1 1

Investor Presentation

May 2015

2 2

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 activi ties (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; 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.

3 3

TransAlta Corporation (TSX:TA, NYSE:TAC)

Growing our business by 3 – 5% annually

$9 billion Power Infrastructure and Energy Marketer with

$3.5 billion market capitalization

Contracted Gas

and Renewables

Portfolio

Upside from a

mix of strategic

assets

Marketing and

asset

optimization

capability

M&A and

development

expertise

• Low cost, long term

contracted

renewable and gas

assets

• Largest wind power

generator in Canada

• 76% ownership in

TransAlta

Renewables

• $4 billion of growth

in the last 5 years

• ~$1 billion in

investment in

Australia over the

last 3 years

• Experienced

developer and

operator of behind

the fence generation

• $40 - $60 million in

annual EBITDA from

low risk proprietary

trading

• Significant value

created from

optimizing fleet

assets

• 700 MW

Commercial and

Industrial Business

• Strategic player in

Canada, Western

U.S. and Western

Australia

• Largest Power

Producer in Alberta

(over 5,200 MW)

• Coal, Gas, Wind &

Hydro

ASSETS CAPABILITIES

4 4

~88% contracted

Remaining contract life of 5.5 years

Coal: 4,931 MW 6 facilities in Canada and U.S.

~95% contracted

Average contract life of 10.9 years

Gas: 1,447 MW 12 facilities in Canada and

Australia; also 270km pipeline

~65% contracted

Average contract life of 10 years

Wind: 1,271 MW 19 facilities in Canada and U.S

~96% contracted

Average contract life of 5.3 years

Hydro: 914 MW

27 facilities in Canada and U.S.

Customer team serving large scale behind

the fence Commercial and Industrial

customers in Alberta

Manage residual price risk

Energy Marketing:

TransAlta – Just the Facts

5 5

Our goal is to grow EBITDA by an average of $40 – $60 million per year and deliver

an 8 – 10% annual return for Shareholders

-25%

-15%

-5%

5%

15%

2009 2010 2011 2012 2013 2014 2015ytd

Target : 8 – 10%/year

Our Track Record

Total Shareholder Return

0.80

0.82

0.84

0.86

0.88

0.90

0.92

0.94

2012 2013 2014 2015E

Safety (IFR)

EBITDA Growth ($M)

Cash Metrics

$0.00

$1.00

$2.00

$3.00

$4.00

2012 2013 2014 2015E

FFO/share FCF/share

$M

0%

2%

4%

6%

8%

$800

$850

$900

$950

$1,000

$1,050

$1,100

2009 2010 2011 2012 2013 2014 2015E

EBITDA Comparable ROCE

6 6

0

1,000

2,000

3,000

4,000

5,000

6,000

2015 2016 2017 2018

Open Merchant

Short term contract / Hedges

Long-term contract

Alberta Legislated PPAs

Total portfolio contractedness

Merchant exposure in Alberta and the

Pacific NW

2015 Hedge prices

AB ~$50/MWh

PacNW ~$40/MWh

2016 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$40 - $45/MWh

MW

Contracted Portfolio Supports Stable EBITDA

88% 82% 78% 69%

Contract and hedging strategy underpin stable cashflows

Contracted EBITDA supports:

• Dividend ($350 million)

• Debt Service ($300 million)

• Sustaining Capex ($300 million)

Merchant and Energy Marketing supports:

• Corporate Overhead

• Growth

7 7

Energy Marketing Capability - A Competitive Advantage

Energy

Marketing

and

Asset

Optimization

• Low risk

• Transacting in multiple markets

provides us with a competitive

advantage

• Preparing for roll off of Alberta

PPAs

• Increase customer contracts from

700 MW today to 3,000 MW by

2021

• Service behind the fence large

industrial customers in Canada,

U.S. and Australia

• Centralia

• Hydro peaking capability

• Ontario Gas supply and

dispatching

Asset Optimization

(30%)

External Customer

Business (50%)

Proprietary Trading

(20%)

