Post on 11-Aug-2020
Forward looking statements
2
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 expectations
related to the demand for electricity in both the short-term and long term, timing and
completion of projects under development including uprates and upgrades, ability to
acquire assets which are accretive, ability to source materials and parts in a timely manner,
cost of fuels to produce electricity, legislative or regulatory developments, competition,
global capital markets activity, changes in currency exchange and interest rates, inflation
levels, unanticipated accounting issues with respect to our financial statements, 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 2010 Annual
Report to shareholders and other disclosure documents filed with securities regulators.
Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.
TransAlta at a glance
Canada’s largest publicly traded wholesale power
generator & marketer with over 100 years of operating
experience
Over 8,000 MW strategically positioned in Canada,
Western U.S. and Australia
2,100 MW of renewable energy
1,600 MW added since 2005
Revenues of ~$3 billion generated from an asset base
of over $9 billion
Enterprise value of ~ $10 billion with a market cap of
~$5 billion
Investment grade credit ratings
Listed on Toronto and New York stock exchanges
Coal:
4,386 MW
Gas:
1,788 MW
Hydro:
912 MW
Wind:
1,127 MW
Geothermal:
164 MW
TransAlta today
3
Why TransAlta
Diversified generation portfolio located in growing markets Over 75 facilities spanning multiple fuels and geographies
Well positioned in markets with strong market fundamentals
Attractive yield supported by significant cash flow 5.4% dividend yield
$400 million per year in free cash starting in 2013
Highly contracted with upside potential to rising power prices
Significant incremental EBITDA post 2020
Proven track record for growth with significant upside potential
1,600 MW added since 2005
Significant growth pipeline
Financial strength to deliver Investment grade ratings
$2 billion of committed credit facilities
Significant cash flow and favourable access to capital
Delivering shareholder value through yield and growth
Why TransAlta
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10
2011e
Gas Coal Renewables
8,250 MW 7,387 MW
Generation gross
margin per MWh
produced
67%
19%
14%
52%
22%
26%
$21.55
$32.42
Proven track record of improvements
Solid gross margin improvements while diversifying fuel mix
5
Low-to-moderate risk profile
Diversification Advantages
Fuel
Geographic
Contracting
Asset Age
Broad platform for growth
Downside protection, upside potential
Reduces risk and cash flow volatility
Supports investment grade ratings
6
Number of assets
$-
$250
$500
$750
$1,000
200
2
200
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200
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200
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Proven track record of improvements
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$M
Funds From Operations (FFO) FFO trend line
Solid gross margin and a diversified fleet has delivered steadily increasing
cash flow
$660
$804
Q3 2010 YTD Q3 2011 YTD
$571
$620
Q3 2010 YTD Q3 2011 YTD
Funds from
Operations
Comparable
EBITDA
Solid operations and growth driving enhanced results for investors
Strong financial performance year-over-year
M
M
M
M
8
0
200
400
600
800
1,000
1,200
1,400
1,600
2005 2008 2009 2010 2011e 2012e
Executing on our strategy
Delivering significant growth
$4 Billion invested in 1,600 MW of growth since 2005
9
MW
Coal Renewables
Western U.S.
Strategically well positioned for growth
Alberta
Rest of Canada Australia
$250 billion investment in oil sands in the next 25
years is driving significant load growth
Growing at 3% - 4% per year
Tight reserve margins driving higher power prices
TransAlta is the incumbent generator with over 30% of the provinces generation
Significant growth opportunities in multiple fuels
Long-term investment opportunities of $20 billion
Well positioned with more than 1,500 MW of coal
and geothermal
High quality geothermal resource supporting significant development opportunities
Opportunities to grow renewable and gas-fired generation through development and acquisitions
Recent Washington State bill allows for long-term contracting
Renewable and gas-fired assets located in B.C.,
Ontario, Quebec and New Brunswick
Well positioned for additional development and acquisitions
Highly reliable supplier of electricity to the mining
industry
Significant growth potential as mining industry and general economy expands
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10,000
15,000
20,000
25,000
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Alberta: Market Overview
Oil sands growth is driving significant demand for new power generation
Alberta: Oil sands growth
11
$253 billion to be
invested in the oil
sands between
2010 and 20352
Further demand
growth driven by
related industries
Forecasted Energy Demand
from Oil Sands1
GWh
