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Third Quarter 2015 Results

October 30, 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”, “forecast”, “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 and performance; our success in

executing on our growth projects, potential development opportunities, achieving top quartile operations and availability targets; the timing and the completion and

commissioning of projects under development, including major projects such as the South Hedland Power Project and Sundance 7, and their attendant costs; expectations

related to future earnings and cash flow from operating and contracting activities (including estimates of comparable earnings before interest, taxes, depreciation, and

amortization (“EBITDA”), comparable funds from operations (“FFO”), and comparable free cash flow; 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; expected levels of future contractedness; expected sustaining capital expenditures; expected pricing in Alberta and the Pacific NorthWest;

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; 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, 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; risks associated with 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 our

Management Discussion and Analysis and under the heading “Risk Factors” in our 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.

Certain financial information contained in this presentation may not be standard measures defined under International Financial Reporting Standards (“IFRS”) and may not be

comparable to similar measures presented by other entities. These measures may not be comparable to similar measures presented by other issuers and should not be

considered in isolation or as a substitute for measures prepared in accordance with IFRS. For further information on non-IFRS financial measures we use, see the section

entitled “Non-IFRS Measures” contained in our Management Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com.

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Strategic Highlights

Q3 2015 Review

Financial Summary and Outlook

Questions and Answers

Agenda

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Strategic Highlights

1) Focus on strengthening our balance sheet by executing on our drop down

strategy with TransAlta Renewables

2) Advocate for our “Dial Down – Dial Up” Proposal

3) Continue to grow TransAlta Renewables

4) Continue to remain disciplined in terms of the returns we expect from growth

5) Pursue more project level debt to reduce debt at the corporate level

5

Dial Down Coal - Dial Up Renewables

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

An

nu

al

ge

ne

rati

on

(G

Wh

)

Generation by fuel type for the Dial Down - Dial Up policy

Coal Gas Cogen Renewables

20% dial down of coal generation is replaced by a combination of

renewable and gas fired generation

Source: London Economics

6

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Current 2021 2026 2030

TransAlta's Generation Capacity (MW)

Transitioning Coal

• Significant optionality and opportunity for replacing mandatory coal retirements

• ~700 MW of Hydro expansion at Brazeau and BigHorn

• ~200 MW of other AB hydro expansions

• Coal to gas conversions

• Solar in the Wabamum area

• Wind expansion/repowering

• Brownfield & greenfield Cogeneration

Coal

Wind

Gas

Solar

Hydro

Potential Opportunities

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Significant Drop-Down Inventory

Gas Fired

Generation

• ~1,000 MW in Alberta & Ontario including:

• 244 MW Poplar Creek facility in AB

• 506 MW Sarnia facility in ON

• ~150 MW from 4 facilities through TA Cogen

• ~$220M in EBITDA

Alberta

Hydro

• ~800 MW from 13 units in Alberta, representing

90% of Alberta’s hydro

• ~$60 - $120M EBITDA

Other

Renewables

• 45 MW wind facility in AB

• 20 MW wind facility in ON

• 50 MW wind facility in Minnesota

• 21 MW solar facilities in

Massachusetts

• 99 MW wind facility in QC

• 7 MW hydro facility in ON

Recently

acquired from

Rockland Capital

Recently

acquired from

Suncor

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Third Quarter Performance Highlights

Q3 2015 commentary

• Solid performance in the quarter due to continued improvement in our mining

operations to reduce fuel costs, the addition of the gas pipeline in Australia and a return

to normal levels of gross margin in Energy Marketing

• Prices in Alberta decreased from $64 per MWh in the third quarter of 2014 to $26 per

MWh in the third quarter of 2015 but our high level of contracts and hedges mostly

mitigated the impact of low prices

1 Availability and production includes all generating assets (generation operations and finance leases that we operate). 2014 availability also includes equity investments,

which were sold in May 2014. 2 Adjusted for economic dispatching at U.S. Coal

3 months ended Sept 30 9 months ended Sept 30

(in $CAD millions) 2015 2014 Change 2015 2014 Change

Comparable EBITDA $219 $212 $7 $677 $735 ($58)

Comparable Funds from

Operations $126 $145 ($19) $497 $537 ($40)

