Investor Presentation March 2009 Forward looking statements This - PDF document

▀ 1 Investor Presentation March 2009

Forward looking statements This presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. These statements are not guarantees of our future performance and 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 cost of fuels to produce electricity, legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels, unanticipated accounting or audit issues with respect to our financial statements or our internal control over financial reporting, plant availability, and general economic conditions in geographic areas where TransAlta Corporation operates. Given these uncertainties, the reader should not place undue reliance on this forward-looking information, which is given as of this date. The material assumptions in making these forward-looking statements are disclosed in our 2007 Annual Report to shareholders and other disclosure documents filed with securities regulators. Unless otherwise specified, all dollar amounts are expressed in Canadian dollars. ▀ 2

Agenda � Value Proposition � Strategy � Operational Excellence � Environmental Leadership � Markets & Outlook ▀ 3

TransAlta’s value proposition � Yield plus steady and disciplined growth � Providing a strong dividend payout ratio: target of 60 - 70% � Low double digit comparable earnings per share growth � Disciplined capital allocation � Committed to paying a dividend � Growth balanced against dividends and share buy back � Portfolio optimization � After tax IRR > 10%; ROCE > 10% � Low to moderate risk profile � Diversified contracting strategy, with diversified fuels � Focused on western markets with strong fundamentals � Financial strength � Strong balance sheet and ample liquidity � Secured cash flows - Alberta PPA’s & LTCs � Investment grade credit ratios ▀ 4

TransAlta’s strategy Wholesale generator & marketer in Western Canada and U.S. � Strong long-term market fundamentals � Knowledge base provides competitive advantage CANADA Disciplined Growth � Short Term: 2009 - 2012 � Thermal uprates � Renewables: wind & geothermal � Medium-term: 2013 - 2015 UNITED STATES GENERATION CAPACITY � Co-generation in Alberta FACILITIES OWNED � Alberta Thermal life cycle investment Coal-fired � Small hydro storage optimization plants 4,914 MW � Longer-term: 2016+ Coal-fired plant 324 MW � Green coal with CCS (IN DEVELOPMENT) � Partner in large hydro Hydro plants 807 MW � Equity share in nuclear Gas-fired plants 1 ,843 MW AUSTRALIA Wind-powered Operational Excellence plants 248 MW � Achieving optimal performance Wind-powered � Culture of cost containment; investing in productivity plant 132 MW (IN DEVELOPMENT) Geothermal Environmental Leadership plants 164 MW � Offsets Corporate � Trading offices � Carbon Capture & Storage Energy Marketing offices ▀ 5

Solid track record of results COMPARABLE EARNINGS PER SHARE CASH FLOW FROM OPERATIONS $MM $922 $1.90 $950 22 % 56% CF $1.70 CAGR Growth $778 $800 $1.46 $1.50 $675 $620 $1.31 $650 $591 $1.30 $1.16 $1.10 $500 $0.90 $0.82 $350 $0.66 $0.70 $0.50 $200 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 5 YEAR CUMULATIVE TOTAL SHAREHOLDER RETURN COMPARABLE RETURN ON CAPITAL EMPLOYED 2 1 100% 12% 65% TSR ~10% ROCE 90% 80% 10% 70% 8% 60% 50% 6% 40% 4% 30% 20% 2% 10% 0% 0% 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 1. As of Dec. 31, 2008 2. As of Dec. 31, 2008 ▀ 6

Base operations expected to provide low double digit EPS growth and strong cash flow in 2009 & 2010 2004 - 2008 2004 - 2008 56% CAGR: 22% $ MM Growth $1,050 $2.50 1 $922 $900 $900 1 $778 1 $2.00 $675 $750 $800 $620 $591 $600 $1.46 $1.50 $1.31 $450 $1.16 $1.00 $300 $0.82 $0.66 $150 $0.50 2004 2005 2006 2007 2008 2009 - 2010e 2004 2005 2006 2007 2008 2009 - 2010e 10% 15% Comparable Earnings per share Cash Flow from Operations 1. Adjusted for timing of PPA revenues ▀ 7

Alberta PPAs and long-term contracts provide the base of our contracted position Hedge strategy is to contract an average of 90% of adjusted capacity for TransAlta’s fleet Total MWs 9,000 8,000 7,000 Merchant contracting strategy 6,000 targets 25% / yr 5,000 4,000 3,000 Alberta PPAs & LTC 2,000 1,000 0 2009 2010 2011 2012 2013 Contracted Open Approx. target contracting level ▀ 8