1 Source: AESO Draft 2011 Long-term Transmission Plan 2 Canadian Energy Research Institute, Economic Impacts of New Oils Sands Projects in Alberta (2010-2035), May 2011
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2010 2020 2029
Alberta: Demand forecast
12
MW
60%
89%
75%
147%
Average Alberta
Peak Demand1
Peak demand in Alberta is expected to grow significantly by 2029
1 Source: AESO Draft 2011 Long-term Transmission Plan
99%
AB Peak Demand Growth by 20291
Northwest
Northeast
Edmonton &
North Central
Calgary &
South Central
South
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
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MW
Alberta: Opportunities for growth
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Oil sands
Related
Industries
$20 Billion1 in investment
opportunities
Retirements
1 Based on 10,000MW at $2M / MW
10,000 MW
of new supply
needed
Investment opportunity AB Peak Demand Installed capacity2
MW
2 Assumes 45 year life for coal assets based on new regulations
$40
$50
$60
$70
$80
2009 2010 2011 2012 2013 2014
Alberta Power Prices1
2010 Investor Day
+$1 / GJ = ~$8 - $10 / MWh
Market fundamentals are driving price strength and providing signals for growth
Alberta: Pricing
$/MWh
1 Figures as of Oct.12, 2011
Actuals Current Market
Cost of new generation
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Actual Forecast
Alberta Reserve Margins1 2
1% load
growth
2% load
growth
3% load
growth
2 Includes transmission; does not include assumptions around announced facilities, only facilities under construction
0
1,000
2,000
3,000
4,000
5,000
1
Well positioned to recognize the upside price from both generation and trading
Alberta: Merchant position
AB PPAs
Merchant
LT contracts (5 years +)
MW
637 MW
431 MW
3,178 MW
ST contracts (< 5years)
400 MW
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Energy Trading
Gross Margin
Asset Optimization
and Customer Business
Trading provides
incremental value
Merchant Portfolio
enhanced by
trading
Contracted
Assets
Expect $65 - $85 million in
gross margin for 2012
2012 – 2015
Annual Average
Sun 7
Location Alberta
Fuel type Gas fired
generation
Size 700 MW
Total project cost $1.2 - $1.4 B
Unlevered after
tax IRR
10%+
Commercial
operations date
Q1 2016
Equipment purchase underway for 700 MW combined cycle gas-fired unit
Sundance 7: Executing on growth
Progress Update
Technology and configuration: Complete
Vendor selection: Q4 2011
Construction start date: ~Q1 2014
Commissioning and commercial operations: ~ Q1 2016
Customer contracting program underway
Exploring fuel supply security
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Sundance 8 & 9: Building our future
TransAlta will bring an additional 1,400 MW into its fleet with the addition of
Sundance 8 and Sundance 9
Sites have been selected after consultation
with the Alberta Electric System Operator
(AESO)
Sundance 8: 700 MW ~ 2018/2019
Sundance 9: 700 MW ~ 2021/2022
Progress Update
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Western Canada: Growth opportunities
There is more than enough opportunity in Alberta for us to meet
our goal of a 30% market share
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Combined cycle
gas-fired generation
Coal with CCS
Wind and hydro
Cogeneration
Renewable growth opportunities
Great opportunities for further renewables development across Canada
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Saskatchewan 180 MW wind RFP
submitted
700 MW of high quality sites across
Canada
Significant acquisition opportunities
Western US: The TransAlta advantage
Our position in the Western U.S. provides us with strong opportunities to build
scale and improve cash flow stability
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Australia: Growth opportunities
TransAlta has developed significant competitive advantages to grow its gas operations in Western Australia
15 years experience in
Australia
Operated throughout
business cycles
Strong customer relationships
Proven track record of
reliability
Valued partner
Strong stakeholder relations
Demand growing
~9% per year
Options for growth:
50 - 100 MW
increments
Leading
behind-the-fence
generator
Competitive
Advantages
Market
Fundamentals
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Financial strategy
Objectives
Drive
Shareholder
Value
Maintain
Financial
Strength &
Flexibility
Targets Actions
TSR = 8 – 10% / yr
Consistent growth
Optimize capital
allocation
Continuous
improvements
Diversify risk
Investment Grade
Strong liquidity
Access to capital
22
We will remain disciplined in how we manage our balance sheet and grow
the company
2012 - 2015
Funds from operations
Sustaining capex
Net dividends
Total
$ 0.9
$ (0.5)
$ (0.2)
$ 0.2
2012e
($B)
Excess cash flow
$ 1.0
$ (0.4)
$ (0.2)
$ 0.4
2013-2015e
Average / year
($B)
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Balance Sheet Growth Dividend
Continued investments in growth over the medium-term will drive TSR target
Medium-term EBITDA growth
$M
2005 - 2008
Incremental EBITDA from growth and optimization
2009 – 2010 2011 – 2013 2014 – 2020
EBITDA
growth &
