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BMO 2016 Fixed Income Infrastructure &

Utilities Conference

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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 and share price performance; our success in executing on our growth projects, including increasing customer

contracts by 2021; anticipated gross margin from proprietary trading; capitalizing on opportunities in gas-fired and renewable generation; repositioning our capital structure and proactively

planning for debt maturities; funding strategy, including pro forma year end 2015 liquidity, raising project-level debt through the use of our contracted asset base and leveraging TransAlta

Renewables Inc. (“TransAlta Renewables”); 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 regarding TransAlta Corporation’s (“TransAlta”) offer control in the Alberta market following the expiry of the power

purchase arrangements; 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; 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’ 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 raising project-level debt; 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 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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Coal: 4,931 MW ~6 facilities in Alberta and the Pacific

Northwest

Gas: 1,315 MW

12 facilities in Canada and Australia;

also 270km pipeline

RNW owns all Australian gas assets (425

MW) and 506 MW gas facility in Ontario

Wind & Solar:

1,402 MW

28 facilities in Canada and the U.S

RNW owns ~90% of wind facilities

Hydro: 914 MW 27 facilities in Canada and the U.S.

TA owns all of the Alberta hydro facilities

TransAlta’s Diversified Portfolio

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Proven Track Record

EBITDA and Cash Metrics (1)

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

over 100 years of operating experience

• Diversified and highly contracted asset base with over 70 facilities strategically

positioned in Canada, the United States and Western Australia

• Approximately 25% of Free EBITDA generated by Canadian Coal assets

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$0

$200

$400

$600

$800

$1,000

$1,200

2012 2013 2014 2015E 2016E

EBITDA ($M) FFO/Share FCF/Share

2014 Free EBITDA (2)

25%

7%

35%

24%

9%

Canadian Coal U.S. Coal Gas Wind Hydro

(1) Guidance ranges are subject to potential regular year-end adjustments relating to force majeure provisions that will be reviewed as part of the financial close process

(1) FFO/Share and FCF/Share reflect the average of the guidance ranges provided for 2015 and 2016

(2) Free EBITDA = EBITDA – Sustaining Capital

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0

1,000

2,000

3,000

4,000

5,000

6,000

2016 2017 2018 2019

Open Merchant Short term contract / Hedges

Long-term contract PPAs

Contracted Portfolio Supports Stable EBITDA

Contract and hedging strategy underpin stable cashflows ¹ As of January 2016

Alberta • Well hedged through 2016

• Market shocks allow opportunity to further

hedge at prices higher than the current

market

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

Merchant exposure in Alberta and the

Pacific NW

2016 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$40/MWh

2017 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$45 - $50/MWh

Total portfolio contractedness1

MW 87% 84% 72% 70%

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Recent Accomplishments

• Raised ~$600 million in equity through TransAlta Renewables through

Australian and Canadian asset drop-downs and AIMco strategic investment

• Raised ~$500 million in senior secured amortizing debt through Melancthon

Wolfe Wind LP and our Pingston joint venture

• Reduced the annual dividend from $0.72 / share to $0.16 per share freeing

up ~$150 million annually, discontinued DRIP

• Reduce U.S. Debt from $2.1 billion to $1.6 billion, however, the reduction

was largely offset by U.S. dollar strengthening

• Current liquidity at ~$1.4 billion

• Significant cost reduction initiatives at our operations and corporate levels

• Extended contract at Poplar Creek to 2030 and acquired 135 MW’s of

renewables assets

• Completed the Australian pipeline construction in early 2015 and advanced

the construction of South Hedland gas project on time and on budget

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A Prudent and Proactive Plan

1) Deliver Operational Excellence

2) Maximize Financial Flexibility

3) Strategically Grow our Portfolio of Gas-Fired and

Renewable Generation

Strategic Objectives

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Executing our Strategic Objectives

2015 2016

Operational

Excellence

• Reduced costs by ~$50 million

with productivity and efficiency

initiatives at Canadian Coal and

Corporate

• Continue to focus on Alberta coal

mining operations

Maximize

Financial

Flexibility

• Raised approximately $1 billion

of capital through the use of

TransAlta Renewables

• On-track to meet our guidance

• FFO expected to be at the low

end of guidance range despite

low power prices

• Reposition our capital structure by

pursuing project-level debt

• Proactive planning for debt

maturities in 2017

• Similar guidance ranges to 2015

despite continued challenging

market conditions expected in

2016

Strategic

Growth

• Acquired 71 MWs of wind and

solar assets in the U.S.

• Received approval to construct

and operate Sundance 7

• Secure a coal transition agreement

• Prepare to capitalize on

opportunities in gas-fired and

renewable generation

• Longer-term focus given Alberta

dynamics

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Debt Funding Overview

Raised over $1 billion of capital in 2015 to strengthen our financial position

Agency Rating Outlook S&P BBB- Stable

DBRS BBB Stable

Fitch BBB- Stable

Moody’s Ba1 Stable

Credit Ratings:

$0

$200

$400

$600

$800

$1,000

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 20302031-20392040

RNW Amortizing Debt CHD Debentures TAC USD Notes TAC CAD MTN

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$27 $204

$400 $400 $400

$520

$0

$200

$400

$600

$800

2016 2017 2018 2019 2020

CAD

USD

Upcoming Debt Maturities

Proactively Preparing for Debt Maturities

Funding initiatives in 2016 can be used to pre-fund 2017 / 2018 maturities

• As at Sept 30th 2015, ~$0.9 billion in available liquidity

• TransAlta recently raised:

