Slide 1: TransAlta Power, L.P. Investor Update Fall 2006
20 06 TransAlta Power, L.P. (TPW.UN) Investor Update Fall 2006 Ian Bourne President and director
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 Power, L.P. and TransAlta Cogeneration, L.P. These statements are subject to a number of risks and uncertainties that ma
Slide 3: Organizational structure
Organizational structure 0.01% TransAlta 100% Power, Ltd. TransAlta Power, L.P. (General Partner) 49.99% 50.01% • 6 board members • 2 TransAlta Corp. TransAlta management Cogeneration, L.P. 99.99% • 7 board members • Owns generation Public • 3 TransAlta Corp. assets investors management
Slide 4: Financial highlights
Financial highlights TransAlta Cogeneration, L.P. ($ millions) YTD 2006 YTD 2005 Revenue 193 172 $10M variance due to: Gross margin 89 88 1) Increase in planned maintenance 2) Increase in Net income 29 33 fuel costs offset by higher revenues Cash available for 49 59 distribution
Slide 5: A look at 2006
A look at 2006 2.0% TPW.UN Price vs. Capped Utilities Index 0.0% -2.0% Announced Windsor unplanned outage -4.0% -6.0% -8.0% -10.0% -12.0% Announced write- down of -14.0% Ottawa -16.0% 1/10/06 1/31/06 2/21/06 3/14/06 4/4/06 4/25/06 5/16/06 6/6/06 6/27/06 7/18/06 8/8/06 8/29/06 TransAlta Power S&P/TSX
Slide 6: Distributions per unit
TPW.UN cash distributions $0.86 Cash distributions 5 year average $0.84 Cash available for distribution payout ratio = $0.82 97% * $0.80 Distributions per unit $0.78 Surplus cash $0.76 applied to $0.74 acquisitions $0.72 $0.70 $0.68 *assuming 2006E cash available is $0.66 midpoint of estimate and ca
Slide 7: TransAlta Power's response: Ottawa impairment
TransAlta Power’s response Event: Ottawa impairment Response: Short term Long term Ottawa EBITDA contribution - Curtail production and - Renegotiate sales sell gas contract - Repurchase gas and run plant - Monitor gas market for - Operate as peaker 2008-2012 gas contract plant AND/OR - Renegotiate s
Slide 8: TransAlta Power's response: increased planned maintenance
TransAlta Power’s response Event: 2006 increased planned maintenance Response: Year Capital Work completed/planned expenditures* 2004 – 2005 Average $11 • Sheerness uprate million per year • Major maintenance at Ft. Sask and Sheerness • Parts purchased in advance for 2006 2006 $25 million - • Major
Slide 9: TransAlta Power's response: increased natural gas pricing
TransAlta Power’s response Event: Increased natural gas pricing Response: Plants Impact Mississauga Increase in gas partially offset by increase in revenue 2006 net increase $7.2M 2007 minimal due to contract Windsor Minimal due to contract Ottawa YTD Q2 2006 gas sales of approx. $10M 2007 locked in
Slide 10: TransAlta Power's response: unplanned outages
TransAlta Power’s response Event: Unplanned outages Response: Unplanned outages are a normal part of our business Lease engine program reduces lost production at Ontario Forced outage rate in 2006 lower than 2005 Forecast 2006 production comparable to 2005 Forecast 2006 availability higher
Slide 11: Production and availability as expected
Production and availability as expected Production and Availability by Fuel Source Ottaw a optimization 1/2 year of production 3,500 slightly low ers production 98.0 P roduction (M Wh) 3,000 96.0 Availability (% ) 2,500 94.0 2,000 92.0 1,500 1,000 90.0 500 88.0 0 86.0 2002 2003 2004 2005 2006E Produ
Slide 12: Cash available for distributions secure
Cash available for distributions secure Cash available for distribution = Cash from operations before changes in working capital – debt payments – maintenance capex TransAlta 2004- 2007 – 2008E Power, L.P. 2005 2006E (millions) (average) (average) Cash available $60 $55 to $58 EBITDA for distributio
Slide 13: Positioning for the future
Positioning for the future • Suspension of DRIP/Commencement of NCIB • Levelization repayment • Renegotiating Ottawa contract • Balance Sheet capacity (5% debt/total cap vs. 35% peer average)* • Growth opportunities *Peer group includes EPCOR Power L.P., Northland Power Income Fund, Algonquin Power
Slide 14: Why TransAlta Power?
Why TransAlta Power? • Solid operating history • Highly contracted asset base • High financial flexibility • SR-2/STA-2 stability rating • Distributions expected to be 35% tax deferred in 2006 • Opportunities for growth and fuel source diversification
Slide 15: Appendix
APPENDIX PUWERED Fo! eel
Slide 16: Sales & supply contracts
Sales & supply contracts 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Sheerness - 385 MW PPA Fuel Commodity Fort Saskatchewan - 71 MW Long-term contract Fuel Commodity Flow through Fuel Transportation Flow through Meridian - 110 MW Long-ter
Slide 17: TPW.UN distributions and taxability
TPW.UN distributions and taxability $0.80 $0.60 Taxable income $0.40 Return of capital $0.20 $0.00 2002 2003 2004 2005 2006E* 1998 to 2003 > distributions classified as ‘return of capital’ 2004 to 2005 > distributions 85% and 36% tax deferred, respectively 2006 > distributions expected to be approxi
Slide 18: Distributable cash – TA Cogen
Distributable cash – TA Cogen Cash available 2005 2004 2003 2002 2001 for distribution ($ millions) Net earnings $(2) $70 $52 $38 $28 Plus: Depreciation $146 $63 $39 $28 $26 and amortization Less: Capital $12 $11 $8 $7 $1 expenditures Less: Debt $5 $4 $3 $3 $2 repayments CASH AVAILABLE $127 $118 $80
Slide 19: Distributable cash – TransAlta Power
Distributable cash – TransAlta Power $ millions, unless 2005 2004 2003 2002 2001 otherwise stated Share of TA $63 $59 $40 $28 $26 Cogen cash available for distribution Operating and $(1) $(1) ($1) - - interest expense Cash available for $62 $58 $39 $28 $26 distribution Distributions in $59 $56 $38 $