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Investor Presentation

March 2015

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Forward Looking Statements

This presentation may include forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable

securities legislation. All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumptions were made

and on management’s experience and perception of historical trends, current conditions, and expected future developments, as well as other factors deemed appropriate in the

circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”,

“will”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “project”, “foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements are not

guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance to be materially different from

that projected. In particular, this presentation contains forward-looking statements pertaining to our business and anticipated future financial performance; our success in

executing on our growth projects; the timing and the completion and commissioning of projects under development, including major projects such as the South Hedland Power

Project, and their attendant costs; expectations regarding the Alberta Electric System Operator’s (“AESO”) plans for resolving regional constraints on Alberta’s transmission

system; spending on growth and sustaining capital and productivity projects; expectations in terms of the cost of operations, capital spend, and maintenance, and the variability

of those costs, including expectations on the cost savings anticipated from the major maintenance agreement entered into with Alstom; the impact of certain hedges on future

reported earnings and cash flows; expectations related to future earnings and cash flow from operating and contracting activities (including estimates of 2015 comparable

earnings before interest, taxes, depreciation, and amortization (“EBITDA”), comparable funds from operations (“FFO”), and comparable free cash flow; estimates of fuel supply

and demand conditions and the costs of procuring fuel; expectations for demand for electricity in both the short term and long term, and the resulting impact on electricity prices;

the impact of load growth, increased capacity, and natural gas costs on power prices; expectations in respect of generation availability, capacity, and production; expectations

regarding the role different energy sources will play in meeting future energy needs; expected financing of our capital expenditures; expected governmental regulatory regimes

and legislation and their expected impact on us and the timing of the implementation of such regimes and regulations, as well as the cost of complying with resulting regulations

and laws; our trading strategies and the risk involved in these strategies; estimates of future tax rates, future tax expense, and the adequacy of tax provisions; accounting

estimates; anticipated growth rates in our markets; our expectations regarding proceedings before the Alberta Utilities Commission (the “AUC”) as well as those relating to the

outcome of existing or potential legal and contractual claims, regulatory investigations, and disputes; expectations regarding the renewal of collective bargaining agreements;

expectations for the ability to access capital markets at reasonable terms; the estimated impact of changes in interest rates and the value of the Canadian dollar relative to the

U.S. dollar and other currencies in locations where we do business; the monitoring of our exposure to liquidity risk; expectations in respect of the global economic environment

and growing scrutiny by investors relating to sustainability performance; our credit practices; the estimated contribution of Energy Marketing activities to gross margin; and

expectations relating to the performance of TransAlta Renewables Inc.’s (“TransAlta Renewables”) assets and plans for the sale of contracted assets to TransAlta Renewables.

Factors that may adversely impact our forward-looking statements include risks relating to: fluctuations in market prices and the availability of fuel supplies required to generate

electricity; our ability to contract our generation for prices that will provide expected returns; the regulatory and political environments in the jurisdictions in which we operate;

environmental requirements and changes in, or liabilities under, these requirements; changes in general economic conditions including interest rates; operational risks involving

our facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels,

water, or wind required to operate our facilities; natural or man-made disasters; the threat of domestic terrorism and cyberattacks; equipment failure and our ability to carry out

or have completed the repairs in a cost-effective manner or timely manner; commodity risk management; industry risk and competition; fluctuations in the value of foreign

currencies and foreign political risks; the need for additional financing; structural subordination of securities; counterparty credit risk; insurance coverage; our provision for

income taxes; legal, regulatory, and contractual proceedings involving the Corporation; outcomes of investigations and disputes; reliance on key personnel; labour relations

matters; development projects and acquisitions, including delays in the construction of the South Hedland Power Project and the construction of the Australia Natural Gas

Pipeline; failure to proceed with plans for the sale of contracted assets to TransAlta Renewables as a result of failure to agree to commercial terms with the independent

directors of TransAlta Renewables, adverse market conditions or failure to obtain any required regulatory, shareholder or other third party approvals; and the satisfactory receipt

of applicable regulatory approvals for existing and proposed operations and growth initiatives. The foregoing risk factors, among others, are described in further detail in the

Risk Management section of this MD&A and under the heading “Risk Factors” in our 2015 Annual Information Form. Readers are urged to consider these factors carefully in

evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements included in this

document are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new information, future events or

otherwise, except as required by applicable laws. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different extent or at a

different time than we have described, or might not occur. We cannot assure that projected results or events will be achieved.

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• One of Canada’s largest publicly traded

power generator & marketer with over 100

years of operating experience

• Diversified asset base with 64 facilities

strategically positioned in Canada, Western

U.S. and Western Australia

• Total fleet capacity of over 8,500 MWs

• Sponsor and 70% owner of TransAlta

Renewables

• Listed on Toronto and New York stock

exchanges

• Investment grade credit ratings

Our Platform

1Includes 100% of TransAlta Renewables’ assets.