• ~$440 million in non-recourse financing associated with two wind facilities

• $200 million through the sale of RNW common shares to AIMCo

• ~$170 million through the recent drop-down transaction with RNW

• Pro forma year-end 2015, ~$1.4 billion in available liquidity

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Maximizing Financial Flexibility

Reposition TransAlta’s capital structure

• Accelerate the use of project-level debt to fund upcoming corporate debt

maturities

• Deliver on FFO and debt reduction targets and achieve FFO to Debt target of

20% by 2018

2016 • Raise $400 to $600 million of project-level debt

• Refinance U.S.$400 million corporate maturity in 2017

2017

• Execute a similar strategy in 2017

• Refinance 2018 debt maturities of CAD$177 million and

U.S.$520 million

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Utilizing our Contracted Asset Base

• Assets support target of $400 - $600 million in financing in the near-term

• Long-term contracted assets with credit worthy counterparties

• Strong operating history and well planned maintenance programs

• Size and ability to package certain assets together to manage transaction costs

Wind • ~500 MW in Ontario and the U.S.

Hydro • ~50 MW in Ontario and B.C.

Gas • ~525 MW in Ontario

• Longer-term, additional ~$1.3 billion (Hydro and Wind in Alberta and

Australian portfolio)

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Melancthon Wolfe Wind LP Project Financing

• First large scale senior secured amortizing financing employed by TransAlta

in 2015

• BBB (stable) credit rating from DBRS

• $442 million, 13.3 year term, 6.9 year average life, 3.834% coupon

We expect to raise additional project finance against existing renewable and

gas assets to re-finance corporate maturities as they come due

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TransAlta Corporation and TransAlta Renewables are strategically aligned

Leveraging TransAlta Renewables

TransAlta Renewables

TransAlta

Public

~60-80% ~20-40%

• TransAlta is the largest shareholder

of TransAlta Renewables and will

maintain ~60-80% 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

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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.

$3.0 billion Market Cap

$2.4 million in 2014

adjusted EBITDA

$176 annual dividend per share

$0.84 billion Enterprise Value

Enterprise Value¹ $2.8 Billion

Market Cap. $2.0 Billion

2015E EBITDA² $245 Million

Dividend Yield 9.6%

Generating Capacity (including South Hedland) 2,470 MW

TransAlta Corporation’s Ownership ~64%

¹ Does not include capital required to complete South Hedland Project

² Average estimate of research analysts covering TransAlta Renewables

* Enterprise Value and Market Cap. based on closing price as of January 15 2016

Wind

Hydro

Gas Fired

Gas Pipeline

Transmission

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Coal Transition in Alberta – The Facts

• There is currently 6,277 MW of coal-fired installed capacity in Alberta, representing

approximately 39% of the overall supply

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

• Eight of TransAlta’s coal units, totaling 2,931MW, will be retired by the end of 2029 under

the federal rule, resulting in GHG reductions of 88% from current levels

• Three other coal units in Alberta will be decommissioned by 2030, representing

approximately 450MW as a result of recently announced climate leadership plan –

compensation expected

Plant MW (Net) Annual GWh1 Retirement Under

Federal 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

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Long-Term Investment Opportunities

Gas-fired

• Alberta’s Climate Leadership Plan– requirement for gas generation

• Sundance 7, low cost option in our portfolio

• Expansion & acquisition opportunities in United States & Australia

Coal Optionality

• Evaluating coal to gas conversions

• Flexibility under Federal GHG legislation allows optimization of cash flows across the Alberta coal units

Renewables/Transmission

• Climate Leadership Plan provides significant potential for new capacity

• Evaluating hydro pumped storage at TransAlta’s existing hydro sites

• Privatization of Australia’s electricity assets

• Significant acquisition opportunities

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Appendix

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Results (in millions $CAD, except where noted)

9 MOS

Q3 2015

9 MOS

Q3 2014 2014

2013

2012

Revenues 1,672 1,905 2,623 2,292 2,210

Comparable EBITDA1 677 735 1,036 1,023 1,015

Comparable Funds from

Operations1

497 537 762 729 788

Available Liquidity1 (billions) 0.9 1.6 1.6 0.9 0.8

Ratios1

Cash Flow to Interest (times) 2,3 3.7 3.7 3.8 3.7 3.3

Cash Flow to Debt (%) 2,3 14.8 15.8 16.9 15.2 16.7

Debt to Invested Capital (%) 55.4 57.8 56.3 60.7 61.0

Continued Strong Financial Performance

¹ These items are not defined under IFRS.

Presenting earnings on a comparable basis provides management and investors with supplemental information to evaluate earnings trends in comparison with results from prior periods. Funds from operations (cash

flow from operations before working capital) is not defined under IFRS and is presented as one measure used to assess operating results.

Refer to the Non-IFRS Measures section of the applicable MD&A for further discussion of these items, including, where applicable, reconciliations to net earnings attributable to common shareholders and cash flow

from operating activities. The MD&A for the periods presented above have been incorporated by reference into the Preliminary Prospectus Supplement for this offering. 2 Last 12 months 3 These ratios have been adjusted for the impact of the Sundance Units 1 and 2 arbitration which occurred in Q2 2012 and for the impact associated with the California claim which occurred in Q4 of 2013

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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

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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