Transalta Corporation · TSX:TA
Transalta — Investor Presentation (May 2013)
21 slides from Transalta's investor presentation, May 2013
Slide 1: TransAlta Investor Presentation May 2013
May 2013 TransAlta Investor Presentation 1
Slide 2: Forward Looking Statements
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 t
Slide 3: TransAlta today
TransAlta today Canada’s largest publicly traded wholesale power Coal: 4,926 MW 1 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 Total fleet
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 opportunities for growth Attractive yield supported by adequate cash flow 7.5% dividend yield Highly contracted assets Increm
Slide 5: Financial strategy
Financial strategy Objectives Targets Actions Drive TSR = 8 – 10% / yr Consistent growth Shareholder Value $40 - $60 million in Optimize capital EBITDA growth allocation Maintain Investment Grade Continuous Financial improvements Strong liquidity Strength & Flexibility Access to capital Diversify ri
Slide 6: Highly contracted portfolio with upside potential
Highly contracted portfolio with upside potential Hedge targets increased to support revenue certainty Total Portfolio Contractedness1 MW 7,000 90% 78% 76% 76% 2013 Contracted Prices 6,000 AB ~ $60/ MWh 5,000 PACNW ~ $40/ MWh 4,000 3,000 2014 Contracted Prices 2,000 AB ~ $55/ MWh 1,000 PACNW ~ $45/
Slide 7: Renewables platform
Renewables platform Leading provider of renewable energy with over 2,200 MW of capacity 2008 TA: 7,963 MW Renewables 15% Gas Coal 23% 62% 2013 TA: 9,051 MW Renewables 24% Coal Gas Wind: 1,129 MW 55% Hydro: 919 MW Geothermal: 164 MW 21% Coal Gas 55% 21% 7
Slide 8: 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 9: 2012 Achievements: Australian acquisition
2012 Achievements: Australian acquisition U.S.$318 million acquisition of Solomon Power Project (125 MW) to supply Electricity to Fortescue Mining Group (FMG) 16-year Power Purchase Agreement with FMG; guaranteed value for 21 years either through a 5 year extension or sale of plant back to FMG
Slide 10: 2012 Achievements: MidAmerican strategic partnership
2012 Achievements: MidAmerican strategic partnership Strategic partnership builds on existing relationship with MidAmerican Partnership will originate and evaluate all Canadian gas fired generation or gas reserve projects. Includes Sundance 7 Development costs split between partners Opport
Slide 11: 2012 Achievements: Positioning Centralia for the Future
2012 Achievements: Positioning Centralia for the Future Entered into agreement with Puget Sound Energy (PSE) Secures cash flows needed for the plant to run to the end of its Centralia Gross Margin Sensitivity life 2013 - 2016 Average Annual Gross Margin ($M) Significantly reduces merchant expo
Slide 12: Canadian GHG emissions certainty
Canadian GHG emissions certainty September of 2012 the Canadian Federal Government finalized coal GHG legislation Revised regulations added 43 additional years to TransAlta’s fleet Weighted average life of TransAlta’s Alberta coal fleet is 19 years under revised regulations 12
Slide 13: 2013 Estimated excess cash flow and dividend coverage
2013 Estimated excess cash flow and dividend coverage Significant excess cash flow available for debt retirement and/or growth (including funding of Sundance A) 2013 Estimated Cash Flow/Dividend Coverage Sensitivity Analysis FFO Scenario $ 750 $ 800 $ 850 $ 900 $ 950 Sustaining Capex (mid point) $ (
Slide 14: Medium-term upside potential from Sundance A
Medium-term upside potential from Sundance A Sundance A expected to generate cumulative incremental EBITDA in the range of $120 to $280 million in the 2018-2019 timeframe once the PPA expires Estimated incremental annual Common dividends as % of FCF1 $M EBITDA Post Sun A PPA Post Sundance A PPA Repr
Slide 15: Longer-term upside potential from Alberta PPA plants
Longer-term upside potential from Alberta PPA plants Expiry of the Alberta Coal and Hydro PPAs is expected to provide significant EBITDA and dividend coverage upside Common dividends as % of FCF1 2021 Post PPA Cumulative potential upside Represents FFO starting point of $800M (2021 – 2030) Represent
Slide 16: Alberta electricity market
Alberta electricity market¹ Load growth has been ~3% per year for last 10 years AESO (Alberta Electric System Operator) forecasting similar growth rate going forward Equivalent to the need of 300-400 MW of new capacity each year Load largely driven by industrial/commercial customers which ge
Slide 17: 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 17
Slide 18: Historical power prices in Alberta
Historical power prices in Alberta Since deregulation, AB Pool prices have averaged $65 / MWh $/MWH ¹ Source: AESO 18
Slide 19: 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 19
Slide 20: Other markets where TransAlta is positioned to grow
Other markets where TransAlta is positioned to grow B.C. Western U.S. Potential load growth of 3.5% per year depending on Load growth of ~1.4% / year over next ten years in LNG development both PacNW and California Key opportunities for gas powered generation are at Based on analysis of PacN
Slide 21: Key take-aways
Key take-aways Highly contracted and diversified asset base, generating strong cash flows Focused on delivering shareholder value through a combination of dividend and growth Significant upside post PPA Well positioned to grow 21