Media Advisory: TransAlta and TransAlta Renewables Fourth Quarter 2021 Results and Conference Call
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
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.
TransAlta Announces Outlook and Continuing Strong Cash Flow for 2022
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today its financial outlook for 2022.
Highlights
Comparable EBITDA range of $1.065 billion to $1.185 billion
Free Cash Flow (FCF) range of $455 million to $555 million or FCF per share range of $1.68 to $2.05
Sustaining capital range of $150 million to $170 million
Continued delivery of TransAlta’s Clean Electricity Growth Plan by reaching final investment decision on 400 to 500 MW of additional clean energy projects across Alberta, the United States and Australia to deliver $50 million to $70 million of incremental EBITDA
We are pleased to announce that our annual outlook highlights continuing strong cash flow expectations for 2022. Our fleet remains well positioned to capture the ongoing strength we see in the Alberta merchant market. We also remain focused on growth that creates value for our shareholders as we work to deliver on our 2 GW renewables growth target by 2025. In 2021, our team secured 600 MW of new renewables projects demonstrating our competitiveness and capability to deliver our growth strategy across all our geographies,- said John Kousinioris, President and Chief Executive Officer of TransAlta.
2022 marks our transition off coal in Canada. With the completion of all our coal-to-gas conversions, and with our renewables growth plan well underway, we have adopted a more ambitious target of 75 per cent emissions reduction over 2015 levels by 2026. We are also proud to be the first publicly-traded electricity company in Canada to commit to setting a science-based emissions reduction target. We are excited for another great year of execution and ESG performance for TransAlta, added Mr. Kousinioris.
2022 Strategic Priorities
In addition to meeting the financial targets set out in the outlook, the Company is focused on the following key priorities for 2022:
Continue execution of the Clean Electricity Growth Plan for 2022 to 2025 by reaching final investment decision on 400 to 500 MW of additional clean energy projects across Canada, the United States and Australia
Achieve commercial operation of the Garden Plain wind project and Northern Goldfields solar and storage project in 2022
Progress the construction of the White Rock wind facilities for commercial operation in 2023
Expand our development pipeline
Recontract the Sarnia, Pingston and Upper Mamquam facilities
Progress the rehabilitation of Kent Hills targeting a safe return of the wind facility to full operations by 2023
Maintain an effective response to COVID-19 and a safe return to office
ESG Targets
The Company has a comprehensive and ambitious set of environment, social, and governance (ESG) targets which supports the long-term success of our business and highlights our ESG value proposition. These targets include:
Environment
Achieve a company-wide reduction of greenhouse gases emissions (GHG) of 75 per cent over 2015 levels by 2026
Discontinue coal generation in the United States by the end of 2025
Develop new renewable projects and power offerings that support customer sustainability goals by delivering low cost, reliable and clean energy solutions
Social
Achieve at least 40 per cent female employment among all employees by 2030
Maintain equal pay for women in equivalent roles as men
Support equal access to all levels of education for youth and Indigenous peoples through financial support and employment opportunities
Provide Indigenous cultural awareness training to all TransAlta employees by the end of 2023
Governance
Achieve 50 per cent female representation on the board of directors of the Company by 2030
Maintain our position as a leader in integrated ESG disclosure
2022 Financial Outlook
Comparable EBITDA is estimated to be between $1.065 billion to $1.185 billion. The midpoint of the range represents continued strong performance compared to historical levels. The Company expects comparable EBITDA for 2022 to be impacted by a number of factors, including:
Continuing strong merchant pricing levels in Alberta and the Pacific Northwest though at a lowered target price range than 2021 for both regions. Lower year-over-year pricing in Alberta is expected to be driven by fewer planned outages and the expected additions of new wind and solar supply including TransAlta’s new Windrise wind facility and Garden Plain wind facility, expected to achieve commercial operation in late 2022. Lower year-over-year pricing in the Pacific Northwest will be impacted by natural gas prices and hydro generation
Continuing outage of Kent Hills 1 and 2 with remediation efforts for foundations expected to commence during the second quarter of 2022 with the aim of fully returning the wind facility to service by the end of 2023
Adjusted performance expectations from the Energy Marketing segment due to exceptional performance achieved in 2021
Full year of EBITDA contributions from the Windrise and North Carolina solar asset additions
The Company expects sustaining capital to be in the range of $150 million to $170 million. The midpoint for the range represents a 25 per cent decrease from the midpoint of the 2021 outlook. This is driven by fewer planned maintenance outages at the thermal fleet in Alberta due to completion of gas conversions that occurred in 2021, partially offset by increased sustaining capital expenditures at Sarnia for a planned major maintenance, as well as increased dam safety and major maintenance across our Hydro fleet. The Kent Hills foundation rehabilitation capital expenditure has been segregated from our sustaining capital range due to the extraordinary and rare nature of this expenditure. The initial estimate range for the rehabilitation at Kent Hills is between $75 million to $100 million with approximately $40 million to $60 million estimated to be incurred in 2022.
