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March 2014

TransAlta

Investor Presentation

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Forward Looking Statements

This presentation may contain forward looking statements, including statements regarding the business and anticipated financial performance of

TransAlta Corporation in 2014, 2015 and subsequent years. All forward looking statements are based on our beliefs and 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, and other factors deemed appropriate in the circumstances. These statements are not

guarantees of our future performance and are subject to a number of risks and uncertainties that may cause actual results to differ materially

from those contemplated by the forward looking statements. In particular, this presentation contains forward looking statements pertaining to,

among other things: expectations relating to the timing of the completion and commissioning of projects under development and their attendant

costs; our estimated spend on growth and sustaining capital and productivity projects; expectations in terms of the cost of operations, capital

spend and maintenance; expectations in respect of future electricity prices and the impact of natural gas prices on electricity prices; the impact

of certain hedges on future reported earnings and cash flows; expectations related to future earnings, cash flow and funds from operations;

expectations for demand for electricity in both the short-term and the long-term and the resulting impact on electricity prices; expected impacts

of load growth on electricity supply and the development of additional generation; expectations in respect of generation availability, capacity and

production; expected financing of our capital expenditures; expected governmental regulatory regimes and legislation and their anticipated

impact on us; our trading strategy and the expected results from our trading activities; and expectations in respect to the global economic

environment. Factors that may adversely impact our forward looking statements include risks relating to, among other things: fluctuations in

market prices and availability of fuel supplies required to generate electricity and in the price of electricity; 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; effects of weather; disruptions in the source of fuels, water, or wind

required to operate our facilities; natural disasters; the threat of domestic terrorism and cyber-attacks; equipment failure; energy trading risks;

industry risk and competition; fluctuations in the value of foreign currencies and foreign political risks; the need for additional financing

counterparty credit risk; insurance coverage; reliance on key personnel; labour relations matters; and risks associated with development projects

and acquisitions. The foregoing risk factors, among others, are described in further detail in the Risk Management section of our 2013 annual

MD&A and under the heading “Risk Factors” in our 2014 Annual Information Form.

Except to the extent required by law, we assume no obligation to publicly update or revise any forward looking statements, whether as a result

of new information, future events or otherwise. All forward looking statements in this presentation are expressly qualified in their entirety by

these cautionary statements. For information on our risks please refer to our 2014 Annual Information Form which has been filed on SEDAR

and can be accessed at www.sedar.com.

Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.

This presentation may contain references to comparable earnings comparable earnings per share, comparable EBITDA, funds from operations,

and funds from operations per share which are not defined under IFRS. Refer to the Non-IFRS financial measures section of TransAlta’s 2013

annual MD&A for an explanation and, where applicable, reconciliations to net earnings attributable to common shareholders and cash flow from

operating activities. The presentation may also contain references to gross margin and operating income, which are Additional IFRS measures.

Please refer to the Additional IFRS measures section of the MD&A.

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Strategic & Financial Objectives

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Leading Diversified Power

Generation Company

Proven Track Record

Sound Financial and

Business Profile

Disciplined Growth

• Over 9,000 MW spanning multiple fuels

and markets

• Over 65 facilities

• ~2,200 MW of renewable energy

• 100 years of operating history

• Disciplined approach to capital allocation

• Highly contracted asset base

• Investment grade credit ratings

• Robust access to capital

• Significant cash flow upside post-PPA

• ~1,800 MWs added over past 5 years

• Located in markets with strong

fundamentals

• TransAlta Renewables and strategic

partnerships to fund growth

TransAlta – Key Messages

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Our Business

Canada’s largest publicly traded wholesale power

generator & marketer with over 100 years of operating

experience

Diversified asset base with over 65 facilities

strategically positioned in Canada, Western U.S. and

Western Australia

Total fleet capacity of over 9,000 MWs

Our business lines:

• Coal

• Gas

• Renewable energy (Hydro and Wind)

• Energy trading, which optimizes our other

business lines

Sponsor and majority owner of TransAlta Renewables

Listed on Toronto and New York stock exchanges

Coal:

4,931 MW1

Gas:

1,916 MW1

Hydro:

914 MW1

Wind:

1,271MW1

1Net Capacity Ownership Interest. Includes 100% of TransAlta Renewables’ assets.

