeneration facility which provides for the supply of electricity and steam. This agreement will extend the term of the original agreement from Dec. 31, 2022 to Dec. 31, 2032. The agreement provides that if the Company is unable to enter into a new contract with the Ontario Independent Electricity System Operator (IESO) or enter into agreements with its other industrial customers at the Sarnia cogeneration facility that extend past Dec. 31, 2025, then this agreement will automatically terminate on Dec. 31, 2025. The current contract with the IESO in respect of the Sarnia cogeneration facility expires on Dec. 31, 2025. The Company is in active discussions with the three other existing industrial off-takers regarding extensions to their supply of electricity and steam from the Sarnia cogeneration facility on comparable terms. On July 19, 2021, the IESO released its Annual Acquisition Report which included draft details for mid- and long-term procurement mechanisms for capacity for 2026 and beyond for existing and new generation. The Company is participating in the consultation process, seeking to secure a contract extension for the Sarnia cogeneration facility following the end of the current IESO contract.

 Kent Hills Wind Facility Outage

On Sept. 27, 2021, the Company’s subsidiary, Kent Hills Wind LP, experienced a single tower failure at its 167 MW Kent Hills wind facility in Kent Hills, New Brunswick. The failure involved a collapsed tower located within the Kent Hills 2 site.  There were no injuries as a result of the collapse.  No one was in the area when the incident occurred and there are no homes in the immediate vicinity.  The Company’s emergency response team has secured the area to ensure safety. This incident has resulted in an impairment being booked against the turbine.

 The facility consists of 50 turbines at Kent Hills 1 and Kent Hills 2 and 5 turbines at Kent Hills 3. The turbines at the Kent Hills 1 and Kent Hills 2 sites have been taken offline pending a satisfactory independent engineering and safety assessment. The engineering assessment, which is ongoing, has identified sub-surface crack propagation at several of the foundations of the turbines located at the Kent Hills 1 and Kent Hills 2 sites. As a result, further inspection and testing will be required for all turbines at Kent Hills 1 and 2 to determine the required remediation plan, on a turbine-by-turbine basis. It is presently expected that the outage at Kent Hills 1 and Kent Hills 2 will require repairs or replacements for a significant portion of the existing foundations.  Foundation replacements would require expenditures of approximately $1.5 million to $2.0 million per foundation.  The remediation plan is expected to be implemented in 2022. The  outage is expected to result in foregone revenue of approximately $3.4 million per month on an annualized basis for so long as all 50 turbines are offline, based on average historical wind production, with incremental revenue expected to be earned as the wind turbines are returned to service. The foundation issues at the Kent Hills 1 and Kent Hills 2 sites are unique to the design of those sites and there is no indication of any foundation issue at the Kent Hills 3 site nor any other wind sites in the fleet. The Company is maintaining communication with all key stakeholders and keeping them fully apprised of the situation.

 The Company recognized an impairment of $2 million related to the Kent Hills tower failure.

 COVID-19 Response Update

The Company continues to operate under its business continuity plan.  As of Nov. 15, 2021, TransAlta will implement a two-phase mandatory rapid testing protocol for those employees that are not fully vaccinated. The first phase will commence on Nov. 15, 2021 to Jan. 31, 2022 and will be paid by TransAlta, requiring onsite testing every 72 hours at TransAlta’s cost. On or about Feb. 1, 2022, those employees who are not fully vaccinated will be required to pay for testing and provide TransAlta with proof of a negative test every 72 hours. Employees can be exempt from rapid testing if they are able to provide proof of vaccination.

 Segment Results

Third Quarter 2021 Segmented Results Comparable EBITDA (C$ millions)	3 Months Ended Sept. 30, 2021	3 Months Ended Sept. 30, 2020	9 Months Ended Sept. 30, 2021	9 Months Ended Sept. 30, 2020
Hydro	82	28	255	83
Wind and Solar	55	36	186	171
North American Gas	35	29	88	85
Australian Gas	36	34	99	93
Alberta Thermal	104	47	232	121
Centralia	35	49	61	109
Energy Marketing	58	49	128	90
Corporate	(24)	(16)	(56)	(59)
Total Comparable EBITDA(1)	381	256	993	693