FCF is expected to be between $455 million and $555 million and excludes impact of rehabilitation capital expenditures required at Kent Hills. The midpoint of the range represents a 5 per cent decrease from the 2021 outlook midpoint largely driven by lower Alberta power pricing, a return to normal performance from Energy Marketing, and a step-up in mine reclamation expenditures, partially offset by the contribution from new assets and lower expected sustaining capital.
The following table summarizes and provides additional details pertaining to our 2022 outlook:
Measure (millions)
2022 Target
2021 Target (as at Q3 2021)
Comparable EBITDA(1)
$1,065 to $1,185
$1,200 to $1,300
FCF (1)
$455 to $555
$500 to $560
Range of key power price assumptions:
Market
2022 Power Prices
2021 Power Prices
Alberta Spot ($/MWh)
$80 to $90
$95 to $105
Mid-C Spot ($/MWh)
US$45 to US$55
US$50 to US$60
AECO Gas Price ($/GJ)
$3.60
$3.45
Alberta spot price sensitivity: a +/- $1/MWh change in spot price is expected to have a +/- $10 million annualized impact on Comparable EBITDA.
Other assumptions relevant to 2022 financial outlook (millions):
Sustaining capital(2)(3)
$150 to $170
Energy marketing gross margin
$95 to $115
Alberta Hedging assumptions full year 2022:
Hedged production (GWh) (4)
6,278
Hedge price ($/MWh)
$75
Hedged gas volumes (GJ) (5)
50 million
Hedge gas price ($/GJ)
$2.75
(1) These items are not defined under IFRS. Presenting these items provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Free Cash Flow, Discussion of Segmented Comparable Results, and Earnings and Other Measures on a Comparable Basis sections of TransAlta’s 2021 third quarter management discussion and analysis for additional information. (2) Excludes payments associated with finance leases. (3) Excludes Kent Hills rehabilitation capital. (4) Represents approximately 75 per cent of expected Alberta thermal production. (5) Represents approximately 55 per cent of expected Alberta thermal fuel requirements.
Segmented Financial Reporting
During the fourth quarter of 2021, the Company changed its segmented reporting disclosures to align with the Company’s Clean Electricity Growth Plan. The segment reporting changes reflect a corresponding change in how management and the Chief Executive Officer assess the performance of the Company. The Company’s revised segmentation will take effect with its year-end annual report as follows:
Elimination of the Alberta Thermal and Centralia segments
Reorganization of the North American Gas and Australia Gas segment into a new Gas segment
The Alberta Thermal facilities that have been converted to gas will be included in the redefined Gas segment. This will include the off-coal agreement with the Province of Alberta
The legacy coal assets (not converted to gas) previously included in Alberta Thermal, the Centralia facility, Centralia mine and the Highvale mine will be included in a new Energy Transition segment
No changes will be made to the Hydro, Wind and Solar or Energy Marketing segments.
The new segments to be reported in our year-end financial report are summarized as follows: Hydro, Wind and Solar, Gas, Energy Transition, Energy Marketing, and Corporate.
The full details of the approved ESG targets are now available at transalta.com/sustainability. More information in regard to ESG targets and the Company’s ESG performance will be included in the Company’s integrated annual report for the year-ended December 31, 2021.