8 8

2015 Strategic Objectives

TransAlta’s Strategic Goals

• Deliver results from the base business

• Grow profitably

• Strengthen our financial position

9 9

Executing on our Strategic Objectives

• Serve Alberta with diverse energy generation fleet; serve

30% of provincial customers by 2021

• Provide customers with reliable and low cost power

• Leverage world class Energy Marketing Team to deliver

value for customers and shareholders

Customer

Focus

• Maintain investment grade rating with all agencies

• Grow FFO/share by 3 – 5% and FCF/share by 4 – 6% per

year

• Deliver average of $40 – $60 million per year in EBITDA

from new growth

• Provide shareholders with annual total return of 8 – 10%

Financial

Operations • Achieve top quartile operations and meet availability

targets

• Realize best performance in Health and Safety

10 10

Alberta Market

11 11

TransAlta’s Position in the Alberta Market

Current By 2020

• 40% of total generation; ~15% of total

customer business

• 30% of total customers under

1 - 5 year contracts

• 13% of total offer control • ~30% of total offer control

• ~80% contract coverage through

Alberta legislated PPAs and long-term

contracts

• Offering to large-scale customers

for cost of service long-term

contracts

• Capital needs to support strong

availability across the coal PPAs

• Manage coal plant availability to

support end of life with less

capital

12 12

Managing Low Merchant Prices in Alberta

Opportunities

• The Alberta PPA’s were designed

for low price periods

• TransAlta’s Alberta fleet has the

lowest cost structure among

Alberta generators

• Disciplined investment until prices

recover

Risk

• If low prices persist to 2018, there

is potential for the upside from the

post-PPA value of Sundance 1 & 2

to be reduced

• Oversupply in the Alberta power

market and low gas prices are

driving historic lows for Alberta

power prices

$20

$30

$40

2015 2016

Alberta Forward Curve

13 13

$-

$10

$20

$30

$40

$50

$60

Hydro Wind Coal Cogen/CC GasPeakers

Competitive Position - Low Cost Generation in Alberta

Diversity and optionality positions TransAlta for success in Alberta

• TransAlta has the largest and most diverse fleet in the Alberta market

• Low-cost structure allows us to be very competitive while still earning strong

margins

• Diverse assets combined with marketing platform allows us to serve customers

in short and long-term

Providing our

customers with a

competitive and

reliable offering

TransAlta’s

Market Share

in AB: 96% 29% 57% 7% 0%

Marginal Costs Customer Representation

TransAlta’s Average

Marginal Cost in AB

$/MWh

14 14

Current Low Prices in Alberta Create Opportunities

• Low-cost asset base

enables competitive

product offerings

• Marketing platform

balances our supply

portfolio with customer

product demands

• Significant customer

growth

• Marketing captures

asset optionality and

market volatility

Allows TransAlta to achieve stable cash flow while capturing upside

TransAlta customer growth MW

TransAlta’s goal is to have 30% market share of the Alberta market by 2020

0

500

1,000

1,500

2,000

2,500

3,000

2009 2012 2014 Medium termtarget

Long termtarget

Co-gen C&I Large Industrial Target

15 15

Total Market Capacity: 15,777 MW

TransAlta currently has 11% offer control in the Alberta market – this will

increase to ~30% after the expiry of the Alberta PPA’s

TransAlta currently offers 11% of the provinces power supply into the market – this

will increase to ~30% after the full expiry of the Alberta PPA’s in 2021

Value Potential as Alberta Legislated PPAs Expire

TransAlta 11%

Capital Power 10%

ATCO 11%

ENMAX 18% Uncontrolled

11%

TransCanada 17%

Other 22%

TransAlta ~30%

Capital Power 15%

ATCO 12%

ENMAX 8%

Oil and Gas 15%

TransCanada 2%

Other 15%

16 16

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

2015 - 2020 2015 - 2030

Alberta Requires Significant New Investment Longer-term

Load growth, coal retirements and extensions mean investment opportunities

Projected load growth and

capacity replacement

Peak load growth

Peak load growth

Coal retirements/

Coal reinvestment

MW

Coal retirements/

Coal reinvestment

• Oil and gas sector

remains a major

economic driver even

with weaker world oil

prices

• 3% average

historical load

growth

• ~ 1M barrels/d of

oilsands capacity

committed

through 2017

17 17

$-

$500

$1,000

$1,500

$2,000

2014 2017E 2018E 2021E

Existing Business Australian Growth Post PPA upside Post PPA upside

Near-term Growth Potential

Significant incremental EBITDA by 2021 when Alberta PPAs expire

Committed growth cash flows & Post-PPA upside support

EBITDA growth for the next 7 years

$M

Upside at

$75/MWH Upside at

$65/MWH Upside at

$55/MWH

18 18

Financial Strength and

Funding Strategy

19 19

Competitiveness

Financial Flexibility

Growth

Strengthening our Financial Position – Why?