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Objectives for driving long-term value for shareholders

Deliver Sustainable Dividend and Maintain

Financial Strength

Attractive and sustainable dividend

Competitive payout ratio with excess cash flow for growth

Strong balance sheet and investment grade credit ratings

Access to multiple sources of capital

Optimize base business

Re-contract to stabilize cash

flows and extend asset life

Continuously manage operating

and fuel costs

Maintain strong availability across

the fleet

Prudently and rigorously manage

sustaining capital expenditures

Position the Canadian coal fleet

to capture significant upside post

PPA

Invest in profitable growth

Growth through acquisitions and

greenfield

Disciplined returns and leverage

Target markets with strong

fundamentals and growth

opportunities

Focus on gas and renewable

generation – targeting primarily

contracted opportunities

Positioned For Growth & Value Creation

Integrated

Approach

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20001

20141

Strategic Evolution of TransAlta

Actively shifting our business mix by

growing renewables

1Net Capacity Ownership Interest. Includes 100% of TransAlta Renewables’ assets.

as

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2008 2009 2010

2011 2013 2012 2013

694 MW

Canadian Hydro

80 MW

Kent Hills 123 MW

Ardenville / Kent Hills 2 19 MW

Bone Creek

450 MW

Keephills 3

125 MW

Solomon

68 MW

New Richmond

2011

132 MW

Summerview 2 / Blue Trail

2010

144 MW

Wyoming Wind

Disciplined growth with a focus on contracted assets

TransAlta’s 5-Year Growth Track Record

~ 1,800 MW added in our core markets over 5 years1

¹Indicative illustration based on annualized EBITDA contributions. 2013 includes recent acquisition of 144 MW Wyoming Wind assuming full year pro-forma. Does not include natural gas

pipeline in Western Australia which will contribute EBITDA beginning in 2015.

Western Australia

Natural Gas Pipeline

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Strategic Initiatives since 2012

– Realigned Centralia’s cost structure to lower market prices and entered into long-

term contract with Puget Energy

– Invested or announced ~$730 million in Long-term Contracted growth delivering

~$80 million per year in EBITDA

– Created TransAlta Renewables Inc. as a competitive growth vehicle

– Re-contracted ~835 MW of capacity under long-term agreements and expanded

C&I Energy Services business

– Reduced corporate costs by $25 - $30 million

– Announced sale of CEGen for US$193.5 million, enhancing the balance sheet for

growth

– Aligned dividend to the Company’s growth and financial objectives, increasing free

cash flow by ~$120 million/year

Executing the Strategy

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Positioned for Growth

TransAlta has flexibility to deliver growth using two strong companies

Lower payout ratio at TransAlta and significant post Alberta PPA cash flows supports

re-investment in growth and strong balance sheet

TransAlta Renewables Inc. well positioned to grow, creating value for both sets of

shareholders

• Moderate payout ratio

• Moderate – High Growth

• Higher payout ratio

• Low – Moderate Growth

• Risk Profile:

• Development risk

• Construction risk

• Operating and resource risks

• Mix of contracted & merchant

price risk

• Trading

• Risk Profile:

• No material development and

construction risks

• Operating and resource risks

• Predominately contracted

• Relatively stable and predictable

sustaining capital

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British Columbia 4 hydro

77 MW

Alberta 4 hydro

21 MW

10 wind

417 MW

Ontario 4 hydro

7 MW

3 wind

398 MW

Quebec 1 wind

68 MW

New Brunswick 2 wind

125 MW

Bone Creek 19MW

Upper Mamquam 25MW

Pingston 23MW

Akolkolex 10MW

Summerview One 70MW

Sinnott 7MW

Castle River 44MW

Belly River 3MW

Waterton 3MW

Cowley North 20MW

Summerview Two 66MW

Macleod Flats 3MW Blue Trail 66MW

Soderglen 35MW Taylor Hydro 13MW McBride Lake 38MW

Ardenville 69MW

St. Mary 2MW Misema 3MW

Moose Rapids 1MW

Appleton 1MW

Galetta 2MW

Wolfe Island 198MW

Melancthon One 68MW

Melancthon Two 132MW

New Richmond 68MW

Kent Hills One 80MW

Kent Hills Two 45MW

High Quality Diversified Portfolio 5 Operating Regions

Creation of TransAlta Renewables1

~80% owned by TransAlta Corporation

1Above figures do not include acquisition of 144 MW

Wyoming wind farm which closed December 20, 2013.