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 plan, expected, estimated, will, continue, goal, target and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to: the Company’s financial outlooks for 2022, including Comparable EBITDA, free cash flow, energy marketing gross margin, and sustaining capital; the sensitivity of Comparable EBITDA to Alberta spot prices; TransAlta’s Clean Electricity Growth Plan, and associated incremental EBITDA; extent of emission reductions and ability to achieve other ESG targets in 2022 and beyond; achieving final investment decisions on 400 to 500 MW of additional development projects across Canada, the United States and Australia; achieving commercial operation of the Garden Plain wind project and Northern Goldfields solar and storage project in 2022; achieving commercial operation for the White Rock wind facilities in 2023; expand the development pipeline; recontracting each of Sarnia, Pingston and Upper Mamquam; and progressing the rehabilitation of Kent Hills to safely return the wind facility back to full operation by 2023, and the cost thereof. The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company’s experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: the Company’s 2022 Alberta hedge price for volume and production of gas and power, respectively; the Alberta and Mid-C spot price; the AECO gas price; that pricing in Alberta will be driven by fewer planned outages and the expected additions of new wind and solar supply; the regulatory environment; and the extent of regulations pertaining to COVID-19 not becoming significantly more onerous and current conditions and expected future developments. 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 our facilities; construction risks, including as it pertains to the supply of equipment and labour availability; changes in market prices where we operate; unplanned outages at generating facilities and the capital investments required; equipment failure and our ability to carry out repairs in a cost effective and timely manner; the effects of weather, catastrophes and public health crises; disruptions in the source of thermal fuels, water, solar or wind required to operate our facilities, including the necessary natural gas supply to support the conversion of the coal units; energy trading risks; failure to obtain necessary regulatory approvals in a timely fashion, or at all; negative impact 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); changes in prevailing interest rates; currency exchange rates; inflation levels and commodity prices; general economic conditions in the geographic areas where TransAlta operates; disputes or claims involving TransAlta or TransAlta Renewables; 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, 2020. 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.
Non-IFRS Measures
This news release contains references to financial measures that are calculated and presented using methodologies other than in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, including EBITDA, and such measures may not be comparable to similar measures presented by other entities. These non-IFRS measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found under the Additional IFRS Measures and Non-IFRS Measures and under the Reconciliation of Non-IFRS Measures sections of TransAlta’s Management’s Discussion and Analysis for the nine months ended September 30, 2021, available on SEDAR at www.sedar.com, on the U.S. Securities and Exchange Commission website at www.sec.gov, and on TransAlta’s website under the Investor Centre section. TransAlta utilizes these measures in managing the business, including for performance measurement, capital allocation and valuation purposes and believes that providing these performance measures on a supplemental basis to its IFRS results is helpful to investors in assessing the overall performance of TransAlta’s businesses. TransAlta cautions readers that these non-IFRS financial measures or other financial metrics may differ from the calculations disclosed by other businesses and, as a result, may not be comparable to similar measures presented by other issuers and entities.
Note: All financial figures are in Canadian dollars unless otherwise indicated.
TransAlta Achieves Full Phase-Out of Coal in Canada
TransAlta Corporation (TSX: TA; NYSE: TAC) (TransAlta or the Company) announced today that it has completed the last of three planned coal-to-gas conversions (CTG) at its Alberta Thermal power generation facilities near Wabamun, Alberta.
The full conversion of Keephills Unit 3 (KH3) from thermal coal to natural gas is a significant milestone for TransAlta in its transition off coal. We are pleased to have completed this important step, nine years ahead of the government target,- said John Kousinioris, President and CEO of TransAlta. Our coal transition is among the most meaningful carbon emissions reduction achievements in Canadian history.
Converting to natural gas from coal maintains the current generation capacity of KH3 and reduces our CO2 emissions by almost 50 per cent from approximately 0.86 tonnes CO2e per MWh to approximately 0.43 tonnes CO2e per MWh, Mr. Kousinioris added. This not only highlights TransAlta’s continued commitment to meet Alberta’s need for safe, reliable and low-cost electricity but also delivers a step-change reduction in the emissions from our converted units.
The $29 million investment in the KH3 conversion plus another $48 million for gas infrastructure and maintenance projects brought a significant boost to the local economy, and at its peak provided nearly 600 construction jobs. Since 2019, TransAlta has invested $295 million in its CTG program that also included conversion of Sundance Unit 6 (Q1-2021), conversion of Keephills Unit 2 (Q3-2021), conversion of Sheerness Units 1 and 2, plus construction of new high-volume gas delivery infrastructure.
Overall, the converted units generate nearly 50 per cent fewer CO2 emissions fueled by natural gas compared to coal. This project is a significant achievement for TransAlta towards its target to reduce 60 per cent, or 19.7 million tonnes, of annual greenhouse gas emissions by 2030 over 2015 levels and achieve carbon neutrality by 2050. By meeting its 2030 target, TransAlta’s performance will exceed Canada’s national Paris Agreement target of 40-45 per cent reduction by 2030. The completed conversions will also contribute to the goals of the Powering Past Coal Alliance, which TransAlta joined at the 26th UN Climate Change Conference of the Parties (COP26).
