Transalta Corporation · TSX:TA
Transalta — Investor Presentation (February 2003)
15 slides from Transalta's investor presentation, February 2003
Slide 1: Revenue and earnings streams
Revenue and earnings streams February 2003. NYSE : TAC TSX : TA 1
Slide 2: Agenda
Agenda → Introduction → Matrix of operations → Source of revenue → Economics of electricity generation • Alberta PPAs • Merchant: contracted • Merchant: non-contracted • Long-term: contracted → Corporate EBIT – corporate net income • Corporate interest (capitalized / expensed) • Corporate tax → Cash
Slide 3: Operations
Operations Coal Gas Renewables Alberta PPAs ü ü Long-term contracts ü ü Merchant production: ü ü ü contracted Merchant production: ü ü ü non-contracted 3
Slide 4: Profit drivers
Profit drivers Avail- Prod- Price ability uction Fuel Costs Interest Alberta PPAs ü ü ü ü ü Long-term contracts ü ü Merchant production: ü ü ü ü ü contracted Merchant production: ü ü ü ü ü non-contracted ü only if targets exceeded 4
Slide 5: Source of revenue
Source of revenue Capacity Share (MWh) (%) Alberta PPAs 4,329 53.7 Long-term contracts 1,350 16.7 Merchant production: 1,263 15.7 contracted Merchant production: 1,122 13.9 non-contracted Total 8,065 100.0 5
Slide 6: Economics of electricity generation
Economics of electricity generation 1) Conversion: fuel to KWh 2) OM&A 3) Capital cost recovery 4) Financing recovery 5) Volume 6
Slide 7: Alberta PPAs
Alberta PPAs → Coal and hydro → PPA duration • Wabamun: 2003 • Sundance 1&2: 2017 • Sundance 3-6: 2020 • Keephills: 2020 → One customer per PPA → Fixed and flow-through payments → Key profit drivers • Availability • Price • Costs – fuel and OM&A 7
Slide 8: Alberta PPAs: how they work
Alberta PPAs: how they work By formula Over / under achieve PPA Price N/A = Fuel Deemed Price / quantity + OM&A Deemed Over / under spend + Capital Deemed depreciation Over / under-investment over time recovery + Financial Deemed interest x Finance set by PPA, then can do better recovery deemed debt
Slide 9: Long-term contracts
Long-term contracts → Typically gas, cogen plants → Contracts for output > 20 years → Few customers per plant • Cogen: 2 to 4 • Combined cycle: 1 → Some excess capacity → Capacity, energy and thermal payments → Gas price / transportation exposure (Ontario but not Mexico) → Key profit drivers • Avail
Slide 10: Long-term contracts: how they work
Long-term contracts: how they work → Price Contracted Pass through @ contracted → Fuel Or contracts matching power contracts → OM&A Capacity payment → Depreciation Capacity payment 10
Slide 11: Merchant production: contracted
Merchant production: contracted → Coal and gas → Contracts typically 3 to 7 years → Several customers per plant → Energy payments only → Key profit drivers • Market price at contract renewal time • Production • Availability • Costs 11
Slide 12: Merchant production: non-contracted
Merchant production: non-contracted → Coal and gas → Output sold in spot to short-term forward market → Number of customers • Alberta: 1 (Power Pool) • Ontario: 1 (IMO) • Potentially several in PacNW → Energy payments only → Key profit drivers • Market price • Production • Availability • Costs 12
Slide 13: Corporate interest & tax
Corporate interest & tax Fixed → Total interest = Debt @ average rate Floating Construction in progress at 100% of → Capitalized CICA book value x interest rate = capitalized interest Total debt x interest rate - capitalized → Expensed = interest expense 13
Slide 14: Corporate tax
Corporate tax → Corporate rate of 30 – 35% 14
Slide 15: Profit drivers
Profit drivers Avail- Prod- Price ability uction Fuel Costs Interest Alberta PPAs ü ü ü ü ü Long-term contracts ü ü Merchant production: ü ü ü ü ü contracted Merchant production: ü ü ü ü ü non-contracted ü only if targets exceeded 15