Balanced and disciplined capital allocation supports value creation through market cy cles PRIORITY DIRECTION ACTION Provide shareowners sustainable � Board policy is to target a payout ratio of 60 - 70% of Dividend dividend growth comparable EPS � 2008 annual dividend increased 8% to $1.08 � 2009 annual dividend increased 7% to $1.16 Provide shareowners incremental � Under the NCIB program, 4 million shares return of capital in absence of cancelled in 2008 Share value-creating investment � Currently suspended; cash conservation and balance Buyback opportunities sheet strength are priorities given current markets Projects must deliver unlevered, � 456 MW currently under construction for a total cost Growth free cash, after tax IRR >10%: of ~$1.3 billion Investment � Timing of organic growth within our control � Economics of asset acquisition increasingly attractive Divest or improve non-core and Portfolio � Mexico - Sold for USD $303.5M under-performing assets � Sarnia - received directive to negotiate a new long- Optimization term contract in 2009 � $50 million to be invested in productivity in 2009 ▀ 9

Strong balance sheet + stable credit ratios + solid liquidity = long-term financial stability CASH FLOW TO TOTAL DEBT CASH FLOW TO INTEREST 35% 8 30% 7 Min 6 25% 25% 5 20% Min 4 15% 4X 3 10% 2 5% 1 0 0% 2005 2006 2007 2008 2005 2006 2007 2008 COMMITTED LIQUIDITY DEBT TO TOTAL CAPITAL 60% $M $2,500 Max 55% 55% $2,000 50% $1,500 45% $1,000 40% $500 $0 35% Dec. 31, 2007 Dec. 31, 2008 2005 2006 2007 2008 Credit Utilized Available Liquidity ▀ 10

Operational excellence = optimal performance AB Thermal historical availability within optimum range of 87 - 90% Availability mix 100% 98% 96% 94% 92% Target fleet availability 90% 88% 86% 84% Coal Gas & Hydro & Wind Cogen Geothermal Alberta Thermal Availability TransAlta Fleet Availability 89% 88% 88% 87% 87% 86% 86% 85% 85% 84% 84% 83% 83% 82% 82% 81% 81% 80% 80% 2002-2007 2008 2002-2007 2008 ▀ 11

Alberta Thermal boiler challenges AB Thermal historical boiler leaks average 40 per year; 2008 an anomaly 70 60 50 40 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Number of Boiler Leaks Linear (Number of Boiler Leaks) � Average number of boiler leaks in a year (1999 - 2007) = 40 � Increased boiler leaks in 2008 driven by: � Testing of optimal capital spend efficiency � Quality of work – contractor labour challenges � Quality of fuel - ash content increasing ▀ 12

Achieving the right balance between spend and availability Typical Coal Asset Availability Matrix Sources of Outages “Sweet Spot” 5% Planned Without Major 5% Capital Unplanned / Derate < Years � Lost production days are costly � Easy to over capitalize � Very costly over time � Unplanned outage days are more costly � Potentially 2 - 5 times equivalent planned repair costs ▀ 13

Alberta Thermal: Plans expected to deliver higher availability by mid-2009 Majority of Alberta Thermal maintenance work is planned for the first half of 2009; remain focused on optimizing capital spend 2008 Availability � Maintenance in 2nd half 2008 improved 89% performance of four units 88% � Operations Diagnostic Centre opened Q4; 87% improved trend analysis to allow for more 86% predictive maintenance 85% 2009 84% � Turnarounds and pitstops on four major units to be 83% completed in 1st half ’09 82% 2010 2008 2009 � Turnarounds and pitstops scheduled for 5 units Alberta Thermal Fleet Q1_08 Q1_09 AB Planned Outages 1 20 >700 (Lost GWh) 1. Includes Sheerness Sundance 4 ID Fan 0 ~325 2. AB Thermal annual availability: (Lost GWh) Est. 80 - 82%; 1st half Est. 88 - 90%; 2nd half Availability 91.2% 80 - 82% 2 Sources: AESO, TransAlta ▀ 14

Environmental leadership TransAlta is competitively positioned to mitigate emissions costs through early engagement, a portfolio of initiatives and pass through contracts Cost pass through under change-in-law provisions Continuous improvement at existing facilities Emissions Management Active acquisition of lower cost offsets (with Technology Fund as backstop) Pursuit of clean combustion technology & renewables ▀ 15