With successful completion of the KH3 conversion and the planned closure of the Highvale coal mine effective December 31, 2021, TransAlta’s thermal facilities in Alberta will have been fully transitioned to 100 per cent natural gas operation. In aggregate, TransAlta has retired 3,794 MW of coal-fired generation capacity since 2018 while converting 1,659 MW to cleaner burning natural gas.
This achievement, coupled with TransAlta’s growing and diversified generating portfolio, including hydro, wind, solar and battery assets, helps position TransAlta to be a highly competitive provider of reliable, low and zero-emitting electricity for customers in Canada, the United States, and Australia.
TransAlta Thermal Facility Status Summary (near Wabamun Lake, Alberta)
Unit
Unit MCR (MW net)
Current Status
Sundance Unit 1
280
Retired Dec. 31, 2017
Sundance Unit 2
280
Retired July 31, 2018
Sundance Unit 3
368
Retired July 31, 2020
Sundance Unit 4
406
Fueled only on natural gas Jan. 1 to Mar. 31, 2022. Scheduled to retire April 1, 2022.
Sundance Unit 5
406
Retired Nov. 1, 2021
Sundance Unit 6
401
Converted to natural gas Feb. 1, 2021
Keephills Unit 1
395
Scheduled to retire Dec. 31, 2021
Keephills Unit 2
395
Converted to natural gas July 19, 2021
Keephills Unit 3
463
Converted to natural gas Dec. 29, 2021
Sheerness Unit 1
200
Converted to natural gas March 31, 2021
Sheerness Unit 2
200
Converted to natural gas April 4, 2020
Highvale Mine
Ending mining operations Dec. 31, 2021. Will begin full mine reclamation effective Jan. 1, 2022.
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 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 its website at transalta.com.
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 continue, will, develop, goal, target and similar expressions suggesting future events or future performance. More particularly, and without limitation, this news release contains forward-looking statements and information relating to: the Company’s target of reducing 60 per cent, or 19.7 million tonnes, of annual greenhouse gas emission by 2030 over 2015 levels and achieving carbon neutrality by 2050, the Company’s expected performance exceeding Canada’s national Paris Agreement target, the planned closure of the Highvale coal mine effective December 31, 2021 and the resulting full transition of the Company’s thermal facilities in Alberta to 100 per cent natural gas operation, and the expected timing of the retirement of Keephills Unit 1 and the full retirement of Sundance Unit 4. The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company’s experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to the extent of regulations pertaining to COVID-19 not becoming significantly more onerous and current conditions and expected future developments. These statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the effects of weather catastrophes and public health crises, including COVID-19; labour availability; disruptions to the Company’s supply chains; failure to obtain necessary regulatory approvals in a timely fashion, or at all; 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 Management’s Discussion and Analysis and Annual Information Form for the year ended December 31, 2020, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. 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.
TransAlta Announces 300 MW White Rock Wind Project
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today that it has entered into two long-term Power Purchase Agreements (PPAs) for the offtake of 100 per cent of the generation from its 300 MW White Rock East and White Rock West Wind Power Projects (collectively, White Rock Wind Project or the facility), to be located in Caddo County, Oklahoma. Contracting the renewable electricity and environmental attributes to an outstanding new customer with an AA credit rating from S&P Global Ratings enables TransAlta to move into the construction phase and add the 300 MW White Rock Wind Project to its growing wind generation fleet.
TransAlta is thrilled to make our White Rock Wind Project a reality. The delivery of low-cost, reliable, and clean energy from White Rock supports our customer’s sustainability goals and provides an excellent opportunity to expand our wind fleet in the United States,- said John Kousinioris, President and Chief Executive Officer of TransAlta. This project is another step towards executing our recently announced Clean Electricity Growth Plan of delivering 2 GW of capacity by 2025. White Rock East and West will collectively be the largest wind project we have undertaken and are excellent additions to our Company’s expanding wind portfolio.
The White Rock Wind Project will consist of a total of 51 Vestas turbines with construction expected to begin in late 2022 and 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 existing liquidity and tax equity. Over 90 per cent of the project costs are captured under executed fixed price turbine supply agreements with Vestas and executed fixed price engineering, procurement, and construction agreements with M.A. Mortenson Company. The project is expected to generate total annual earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately US$44 million including production tax credits. It is expected that the White Rock Wind Project will remain a TransAlta project.