Comparable Free Cash

Flow $8 $34 ($26) $141 $192 ($51)

Sustaining Capital $79 $84 ($5) $253 $255 ($2)

Adjusted Availability (1),(2) 91.2% 92% (0.8%) 87.8% 89.6% (1.8%)

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Recent Growth Accomplishments

• Advanced construction of our 150 MW South Hedland gas-fired facility in Australia with expected commissioning in mid-2017

• Re-structured contracts at our Poplar Creek facility, extending the contract duration by 7 years and reducing our merchant exposure in Alberta

• Acquired three wind facilities in Alberta, Ontario and Minnesota adding 115 MW of net wind capacity to our portfolio

• Added our first solar assets with the acquisition of 21 MW of fully-contracted solar projects in Massachusetts

Strategically reinvesting in our business for the long-term

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Financial Outlook

2015 Outlook Range ($M) Revised Target Previous Target 2015 YTD

Comparable EBITDA $980 - $1,010 $1,000 - $1,040 $677

Comparable FFO $725 - $755 $720 - $770 $497

Comparable FCF(1) $275 - $285 $265 - $270 $141

Sustaining Capital(1) $305 - $320 $310 - $340 $253

2016 Outlook Range ($M)

Comparable EBITDA $990 - $1,100

Comparable FFO $755 - $835

Comparable FCF $250 - $300

Sustaining Capital $330 - $350

¹ Excluding flood recovery capital

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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 89% 86% 80% 70%

Contract and hedging strategy underpin stable cashflows

Alberta Forward Curve

PacNW Forward Curve

Hedges mitigating impact of low power prices

0

2,000

4,000

6,000

2015 2016 2017 2018

PPAs Long-term contract

Short term contract / Hedges Open Merchant

$25

$35

$45

$55

2015 2016 2017

$15

$20

$25

$30

$35

2015 2016 2017

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2015 Third Quarter Business Segment Performance ($M)

Business Unit Q3 2015 Q3 2014 Key Drivers

Generation Segment

Canadian Coal $101 $92 • Lower operating expenses and mark-to-market

gains offset the impacts of lower prices and

lower availability

U.S. Coal $10 $13 • Coal inventory writedowns and reduced

generation from low power prices partially offset

by mark-to-market gains and a stronger USD

Gas $80 $77 • Additional revenues from the Australian natural

gas pipeline and strengthening of the USD

Wind (1) $23 $27 • Lower volumes in Eastern Canada and lower

power prices in Alberta

Hydro $15 $27 • Lower prices and decreased price volatility in

Alberta limited our ability to use our flexibility to

produce electricity in higher priced hours

Sub-Total Generation $229 $236

Energy Marketing $6 ($4) • Represents a return to normal gross margin

Corporate Segment ($16) ($20) • Legal costs incurred in 2014 relating to the MSA

proceedings

Consolidated EBITDA $219 $212

1 Wind Segment includes results of solar facilities acquired during the quarter

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Comparable FFO and FCF

3 months ended Sept 30 9 months ended Sept 30

(in $CAD millions) 2015 2014 2015 2014

Comparable EBITDA $219 $212 $677 $735

Interest ($58) ($59) ($167) $(178)

Current Income Tax Expense ($1) ($7) ($12) $(24)

Other adjustments ($34) ($1) ($1) $4

Comparable Funds from

Operations $126 $145 $497 $537

Sustaining Capital (1) ($77) ($83) ($251) ($254)

Pfd Share Dividends ($12) ($9) ($35) ($28)

NCI Cash Distributions ($29) ($19) ($70) ($63)

Comparable Free Cash Flow $8 $34 $141 $192

¹ Net of insurance recoveries of sustaining capital expenditures related to the Alberta flood of 2013

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Sustaining Capital

$M

Q3 2015 sustaining capital of $79 million. Year-to-date sustaining capital of $253

million. We have revised our annual target range to $305-$320(1) million for 2015

$286

$153 $162 $165 - $175

$115

$125 $116 $100 - $105

$38

$62 $55 $40

$0

$100

$200

$300

$400

$500

2012 2013 2014 2015E

Mining Capital (including finance leases) Routine maintenance (excluding flood-recovery capital) Major Maintenance

¹ Excluding flood recovery capital

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