Maintain investment grade credit ratings to increase our competitiveness

Agency Rating Outlook S&P BBB- Stable

Moody’s BAA3 Negative

DBRS BBB Stable

Fitch BBB- Stable

All rating agencies have

recently re-affirmed our

investment grade credit rating:

1 Access to capital markets

2 Lower cost of debt

3 Access to customers

20 20

-$200M

-$135M

-$165M -$215M

~$4,000M

~85M-$285M ~$3,700 - $3,500M

Dec. 31, 2013 Feb 2014 Apr 2014 Aug 2014 March 2015 2015E

Secondary

Offering of

RNW

2014

FFO/Debt

16.9%

Includes

$174M effect

of USD

strengthening

in 2014

2015E

RNW

Invests in

Aussie

Assets

2013

Sale of

CE Gen

Issuance

of

Preferred

Shares Other

initiatives

to reduce

debt by

~$85M -

$285M by

year-end

Strengthened Financial Position

Long-Term Debt Reduction Initiatives

Met our debt reduction target of ~$500

million in 2014

Our goal is to size our debt to meet our target FFO/Debt ratio of better than 19%

by 2016 with an FFO of $750 to $800 million

~$4,300M

21 21

Significant Financial Capacity

TransAlta aims to raise between $900 million and $1.1 billion over the next 3

years to meet our current funding requirements

Significant funding available to finance additional 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

22 22

TransAlta Corporation and TransAlta Renewables are strategically aligned

Leveraging TransAlta Renewables

TransAlta Renewables

TransAlta

Public

~70% ~30%

• TransAlta is the largest shareholder of

TransAlta Renewables and will maintain

~70% ownership

• Unlocks the value of long-life contracted

assets on attractive terms

• Provides access to lower cost funding

• Funds growth and debt reduction

• Strong currency to support accretive

acquisition of third party assets

23 23

$9.50

$10.50

$11.50

$12.50

$13.50

Aug-13 Nov-13 Feb-14 May-14 Aug-14 Nov-14 Feb-15 May-15

TransAlta Renewables (TSX:RNW)

• Created in August 2013 to provide stable, consistent returns for investors through the

ownership of highly contracted power generation and other infrastructure assets.

37 megawatts installed

net generating capacity

1,830 regions

7 Wind

Hydro

Gas Generation

Gas Pipeline

Electric Transmission operating sites

$3.4 billion Market Cap

$2.7 million in 2014

adjusted EBITDA

$176 annual dividend per share

$0.84 billion Enterprise Value

*Includes the estimated contribution for a full year of operations from the Fortescue River Gas Pipeline and the South Hedland Power Station

Share price performance since Initial Public Offering

24 24

Executing the First Step of our Funding Strategy

TransAlta Renewables agreed to acquire an economic interest in

TransAlta’s Australian portfolio in March 2015 for $1.8 billion

With the closing of the transaction in May 2015, TransAlta has

received:

• Net cash proceeds of ~$216.9 million

• ~$1.1 billion of Common and Class B Shares in RNW, increasing its

ownership from 70% to 76%

Transaction delivered significant benefits to TransAlta:

• Unlocked the value of TransAlta’s highly contracted Australian portfolio

(book value of the assets was ~$1.0 billion)

• Created a stronger sponsored vehicle positioned for future growth

• ~$216.9 million net cash proceeds will be used to reduce indebtedness

• Will benefit from the resulting cash flow accretion at RNW as the 76%

majority owner

• TransAlta will continue to manage and operate the portfolio

• Provides an efficient source of funding for the South Hedland project

25 25

Inventory of Drop-Down Opportunities

Gas Fired

Generation

• ~1,000 MW in Alberta & Ontario

• ~$220 million annual EBITDA

Alberta Hydro

• ~800 MW from 13 units in Alberta

• ~$60 - $120 million annual

EBITDA

Additional

Renewables

• 99 MW contracted wind farm in

Quebec

• 7 MW contracted hydro facility in

Ontario

• ~$12.5 million annual EBITDA

Potential Drop-Down Candidates

26 26

Growth Strategy

27 27

Growing TransAlta

• Add customized

customer product

offerings

• Replace Alberta PPAs

with direct customer

contracts

• Extend the life of our

existing assets

• Acquisitions and

development of new

projects

Actively Evaluating 6,700 MW (~$10 billion) of

Growth Opportunities across all of our core markets

- 1,000 2,000 3,000

Carbon Capture

Renewables

Grid Connected Gas Fired

Behind the Fence Gas Fired

MW

Opportunity Set (MW)