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 plan, expected, estimated, will, continue, goal, target and similar expressions suggesting future events or future performance. In particular, this news release contains, without limitation, statements pertaining to: TransAlta’s Clean Electricity Growth Plan; the timing of turbine construction and commercial operation of the White Rock East and West Projects; the estimated construction capital for the White Rock Wind Project; expected sources of financing for the White Rock Wind Project; the expected project costs and annual EBITDA generation; and the expectation that the White Rock Wind Project will remain TransAlta projects. The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company’s experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to the extent of regulations pertaining to COVID-19 not becoming significantly more onerous and current conditions and expected future developments. 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: the effects of weather, catastrophes and public health crises, including COVID-19; labour availability; disruptions to the Company’s supply chains; failure to obtain necessary regulatory approvals in a timely fashion, or at all; 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 Management’s Discussion and Analysis and Annual Information Form for the year ended December 31, 2020. 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.
Non-IFRS Measures
This news release contains references to financial measures that are calculated and presented using methodologies other than in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board, including EBITDA, and such measures may not be comparable to similar measures presented by other entities. These non-IFRS measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Certain additional disclosures for these non-IFRS financial measures have been incorporated by reference and can be found on page M29 under the Additional IFRS Measures and Non-IFRS Measures and page M30 under the Reconciliation of Non-IFRS Measures sections of TransAlta’s Management’s Discussion and Analysis for the nine months ended September 30, 2021, available on SEDAR at www.sedar.com, on the U.S. Securities and Exchange Commission website at www.sec.gov, and on TransAlta’s website under the Investor Centre section. TransAlta utilizes these measures in managing the business, including for performance measurement, capital allocation and valuation purposes and believes that providing these performance measures on a supplemental basis to its IFRS results is helpful to investors in assessing the overall performance of TransAlta’s businesses. TransAlta cautions readers that these non-IFRS financial measures or other financial metrics may differ from the calculations disclosed by other businesses and, as a result, may not be comparable to similar measures presented by other issuers and entities.
Note: All financial figures are in Canadian dollars unless otherwise indicated.
Correction Notice to Press Release Regarding Dividend Amount on Preferred Shares, Series B
TransAlta Corporation (TSX: TA) (NYSE: TAC) announced today a correction to its press release issued December 13, 2021 in respect of the dividend amount declared on its Cumulative Redeemable Rate Reset First Preferred Shares, Series B (the Series B shares). In the press release, the dividend amount payable on March 31, 2022 to shareholders of record on March 1, 2022 was misstated as $0.53236 per Series B share. The correct amount is $0.13309 per Series B share.
All currency is expressed in Canadian dollars.
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.
The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) declared a quarterly dividend of $0.05 per common share payable on April 1, 2022 to shareholders of record at the close of business on March 1, 2022.
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 December 31, 2021 up to but excluding March 31, 2022:
Preferred Shares
TSX Stock Symbol
Dividend Rate
Dividend Per Share
Record Date
Payment Date
Series A
TA.PR.D
2.877%
$0.17981
March 1, 2022
March 31, 2022
Series B*
TA.PR.E
2.159%
$0.53236
March 1, 2022
March 31, 2022
Series C
TA.PR.F
4.027%
$0.25169
March 1, 2022
March 31, 2022
Series E
TA.PR.H
5.194%
$0.32463
March 1, 2022
March 31, 2022
Series G
TA.PR.J
4.988%
$0.31175
March 1, 2022
March 31, 2022
*Please note the quarterly floating rate on the Series B 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 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.
TransAlta Reports Exceptional Third Quarter 2021 Results and Increases Annual Guidance
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
Notes (1) These items are not defined 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. Refer to the Comparable EBITDA, Funds from Operations and Free Cash Flow and Earnings and Discussion of Consolidated Financial Results sections of the MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS. (2) Prior period adjusted availability has been revised to include the Hydro segment. (3) As of the first quarter of 2021, carbon compliance costs have been reclassified from fuel and purchase power costs and disclosed separately. Prior periods have been adjusted for comparative purposes. (4) No dividends were declared in the first quarter of 2021 as the quarterly dividend related to the period was declared in December 2020. (5) 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.
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
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.
TransAlta Recognized at COP26 Powering the World Past Coal Event
As the world gathers at COP26 to take action on the threat of climate change and keep the Paris Agreement goal of limiting temperature rise to 1.5°C within reach, TransAlta Corporation (TSX: TA) (NYSE: TAC) (TransAlta or the Company) was pleased to participate at the Powering the World Past Coal event at COP26, in Glasgow, Scotland. At the event, TransAlta and 27 new members joined the Powering Past Coal Alliance (the Alliance) where the new members were announced by the governments of Canada and the United Kingdom, Co-Chairs of the Alliance.