• Coal 4,930 MW

• Gas 1,447 MW

• Wind 1,271 MW1

• Hydro 914 MW1

• Gas Pipeline 270 km

• Energy Marketing

Customer Business 700 MW

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Strategic Focus – Operational Excellence

Improvement of our competitive position

• Strong Availability across the fleet

• Lower mining, operating & outage costs

at Alberta coal

• 3-year maintenance agreement with

Alstom

• Productivity improvements at the plants

& mine

• Strategic agreements with OEMs in wind

and gas resulting in lower OM&A and

capital costs

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Strategic Focus – Growth and Optionality

Target an average of $40-$60 million per year in EBITDA growth

• $650 million in committed long-term

contracted growth underway, adding

$90 million of EBITDA in 2017

• Potential opportunity to life extend

Alberta coal through CCS and coal-to-

gas conversion

• Low-cost gas and hydro brownfield

expansion opportunities in Alberta

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Strategic Focus – Financial Strength and Stability

Positioned to fund growth in a low power price environment

• $500 million in debt reduction in 2014 with a plan to reduce debt by a

further $300 - $500 million in 2015

• Leverage TransAlta Renewables as a source of equity through the drop

down of TransAlta contracted assets

• Strong contract profile; 88% hedged in 2015 & 75% hedged through

2020

• All recent growth has been long-term contracted

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0

1,000

2,000

3,000

4,000

5,000

6,000

2015 2016 2017 2018

PPAsLong-term contractShort term contract / HedgesOpen Merchant

Total portfolio contractedness

2015 Hedge prices

AB ~$50 - $55/MWh

PacNW ~$40 - $45/MWh

2016 Hedge prices

AB ~$50 - $55/MWh

PacNW ~$45 - $50/MWh

MW

Hedges Mitigating Impact of Weaker Power Prices

88% 81% 77% 68%

Contract and hedging strategy underpin stable cashflows

Alberta

• Well hedged through 2015

• Hedge levels assume normal

wind and hydro volatility

• Positioned for upside from

mid-term price recovery

Pacific-Northwest

• Puget Sound Energy and other

long-term contracts provide

base of between ~280MW and

380MW

• Additional shorter-term hedges

managed dynamically to

capture market volatility

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Environmental Strategy

• Canadian federal regulations amended in 2012 designate useful life of coal plants as 50 years

• Weighted average life of TransAlta’s Alberta coal fleet is ~17 years

• Flexibility provisions enabling unit substitution and ability to apply years from one closed unit to

another to extend operating life

• Overlapping air emission regulation on SOx and NOx; Alberta government developing an

equivalency agreement with Federal gov’t to deal with air emissions

• As an outcome of forced coal unit retirements, the federal GHG regulations will equal and

eventually exceed the effects of CASA

Plant MW Annual GWh1 Final GHG

Regulations

Sundance 1 & 2 560 4,170 2019

Sundance 3 368 2,740 2026

Sundance 4 406 3,023 2027

Sundance 5 406 3,023 2028

Sundance 6 401 2,986 2029

Keephills 1 & 2 790 6,046 2029

Sheerness 1 98 1,415 2036

Sheerness 2 98 1,415 2040

Genesee 3 233 1,675 2055

Keephills 3 232 1,675 2061

¹ Based on 85% availability

-

10,000

20,000

30,000

40,000

50,000

60,000

ton

nes

NOx Emissions under final GHG Gazette Regs vs. CASA

GHG Legislation NOx emissions

NOx under CASA

Timing is the only issue

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Proven Track Record of Growth

$4.0 billion of growth during last five years

$650 million of growth underway

$M

$650M in

committed capital

~$90M in

incremental

EBITDA

Capital Invested in Growth

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$800

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

2014E 2017E 2018E 2021E

Existing Business Australian Growth Post PPA upside

Significant Near to Medium-term EBITDA Growth

Significant EBITDA Increase from Committed Growth and Post Alberta PPA Upside

Committed growth cash flows & Post-PPA upside

$M

Upside at

$75/MWH

Upside at

$65/MWH Upside at

$55/MWH

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Potential Investment Opportunities

• Gas-fired well positioned to meet 3,000 MW + of

additional generation required in Alberta by 2020

• Sundance 7, low cost option in our portfolio

• Saskatchewan and B.C. require additional

generation to meet growing loads

• Expansion & acquisition opportunities in United

States & Australia

• Evaluating hydro pumped storage at TransAlta’s

existing hydro sites

• Privatization of Australia’s electricity assets

• Significant acquisition opportunities

Gas-fired

Renewables &Transmission

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Options for Life Extension of Canadian Coal Assets

• Carbon Capture & Storage

has significant potential

• Evaluating coal to gas

conversions

• Flexibility under Federal

GHG legislation allows

optimization of cash flows

across the Alberta coal units

Pursuing Options to Transition Coal Assets

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Recent Accomplishments

Debt maturity profile is manageable over both the short and long-term

• $500 million reduction in net debt

since YE 2013

• Rating agencies have all re-

affirmed our investment grade in

2014

• As at Dec. 31, 2014, ~$1.6

billion in liquidity.