28 28

$-

$500

$1,000

$1,500

$2,000

2009 2010 2011 2012 2013 2014 2015 2016 2017

Greenfield Acquisition

Proven Track Record of Growth

$4.0 billion of growth during last five years

$650 million of growth underway

$M

Capital Invested in Growth

$650 million in

committed capital

~$90 million in

incremental

EBITDA

29 29

Growth Strategy

Prepare for final

stages of

de-regulation in

the Alberta

market

• Manage volatility in the Alberta market by continuing to

grow Customer business from 700 MW to 3,000 MW of

customers by 2021

• Support large industrial customers by offering behind the

fence service arrangements

• Extend the life of our existing portfolio by either:

• converting coal to gas or

• investing in Carbon Capture and Storage

• Build gas and wind storage for plants on a cost of

services basis for customers who can contract for 10

years

• Generate additional customer business in chemical,

mining and oil and gas sector

• Focus on U.S., Ontario, Saskatchewan and B.C.

• Built on strong experience from Australia and Alberta

business with FMG, BHP and Dow Chemical

Capitalize on

behind the fence

experience with

large scale

customers

30 30

Growth Strategy

Capitalize on

locational

advantages in

Washington State

• Find a customer for Centralia 3

• Find additional contracts for Centralia

• Potential to grow large scale utilities through

development of contracted Gas-fired

facilities or acquisition of contracted

Renewables projects

Attract more large

scale utilities to our

customer base

31 31

Capital Allocation Metrics

Growth Metrics Metric

Operating

Assets In Construction Development Stage Range

Non-contracted 8 -11% +2% +2% 8 -15%

Contracted 6 - 8% +1% +2% 6 -11%

We will allocate capital to grow our business with discipline

• Targeted return will depend on location, technology and stage of construction or development

32 32

Environmental Regulations

33 33

Environmental Regulations – The Facts

• 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

• 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

34 34

CASA & Federal GHG Regulations

Opportunities

• Align Federal early shut-down rules and longer term CASA

regulations

• Ensure credit for NOX/SOX reductions due to early shut down

required under Federal regulations

• Potential to reduce GHG’s/NOX/SOX through a mass based

approach to both sets of regulations

Risk

• Required to install NOX and SOX equipment for 2021

35 35

Appendix

36 36

Highly Diversified Portfolio

Diversified asset base with 64 facilities strategically positioned in Canada, Western U.S. and Western Australia

One of Canada’s largest publicly traded power generators & marketers with

over 100 years of operating experience

37 37

Financial performance by Business Segment

Business Segment 2011 2012 2013 2014

EBITDA ($M)

Canadian Coal $273 $373 $309 $386

U.S. Coal $211 $148 $66 $62

Gas $275 $312 $327 $309

Wind $163 $151 $180 $177

Hydro $105 $127 $147 $85

Energy Marketing $101 ($13) $61 $76

Corporate Segment ($84) ($83) ($67) $(59)

Comparable EBITDA

($M) $1,044 $1,016 $1,024 $1,036

Comparable FFO ($M) $812 $788 $729 $762

38 38

Sustaining Capex by Business Segment

Sustaining Capital $M

Business Segment 2011 2012 2013 2014

Generation Segment

Canadian Coal $121 $316 $237 $211

U.S. Coal $63 $32 $16 $12

Gas $69 $49 $58 $63

Wind $7 $4 $9 $12

Hydro $32 $14 $14 $21

Corporate $27 $24 $22 $23

Sustaining Capital $319 $439 $341 $342

39 39

$120 $27 $177 $400

$500

$400

$520

$0

$200

$400

$600

$800

2015 2016 2017 2018 2019

CAD MTN USD Notes

Debt Maturity schedule and Liquidity

• As at March 31, 2015, ~$1.0 billion in available liquidity and $700 million

drawn on credit facilities

• Liquidity was used to repay $500 million SD maturity in Jan. 2015.

• No significant maturity until 2017-2018

Debt Maturity Schedule

$M