Transalta Corporation · TSX:TA
Transalta — 47th Annual EEI Financial Conference (November 2012)
23 slides from Transalta's conference presentation, November 2012
Slide 1: 47th Annual EEI Financial Conference
November 2012 47th Annual EEI Financial Conference Brett Gellner Chief Financial Officer 1
Slide 2: Forward looking statements
Forward looking statements This presentation contains 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
Slide 3: TransAlta today
TransAlta today Coal: Canada’s largest publicly traded wholesale power 4,940 MW generator & marketer with over 100 years of operating experience Diversified asset base with over 75 facilities strategically Gas: positioned in Canada, Western U.S. and Western 1,913 MW Australia 2,200 MW of re
Slide 4: Why TransAlta
Why TransAlta Diversified generation portfolio located in growing markets Over 75 facilities spanning multiple fuels and geographies Well positioned in markets with opportunity for growth Attractive yield supported by adequate cash flow 8.0% dividend yield Approximately $350M per year in fre
Slide 5: Financial strategy
Financial strategy Objectives Targets Actions Drive Consistent growth Shareholder TSR = 8 – 10% / yr Value Optimize capital allocation Maintain Investment Grade Continuous Financial improvements Strong liquidity Strength & Flexibility Access to capital Diversify risk 5
Slide 6: Renewables platform
Renewables platform Leading provider of renewable energy with over 2,000MW of capacity 2008 TA: 7,963 MW Renewables 15% Gas Coal 23% 62% 77 MW 68 MW 822 MW 125 MW 439 MW 1 MW 14 MW 398 MW 2013 5 MW 164 MW TA: 9,065 MW Renewables 24% Coal Gas Wind: 1,129 MW 55% Hydro: 919 MW Geothermal: 164 MW 21% Co
Slide 7: 2012 Achievements
2012 Achievements Above average planned maintenance program in 2012 with majority of outages completed Resolved Sundance A decision which adds incremental cash flow especially beginning in 2018 Signed anchor contract at Centralia, reducing merchant risk Reduced operating and capital costs at
Slide 8: Australian acquisition
Australian acquisition $318 million acquisition of Solomon Power Project (125 MW) to supply Electricity to Fortescue Mining Group (FMG) 16-year Power Purchase Agreement with FMG; guaranteed value for 21 years either through a 5 year extension or sale of plant back to FMG Escalating capacity pa
Slide 9: MidAmerican strategic partnership
MidAmerican strategic partnership Strategic partnership builds on existing relationship with MidAmerican Partnership will originate and evaluate all Canadian gas fired generation or gas reserve projects. Includes Sundance 7 Development costs split between partners Opportunity for TransAlta
Slide 10: Federal GHG emissions regulations
Federal GHG emissions regulations End of Life: For units built before 1975, the earlier of 50 years or Dec 31, 2019 For units built after 1974 but before 1986, the earlier of 50 years or Dec 31, 2029 Units built after 1986 - 50 years Performance standard required to operate beyond end of l
Slide 11: Federal GHG emissions regulations
Federal GHG emissions regulations Weighted average life of TransAlta’s Alberta coal fleet is 19 years under revised regulations 11
Slide 12: Federal GHG emissions regulations
Federal GHG emissions regulations Revised regulations adds 43 additional years and approximately 89 TWh of anticipated additional production to TransAlta Plant MW Annual GWh1 45 Year Rule Final Years Increase Total GWh Regulations Sundance 1 280 2,085 2017 2019 2 4,170 Sundance 2 280 2,085 2018 2019
Slide 13: Sundance units 1 & 2 cash flow under new regulations
Sundance units 1 & 2 Sundance units 1 & 2 are expected to generate positive cash flow under the new regulations 45 year rule Final Regulations ($M) ($M) Net Payments1 ($50) Net Payments1 ($50) Initial Repair Costs ($190) Initial Repair Costs ($190) Operating Cash Flow $225 - $275 Operating Cash Flow
Slide 14: Alberta electricity market
Alberta electricity market¹ Load growth has been 3% per year for last 10 years (2002-2011) and last 20 years (1991- 2011) AESO is forecasting similar growth rate going forward Equivalent to the need of 400-500 MW of new capacity each year By 2022, ~5,200 MW of new capacity required Load la
Slide 15: Alberta supply & demand fundamentals
Alberta supply & demand fundamentals¹ At least 5,200 MW’s of additional generating capacity required to meet forecasted peak demand over the next 10 years. 1Above MW’s exclude future retirements 2Above MW’s include ~850 MW’s of retirements ¹ Source: AESO 2012 Long-term Outlook 15
Slide 16: Price required to attract new generation
Price required to attract new generation¹ AESO estimates that prices in the range of $55-$125 / MWh are required to attract new combined cycle generation ¹ 16
Slide 17: Historical power prices in Alberta
Historical power prices in Alberta Since deregulation, AB Pool prices have averaged $65 / MWh ¹ Source: TransAlta 17
Slide 18: Long-term contract signed at Centralia
Long-term contract signed at Centralia Centralia re-contracting and realigning cost structure Agreement with Puget Sound Energy secures cash flows needed for the plant to run to the end of its life The contract significantly reduces merchant exposure in the PacNW 45% contracted in 2013, 35% fr
Slide 19: Centralia gross margin sensitivity
Centralia gross margin sensitivity Centralia 2013-2016 Average Annual Gross Margin ($M) $M $170 - $175 $140 - $145 $110 - $115 $80 - $85 35 40 Price $/MW Market 45 50 Price ($/MWh) for remaining open positions 19
Slide 20: Forward gas prices
Forward gas prices Forward markets have risen more than 15% since lows in April 2012 Price of Natural Gas $/GJ 2013 Forward AECO price 2014 Forward AECO price 20
Slide 21: Other markets where TransAlta is positioned to grow
Other markets where TransAlta is positioned to grow B.C. Western U.S. Load growth of 3.5% per year over next ten years Load growth of ~1.4% / year over next ten years in according to BC Hydro both PacNW and California ~ 2,000 MW of power will be required by 2019. Based on analysis of PacNW u
Slide 22: Adequate dividend coverage
Adequate dividend coverage Adequate dividend coverage under the following range of FFO scenarios Steady State Cash Flow/Dividend Coverage Sensitivity Analysis 1 FFO Scenario $ 750 $ 800 $ 850 $ 900 $ 950 Sustaining Capex $ (355) $ (355) $ (355) $ (355) $ (355) 2 Pfd share dividends and other distrib
Slide 23: Key areas of focus
Key areas of focus Medium Term (2013 – 2017) Maintain strong availability across the fleet Complete rebuild of Sundance A Optimize operating and capital costs Continue to diversify the asset base through growth Reduce merchant risk through additional contracts at Centralia and in Alberta
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