TransAlta Corporation Investor Presentation May 2017 1
Forward Looking Statements This presentation includes forward-looking statements or information (collectively referred to herein as “forward -looking statements”) within the meaning of applicable securities legislation. All forward-looking statements are based on our beliefs as well as assumptions based on available information and on management’s experience and perception of historical trends, current conditions, and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”, “can”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “project”, “forecast”, “foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause actual results or outcomes to be materially different from those set forth in the forward-looking statements. In particular, this presentation contains forward-looking statements pertaining to: our business strategy and goals, including our decisions to shut-down Sundance Unit 1 and mothball Sundance Unit 2 and to convert Sundance Unit 3 to 6 and Keephills Units 1 and 2 to gas and the cost and timing thereof; the potential upside available to our hydro assets following expiry of the power purchase arrangements; TransAlta’s position to participate in the 5,000 MW renewable build-out; our 2017 financial guidance, including Comparable EBITDA, Funds from Operations ("FFO"), Free Cash Flow ("FCF"); the commissioning of South Hedland, including the timing and capital costs thereof, and the incremental EBITDA expected to be generated from South Hedland; statements pertaining to our growth opportunities, including proposed in-service dates and costs for Antelope, Garden Plains and Goonumbla; the Brazeau pumped storage project, including the growth capital estimates and construction and operation date; amount of capacity eligible for conversion and the anticipated reduction to sustaining capital expenditures and operating costs; implications to the Alberta market as a result of the phasing out of coal and the shift to a capacity market, including as it pertains to capacity prices and carbon pricing; the emission reductions realizable following the conversion of coal to gas generation; the anticipated supply mix in 2025; the price of natural gas; the advantages of coal to gas conversions relative to the construction of new combined cycle gas turbines; anticipated benefits following expiry of the Alberta hydro power purchase arrangement; the source of funding growth opportunity and size of equity investments; target returns on growth opportunities; anticipated benefits to be realized through our sponsorship and shareholdings in TransAlta Renewables; our outlook and priorities; those factors that will contribute to FCF, including the anticipated benefits from Project Greenlight and high margin on Alberta renewables. Factors that may adversely impact our forward-looking statements include risks relating to: fluctuations in market prices and the availability of fuel supplies required to generate electricity, including the costs of natural gas within Alberta; our ability to contract our generation for prices that will provide expected returns; the regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; changes in general economic conditions, including interest rates; operational risks involving our facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels, water, or wind required to operate our facilities; natural or man-made disasters; the threat of domestic terrorism and cyberattacks; lower than anticipated electricity prices; equipment failure and our ability to carry out, or have completed, repairs, alterations or conversions in a cost-effective manner or timely manner; commodity risk management; industry risk and competition; fluctuations in the value of foreign currencies and foreign political risks; the need for additional financing; counterparty credit risk; insurance coverage; our provision for income taxes; legal, regulatory, and contractual proceedings involving the Corporation; outcomes of investigations and disputes; reliance on key personnel; labour relations matters; risks associated with development projects and acquisitions; increased costs or delays in the construction or commissioning of the South Hedland power project; adverse regulatory developments; and any market disruption or changes in market regulation, including changes relating to the implementation of a capacity market. The foregoing risk factors, among others, are described in further detail in the Risk Management section of our Management Discussion and Analysis and under the heading “Risk Factors” in our Annual Information Form. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this document are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable laws. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect the Corporation's expectations only as of the date of this news release. The purpose of the financial outlooks contained in this presentation is 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. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different extent or at a different time than we have described, or might not occur at all. We cannot assure that projected results or events will be achieved. Certain financial information contained in this presentation, including Comparable EBITDA, FFO and FCF, may not be standard measures defined under International Financial Reporting Standards (“IFRS”) and may not be comparable to similar measures presented by other entities. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. For further information on non-IFRS financial measures we use, see the section entitled “Reconciliation of Non-IFRS Measures” contained in our most recently filed Management's Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com and the Securities and Exchange Commission on www.edgar.com. Unless otherwise specified, all dollar amounts are expressed in Canadian dollars. 2
Positioning TransAlta for Growth 2016 Cash Flow From Generation (2) 60% of Total 64% of Cash Flow From Generation driven by Gas, Wind, and Solar Cash Flows 22% Natural gas / wind / solar portfolio is 87% contracted (3) on a weighted- Are Gas / Gas Wind / Solar average capacity basis with a weighted average contract life of 10.5 years (3) Wind and Solar on Long-term Canada’s largest generator of wind power 42% Contracts (1) Coal-to- Gas (“CTG”) Conversions Hydro Assets Convert Represent 90% of Alberta’s hydro Low cost to convert Coal Capacity New Alberta capacity Assets to Market Extends asset life Market Gas Substantial upside once Alberta Critical stand-by power to support Structure PPAs expire in four years new renewables Enhances Hydro Substantial reduction in capital and Asset Value Assets operating costs Increased reliability and flexibility $10+ bn 600 – 900MW Alberta’s build -out is the largest single-market investment opportunity in Alberta Brazeau Pumped North America renewables Storage Hydro Significant build-out As Alberta’s incumbent renewables developer – TransAlta is well-positioned Growth to participate in the 5,000 MW renewable build-out Australian, AB, Opportunities Low Cost and SK Growth Capital Significant growth opportunities are already in the pipeline Renewable Through RNW Opportunities TransAlta has entered a new phase with substantial growth opportunities 1 Based on cash flow from generation 3 Based on weighted average gross capacity 3 2 Comparable EBITDA less sustaining capital and excludes Energy Marketing and Corporate Segments
PRELIMINARY DRAFT – FOR DISCUSSION PURPOSES ONLY, 2017-05-23 8:13 AM TransAlta’s Global Generation Portfolio 4
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