• $500 million was used to

pay USD maturity in Jan.

2015

Agency Rating Outlook

S&P BBB- Stable

Moody’s BBB- Negative

DBRS BBB Stable

Fitch BBB- Stable

120 27

177 400

500

400

520

$0

$200

$400

$600

$800

2015 2016 2017 2018 2019

CAD MTN USD Notes

$M Debt Maturity Schedule

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Performance Highlights

3 months ended Dec. 31 12 months ended Dec. 31

(in $CAD millions) 2014 2013 Change 2014 2013 Change

Comparable EBITDA $301 $242 $59 $1,036 $1,023 $13

Funds from Operations $225 $179 $46 $762 $729 $33

Free Cash Flow $104 $61 $43 $295 $295 -

Sustaining Capital $87 $96 $(9) $342 $341 $1

Adjusted Availability(1) 93.2% 91.8% 1.4% 90.5% 87.8% 2.7%

Q4 2014 commentary

• Comparable EBITDA increased over last year due to the following achievements offsetting lower

Alberta power prices:

• Strong availability throughout our generation portfolio

• Continued improved operational performance at Canadian Coal

• Higher than planned margins delivered by our Energy Marketing Team

• Robust hedging strategy

• FFO increased compared last year primarily due to lower reclamation costs and lower non-cash

mark to market gains included in EBITDA

• Strong portfolio availability in the quarter as a result of higher availability at Canadian Coal

(1) Adjusted for economic dispatching at Centralia Thermal

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3,000

3,200

3,400

3,600

3,800

4,000

4,200

4,400

2013 2014

$M

Net Debt

12%

13%

14%

15%

16%

17%

18%

2013 2014

Strengthening our Financial Position

$500 million reduction in net debt since YE 2013

¹ Assumes 50/50 treatment of Preferred shares and reported net debt balance

FFO / Debt1

Impact of

Foreign

Exchange

• Deliver FFO / Debt target in 2015

• Financing options / flexibility using TransAlta Renewables and out sources of funding

• Ability to meet all obligations including sustaining dividend and investment grade ratings

in a low price environment

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Funding Growth and Debt Reductions

TransAlta will use RNW as an efficient way to fund South Hedland and

other growth opportunities at TransAlta

Significant funding available finance growth opportunities

Committed Funding Requirements (2015 - 2017)

$ millions Low High

Debt Reductions $ (300) - $ (500)

Committed Growth Capital - South Hedland $ (570) - $ (570)

Total Uses $ (870) - $(1,070)

Potential Sources (2015 - 2017)

$ millions Low High

Excess Cash Flow¹ $ 300 - $ 300

Pfd Shares $ 300 - $ 500

RNW Drop Downs $ 700 - $ 1,000

DRIP $ - - $ 200

Total Sources2 $ 1,300 - $ 2,000

¹ Cash Flow after deducting sustaining capital, dividends and partner distributions

2 Does not include potential partnerships

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TransAlta Corporation and TransAlta Renewables are strategically aligned

Strategic Flexibility – Leveraging TransAlta Renewables

TransAlta Renewables

TransAlta

Public

70% 30%

• Sponsored vehicle to own long-term

contracted assets

• Access lower cost funding and

enhance returns for contracted assets

• Release capital to TransAlta as

required

• >$3 billion potential drop down

inventory

• Strong currency to support accretive

acquisition of third party assets

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Significant Inventory of Drop-Down Opportunities

• Six power stations with long-term contracts

• 270 km gas pipeline

• ~$100 mm EBITDA growing to ~$200 mm

Australia Business

Alberta Hydro • 13 units, representing 90% of Alberta’s hydro

• ~$60 - $120 mm EBITDA

Additional

Renewables

Canadian Gas Fired

Generation

• ~1,000 MW in Alberta and Ontario

• ~$220 mm EBITDA

• 99 MW contracted wind farm in Quebec

• 7 MW contracted hydro facility in Ontario

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0

200

400

600

800

1,000

$55 $65 $75

Long-term Upside Potential

• Significant potential upside

once the Alberta legislated

PPAs expire

• Alberta prices have

averaged ~$65/MWh since

deregulation

• AESO estimates that

~$80/MWh is required to

attracted new gas-fired

generation

Significant increase in cashflows once Alberta legislated

PPAs expire in 2018 and 2021

Potential incremental annual

EBITDA from Alberta PPAfacilities¹

Incre

me

nta

l E

BIT

DA

$M

Alberta power prices $/MWh

¹ Represents potential annual incremental EBITDA per year starting in 2021. The term of the incremental upside is governed by the retirement dates of each of the generating units

under the Federal greenhouse legislation but could go longer if some or all of the units have carbon capture and storage installed, or are converted to gas fired.

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Investment Proposition

Focused on maximizing value and shareholder returns

• Diversified and highly contracted portfolio

• Significant near and long-term EBITDA growth

• Well positioned for growth in markets with strong fundamentals

• Diversified and low cost portfolio provides greatest optionality to meet

Alberta’s future capacity needs

• Access to low cost capital for funding growth