• Hydro: Comparable EBITDA for the three and nine months ended Sept. 30, 2021 increased by $54 million and $172 million, respectively, compared with the same periods in 2020. With strong availability during periods of market volatility, the Company was able to capture higher energy and ancillary service revenues. Comparable EBITDA also had a favourable variance for the AESO transmission line loss recorded in 2020, which was offset by higher maintenance costs, higher portfolio management services and increased dam safety staffing costs. Portfolio management services support our strategy for maximizing our overall return on assets in the merchant Alberta electricity market.
• Wind and Solar: Comparable EBITDA for the three and nine months ended Sept. 30, 2021, increased by $19 million and $15 million, respectively, compared with the same periods in 2020, primarily due to higher pricing in Alberta, new incremental production from the Skookumchuck wind facility, the sale of environmental attributes and a favourable variance for the AESO transmission line loss recorded in 2020, which was partially offset by lower production and the impact of the weakening U.S. dollar.
• North American Gas: Comparable EBITDA for the three and nine months ended Sept. 30, 2021, increased by $6 million and $3 million, respectively, compared to the same periods in 2020, primarily due to higher production at the Ada facility and higher realized pricing in Alberta, which was partially offset by year-to-date unplanned short-term steam supply outages at Sarnia.
• Australian Gas: Comparable EBITDA for the three and nine months ended Sept. 30, 2021, increased by $2 million and $6 million, respectively, compared with the same periods in 2020. The increase was mainly due to the strengthening of the Australian dollar relative to the Canadian dollar and the Solomon meter station upgrade revenue recognised in 2021.
• Alberta Thermal: Comparable EBITDA for the three and nine months ended Sept. 30, 2021, increased by $57 million and $111 million, respectively, compared to the same periods in 2020. Higher availability during periods of tight market conditions and higher Alberta pricing was partially offset by increases in fuel and carbon compliance costs.
• Centralia: Comparable EBITDA for the three months ended Sept. 30, 2021, decreased by $14 million,  primarily due to the retirement of Centralia Unit 1 and higher fuel transportation costs, which was partially offset by lower OM&A cost.  Comparable EBITDA for the nine months ended Sept. 30, 2021 decreased by $48 million,  due to planned and unplanned outages during period of high merchant pricing and the retirement of Centralia Unit 1, which was partially offset by lower OM&A costs.
• Energy Marketing: Comparable EBITDA for three and nine months ended Sept. 30, 2021 increased by $9 million and $38 million respectively, compared with the same period in 2020, due to favourable short-term trading of both physical and financial power and natural gas products across all North American markets. This was partially offset by OM&A increases due to higher incentives related to stronger performance. The Energy Marketing team was able to capitalize on short-term arbitrage opportunities in the markets in which we trade without materially changing the risk profile of the business unit.
• Corporate: Corporate overhead costs for the three months ended Sept. 30, 2021, increased by $8 million compared to the same period in 2020, primarily due to higher incentive payments, higher staffing costs, increases in insurance costs and realized losses from the total return swap. Corporate costs for the nine months ended 30, 2021 decreased by $3 million, compared to the same period in 2020, primarily due to the receipt of CEWS funding and realized gains from the total return swap, partially offset by higher incentive payments and legal dispute settlement costs. A portion of the settlement costs of our employee share-based payment plans is hedged by entering into total return swaps, which are cash settled every quarter.

 Conference call

TransAlta will hold a conference call and webcast at 9:00 a.m. MT (11:00 a.m. ET) today, Nov. 9, 2021, to discuss third quarter 2021 results. The call will begin with a short address by John Kousinioris, President and Chief Executive Officer, and Todd Stack, Executive Vice President, 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.

 Third Quarter 2021 Conference Call:

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

Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1503090&tp_key=b23b82c0c5

Related materials will be available on the Investor Centre section of TransAlta’s website at http://transalta.com/investors/events-and-presentations. 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 passcode 481434 followed by the # sign.  A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.

 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 Nov. 9, 2021 on the Investor Centre of TransAlta’s website at transalta.com or through SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.

 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 hydroelectric power. For over 100 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 has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management, having recently achieved an A- score.

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

Cautionary Statement Regarding Forward-Looking Information

 This news release contains forward-looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company’s current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as “expects”, “plans”, “will”, “develop”, “continue”, and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, pertaining to, without limitation, the following: the potential impact of COVID-19 on the Company and the actions to be undertaken by the Company in response to the COVID-19 pandemic; the Company’s Clean Electricity Growth Plan, including delivering 2 GW of incremental renewables capacity with  investment of $3 billion by 2025; the conversion of Keephills Unit 3 and the timing thereof; the suspension of the Sundance Unit 5 repowering project; the Windrise wind project and the timing for commercial operation; the status of the Company’s other growth projects, including the Northern Goldfields Solar Project, the North Carolina Solar portfolio and the Garden Plain wind project, including the timing and cost thereof and expected contributions to EBITDA; the retirements of Keephills Unit 1 at the end of 2021 and Sundance Unit 4 in 2022; the incident at the Kent Hills wind facility and the extent of remediation that may be required, including the timing and associated cost; financial outlooks, including the revised outlook for Comparable EBITDA, FCF and Energy Marketing’s contributions to gross margin; sustaining capital spend in 2021; the recontracting of the Sarnia facility; and the optimization of the Alberta fleet, including as it pertains to maintaining flexibility and high availability. The forward-looking statements contained in this news release are based on many assumptions, including, but not limited to, an Alberta spot price of $95 to $105/MWh and Mid-C pricing of between $50 and $60/MWh.  The forward-looking statements are also subject to a number of significant risks and uncertainties that could cause actual plans, performance, results or outcomes to differ materially from current expectation. Factors that may adversely impact what is expressed or implied by the forward-looking statements contained in this news release include risks relating to: the impact of COVID-19, such as more restrictive directives of government and public health authorities; reduced labour availability; inability to staff the Company’s construction and operating activities; disruptions to the Company’s supply chain; impairments and/or write-downs of assets; adverse impacts on the Company’s information technology systems and the Company’s internal control systems; the price of electricity in Alberta or Mid-C differing significantly from those assumptions noted above; operational risks involving the Company’s facilities, including unplanned outages at such facilities; losses from Energy Marketing; the remediation at the Kent Hills wind facility being more extensive or costly than currently expected; adverse regulatory developments; disruptions in the transmission and distribution of electricity; the effects of weather and other climate-related risks; disruptions in the source of water, wind, solar,  or gas resources required to operate our facilities; natural disasters; equipment failure and our ability to carry out repairs in a cost-effective or timely manner; decreases to the Company’s relative efficiency and capacity factors; and greater competition and other industry risks. The foregoing risk factors, among others, are described in further detail in the Company’s Management’s Discussion and Analysis and Annual Information Form for the year ended Dec. 31, 2020, which are available on SEDAR at www.sedar.com. 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 purpose of the financial outlooks contained herein 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. 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: 1-855-255-9184
Email: investor_relations@transalta.com	Email: ta_media_relations@transalta.com