The Alliance is a global organization of governmental and private sector organizations working to take action on reducing greenhouse gas emissions from coal-fired electricity generation and accelerate the energy transition.
TransAlta’s President and CEO, John Kousinioris, stated, Our decision to join the Powering Past Coal Alliance is a natural extension of the Company’s commitment to delivering clean energy solutions for our customers, strong returns for our investors, and reliable energy for the communities that we serve. Our growth plan will expand our renewable electricity fleet by two gigawatts over the next five years and deploy energy storage at a much larger scale. We look forward to continuing our contribution to global efforts to deliver an accelerated clean energy transition.
TransAlta has already reduced its greenhouse gas emissions by 61 per cent over 2005 levels and has a 2030 target that equates to a 70 per cent reduction compared to 2005 levels.
TransAlta’s transition away from coal-fired generation started in 2019 and by the end of 2021, the Company will end coal-fired generation in Canada. Through this process, TransAlta will eliminate 2,135 megawatts of coal-fired generating capacity from its fleet and will have converted a further 1,259 megawatts to gas-fired generation, consistent with the regulatory frameworks set out by the governments of Canada and Alberta. The Company’s sole remaining coal-fired unit in the U.S. will also cease operations at the end of 2025. By that time, the Company will have also delivered on its plan to grow its leading renewable portfolio by two gigawatts, which will result in 70 per cent of the Company’s EBITDA being generated by renewables.
The Company is well positioned to leverage its significant expertise across a variety of geographies and technologies. TransAlta’s ongoing focus is to be a leading provider in the renewables space, bringing solutions that work for its customers and the communities that it serves. TransAlta’s success will enable it to continue its role as a leader in the energy transition and to reach the critical goals set out at COP26.
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, anticipates, plans, predicts, believes, estimates, intends, targets, projects, forecasts or negative versions thereof and other similar expressions or future or conditional verbs such as may, will, should, would and could. These statements may include, without limitation, statements regarding: delivering strong returns for our investors; expanding our renewable electricity fleet by two gigawatts over the next five years; deploying energy storage at a much larger scale; its 2030 target of reducing its greenhouse gases by 70 per cent compared to 2005 levels; ceasing coal-fired generation in Canada by the end of 2021; the removal of 2,135 megawatts of coal-fired generating capacity from its fleet and the conversion of 1,259 megawatts to gas-fired generation; the Company’s sole remaining coal-fired unit in the U.S. ceasing operations at the end of 2025; and that 70 per cent of the Company’s EBITDA will be delivered by renewable generation by the end of 2025. Forward-looking statements involve significant risks, uncertainties and assumptions, including, but not limited to, risks pertaining to: the regulatory environment and market changes; the reliability of the grid and the requirements for thermal base load generation; cost of new technology; competitive threats; and ability to identify and execute on growth opportunities. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. The Company cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking statements. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the continuous disclosure materials filed by the Company from time to time on SEDAR and EDGAR. All forward-looking information herein is given as of the date of this media release. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.
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 and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management, having recently achieved an A- score from CDP.
For more information about TransAlta, visit our web site at transalta.com.
The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including September 30, 2021 up to but excluding December 31, 2021:
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, 2021
December 31, 2021
Series B*
TA.PR.E
2.217%
$0.13970
December 1, 2021
December 31, 2021
Series C
TA.PR.F
4.027%
$0.25169
December 1, 2021
December 31, 2021
Series E
TA.PR.H
5.194%
$0.32463
December 1, 2021
December 31, 2021
Series G
TA.PR.J
4.988%
$0.31175
December 1, 2021
December 31, 2021
*Please note the quarterly floating rate on the Series B 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 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 we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management, having recently achieved an A- score from CDP.
For more information about TransAlta, visit our web site at transalta.com.
Media Advisory: TransAlta and TransAlta Renewables Third Quarter 2021 Results and Conference Call
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) will release its third quarter 2021 results before markets open on Tuesday, November 9, 2021. 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 third quarter 2021 results before markets on Tuesday, November 9, 2021. 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.
Third Quarter 2021 Conference Call:
Toll-free North American participants call: 1-888-664-6392
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 481434 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 and we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management, having recently achieved an A- score from CDP.
For more information about TransAlta, visit its web site at transalta.com.
