Slide 1: TransAlta Investor Presentation
October 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: Leading Diversified Power Generation Company
Leading Diversified Power Generation Company Coal: 4,926 MW1 Diversified fleet of ~9,000 MWs located in Canada, United States and Australia Gas: Market cap of over $3.5 billion 1,913 MW Investment grade credit ratings Hydro: Sponsor and majority owner of TransAlta 898 MW Renewables W
Slide 4: Value Proposition
Value Proposition Diversified portfolio Over 75 facilities spanning multiple regions and fuels Attractive yield supported by adequate cash flow Highly contracted assets provide stable cash flows and support dividend 500 MW of new long-term contracts recently signed Significant incremental EB
Slide 5: Delivering on the Strategy
Delivering on the Strategy Objective Actions Extend life of existing assets • CE Gen: 23 year contract with City of Riverside through new contracts • CE Gen: 24 year contract with Salt River Project • Ottawa gas fired: 20 year contract with OPA (AAA) • Centralia: 11 year contract with Puget Energy O
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 90% 83% 78% 77% CONTRACTED PRICES 2013 AB ~ $60/ MWh Pac NW ~ $40/ MWh 2014 AB ~ $55/ MWh Pac NW ~ $45/ MWh ¹ Capacity adjusted volumes 6
Slide 7: Alberta Continues to be a Great Place to Invest
Alberta Continues to be a Great Place to Invest Alberta Interconnected Electric System (AIES) Alberta continues to Reserve Margin, 2000 - 20181 see considerable demand growth due to industrial and mining activities, and their indirect impacts Also, significant retirements in capacity in next 10
Slide 8: Price Required to Attract New Generation in Alberta
Price Required to Attract New Generation in Alberta¹ AESO estimates that prices in the range of $55-$125 / MWh are required to attract new combined cycle generation 8
Slide 9: Historical Power Prices in Alberta
Historical Power Prices in Alberta Since deregulation, AB Pool prices have averaged $65 / MWh Source: AESO 9
Slide 10: AB forward market is a poor predictor of future spot market settles
AB forward market is a poor predictor of future spot market settles Forward prices tend to reflect spot fundamentals not future fundamentals Average annual Alberta power prices compared to historical forward Alberta power prices $/MWh Source: Canaccord Genuity Data: NGX, Alberta Electric System Oper
Slide 11: Investing in Alberta - Sundance 7
Investing in Alberta - Sundance 7 As noted earlier, Alberta market continues to see considerable demand growth Large combined cycle (CCGT) units offers the most efficient and competitive technology given the scale of generation replacement required Site selected Turbines secured and long-ter
Slide 12: Positioned for further growth in Australia
Positioned for further growth in Australia Established in Western Australia in the early 1990’s Specialists in safe, reliable supply of power to remote mining operations 6 power stations 480 MW installed capacity; 425 MW net to TA Gas turbine and diesel reciprocating engine technologies
Slide 13: Sizeable Future Growth Opportunity Set
Sizeable Future Growth Opportunity Set ~21,000 MW of market opportunity requiring potential investment of $42 billion over the next 10 years MW Competitive Advantages: Creation of operational and corporate synergies Ability to use tax attributes in the U.S. Ability to manage merchant risk Mu
Slide 14: Growth in Renewables
Growth in Renewables TransAlta Renewables Brings Significant benefits Establishes focused and competitive vehicle for pursuing and funding growth opportunities in renewable power Provides additional financial flexibility for TransAlta TransAlta retains majority ownership and operator Continu
Slide 15: Significant Upside Potential Post Alberta PPAs
Significant Upside Potential Post Alberta PPAs Expiry of the Alberta Coal and Hydro PPAs expected to provide significant EBITDA upside and dividend coverage Current Coal PPAs generate average revenue of ~$30/MWh Current Coal PPAs generate average revenue of ~$30/MWh ¹ Illustrative representation of
Slide 16: Cash Flow Strength
Cash Flow Strength Excess Funds from Operations available to fund sustaining capital, debt and growth $M ¹ Potential based on $65/MWh price in Alberta 16
Slide 17: Is EPS the best measure for TransAlta?
Is EPS the best measure for TransAlta? Prudently reinvesting in our assets for the long-term Typical Power Plan EBITDA & TransAlta Illustrative EBITDA & Depreciation Profile Depreciation Profile $M $M ~35% D&A as a % of EBITDA ~55% D&A as a % of EBITDA ~40% D&A as a % of EBITDA Capital investment
Slide 18: Focused on Creating Value
Focused on Creating Value Extending life of existing assets through new contracts Continuously reinvesting in and optimizing existing assets Diversifying and growing through new projects, acquisitions and creation of TA Renewables Solid dividend coverage Significant upside post-PPA Well