dividend
yield
delivering
TSR of
8 – 10%
* Growth based on utilizing only free cash flow of $400M per year
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Historical growth
of $40 - $60M in
EBITDA / YR
$-
$250
$500
$750
$1,000
$1,250
$1,500
$1,750
$60 $70 $80 $90 $100 $110 $120
Long-term upside potential
$M
Estimated Incremental EBITDA in 2021
$750 - $1,250 M 2
$750
$1,000
$1,250
Alberta Power Prices 2021 ($/MWh)
2 Includes Sundance Units 3 – 6, Keephills, Sheerness, and Alberta Hydro facilities
End of PPAs will provide significant EBITDA upside
3 Minimum power prices required for new NGCC facility
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1 Based on range of power prices between $60-$120/MWh and assumes facilities retire at the end of their 45 year life
Cumulative Potential
Upside1
(2021 - 2029)
$2 – 8 Billion
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
Credit Lines Available
Credit Lines Utilized
2.0
3.0
4.0
5.0
6.0
2010 Q3 2011 Proforma w/Keephills 3
Cash Flow to Interest
Committed Credit Lines
Sept. 30, 2011
$B
Financial strength & flexibility
Target:
4 - 5x Target:
20 - 25%
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10%
15%
20%
25%
30%
2010 Q3 2011 Proforma w/Keephills 3
Cash Flow to Debt
Cash flow to Debt
Cash flow to Interest
TransAlta is committed to maintaining its investment grade credit ratings
0%
20%
40%
60%
80%
100%
2006 2007 2008 2009 2010 2011e
Strong dividend coverage
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Dividend Payout as a Percentage of Free Cash Flow1
1 Free cash flow is defined as FFO less sustaining capital expenditures
Well positioned to grow
Disciplined in the returns we expect and on maintaining
investment grade credit ratings
Upside potential in the near, medium and long-term
Diversification strategy supports our low-to-moderate risk
profile, creates value for shareholders and reduces risk
Strong internally generated cash flow and access to capital
markets
Summary
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Additional information
($M) 2012e 2013e 2014e
Sustaining $430 - 475 $305 - 350 $365 - 410
Routine Capital $100 - 115 $85 - 100 $80 - 95
Major Maintenance $290 - 310 $180 - 200 $245 - 265
Mine Capital $40 - 50 $40 - 50 $40 - 50
Other1 $70 - 90 $30 - 50 $30 - 50
30
Setting up for sustained long-term operational excellence
Sustaining capital
1 Includes repowering/life extension and productivity
($M) Coal
Gas and
Renewables Total
Capitalized $215 - 230 $75 - 80 $290 - 310
GWh lost 2,880 - 2,890 420 - 430 3,300 - 3,320
31
2012 Major maintenance plan
Major maintenance
In Progress MW 2011e 2012e Total ($M)
Keephills 1 uprate 23 $5 - 15 $15 - 25 $343
Keephills 2 uprate 23 $10 - 20 $10 - 20 $344
Sun 3 uprate 15 $5 - 10 $15 - 20 $275
New Richmond 68 $20 - 40 $165 - 185 $205
Total 129 $40 - 85 $205 - 250 $300
32
1 Bone Creek capital spend prior to the acquisition was $23M, which does not form part of our total project cost. Spend prior to 2010 was $4M 2 Keephills 3 capital spend prior to 2011 was $929M 3 Keephills 1 uprate spend prior to 2011 was $4M 4 Keephills 2 uprate spend prior to 2011 was $6M 5 Sundance 3 uprate spend prior to 2011 was $3M
Growth capital outlook
All projects tracking on time and on budget
Completed MW 2011e 2012e Total ($M)
Bone Creek 19 $(5) - 0 $521
Keephills 3 225 $70 - 90 $1,010 – 1,0202
Total 244 $65 - 90 $1,062 – 1,072
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
2011 2012 2013 2014 2015
Total Portfolio Contractedness
MW
Highly contracted with upside potential
Contracting strategy provides solid downside protection while maintaining
leverage to power price recovery
Adjusted Capacity Upside potential
AB PPA ST Merchant Contracted
LT Contract Open Merchant
2013 2014 2012 2011 2015
95% 86% 77% 70% 65%
2012 Contracted Prices
AB $60 - $65 / MWh
PACNW $50 - $55 / MWh
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$0
$200
$400
$600
$800
2012 2013 2014 2015 2016 2017 2018 2019 Thereafter PerpetualPrefs
CAD MTN USD Notes
(CDN $M)
1 Based on Sept. 30, 2011 FX rate of $1.03 CAD/US
Debt profile supports balance sheet
Minimal debt refinancing over the short-term provides ample financial flexibility
1
34
Advanced development pipeline
* TransAlta’s ownership
LOCATION PROJECT CAPACITY FUEL TYPE RESOURCE & TURBINE CAPEX RANGE PPA /
MW SITE CONTROL Applied Secured SECURED $ MM LTC
Saskatchewan Mistahay Utin 175 Wind In progress TBD $300 - $350 PPA/LTC
California Black Rock 1-4 117* Geothermal In Progress $500 - $600 PPA/LTC
Alberta Sundance Bridge 1 (Sun 7) 700 Gas-fired TBD $1,200 - $1,400 Merchant
California Black Rock 5-6 117* Geothermal TBD $500 - $600 PPA/LTC
Alberta Sundance Bridge 2 (Sun 8) 700* Gas-fired TBD $1,200 - $1,400 Merchant
Alberta Sundance Bridge 3 (Sun 9) 700* Gas-fired TBD $1,200 - $1,400 Merchant
Alberta Dunvegan 100 Hydro TBD $500 - $600 Merchant
TOTAL MW : 2,609 TOTAL COST: $5.4 B - $6.4 B
2018 - 2019
2021 - 2022
Projects in Advanced Development
TARGET
COMMERCIAL
OPERATION DATE
ENVIRONMENTAL
AND PERMITS
2015
2014 - 2015
TBD
2015 - 2016
2016 - 2017
35