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Financial Review & Outlook

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• 10-year power contract at Southern

Cross in Australia

• 20-year power contract at Ottawa

• 11-year power contract at Centralia

• 24-year power contracts at CE Gen

• 640 MW C&I Energy Services

contracts

• Created TA Renewables

• Full contribution of $318 mm

Solomon gas generation facility

• Commissioned $212 mm 66 MW

New Richmond wind farm

• Acquired $109 mm 144 MW

Wyoming wind

• Advanced Sundance 7

• Fleet Availability of 88% compared

with target of 89-90%

• Unplanned outages at Canadian

Coal did not meet expectations

• Safety IFR < 1.0

• Comparable EBITDA of $1,023 mm,

in line with 2012

• Free Cash Flow of $295 mm,

increase of $37 mm from 2012

• Sustaining Capital of $341 mm

• Trading margins returned to

historical levels

2013 Year in Review

Operational Financial

Growth Contracting

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2013 Performance Highlights

2011 2012 2013

(in $ millions, except as otherwise

noted)

Comparable EBITDA $1,045 $1,015 $1,023

Funds from Operations $809 $788 $729

Free Cash Flow $417 $258 $295

Sustaining Capital $319 $439 $341

Adjusted Availability1 88.2% 90.0% 87.8%

1Adjusted for economic dispatching at Centralia.

2013 Comparable EBITDA in line with 2012

2013 Funds from Operations lower than 2013 due to higher interest costs, higher cash

taxes and timing differences associated with cash settlements of certain hedges

2013 Free Cash Flow higher than 2012 due to lower sustaining capital (fewer planned

outages)

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2013 Business Segment Performance

Business Unit 2012 2013 Primary Drivers

Generation Segment

U.S. Coal $148 $66 • Lower prices and expiring

contracts

Cdn Coal $373 $309 • Higher unplanned outages

Gas $312 $327 • Growth

Hydro $127 $147 • Higher volumes & prices

Wind $151 $180 • Growth

Sub-total Generation $1,111 $1,029

Energy Trading Segment ($13) $61 • Return to “back to basics”

Corporate Segment ($83) ($67) • Corporate realignment

Consolidated EBITDA $1,015 $1,023

Comparable EBITDA ($ millions)

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Operations

Restore performance of Canadian Coal

Commercial

Pursue long-term contracts for Centralia and growth in Alberta

Start processes to secure long-term contract extensions in Ontario and Australia

Protect TransAlta’s rights under Alberta legislated PPAs

Growth

Grow EBITDA by $40 - $60 mm per year

Invest in cogeneration to support oilsands and LNG development in Western Canada

Advance Sundance 7 and TAMA Transmission

Construct Western Australia pipeline with COD targeted for early 2015

Achieve goal of 600 MW in Western Australia through acquisition or greenfield

development

Pursue acquisition of wind projects in Canada, US and Australia

Key Priorities for 2014

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2014 Outlook

Financial Outlook

Comparable EBITDA 1,015$ 1,065$

Cash Interest (235)$ (235)$

Cash taxes (30)$ (30)$

Others (7)$ (7)$

Funds from Operations (FFO) 743$ 793$

Sustaining Capital (350)$ (350)$

Pfd Share/Other Distributions (100)$ (100)$

Free Cash Flow (FCF) 293$ 343$

FCF/Share 1.07$ 1.26$

Dividend 0.72$ 0.72$

Dividend Coverage 1.49x 1.75x

Dividend Payout 67% 57%

EBITDA in line with 2013

Significant dividend coverage

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Total Portfolio Contractedness1

Hedge targets increased to support near-term revenue certainty

CONTRACTED PRICES

2014

AB ~ $55/ MWh

Pac NW ~ $40/ MWh

2015

AB ~ $50 - $55/ MWh

Pac NW ~ $40 - $45/ MWh

MW

88% 78% 77% 76%

Highly Contracted with Upside Potential

¹Capacity adjusted volumes. Includes 100% of TransAlta Renewables’ assets.

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Strong Near and Long-term Cash Flows

Dividend and payout

ratio aligned to

business objectives,

generating significant

excess cash flow

Significant increase in

cash flows once Alberta

legislated PPAs expire

¹Illustrative representation of estimated average EBITDA over period. Actual EBITDA could vary from those shown due to a

number of factors

$ millions

FFO Range 750$ 775$ 800$ 825$

Sustaining Capital¹ (350)$ (350)$ (350)$ (350)$ Pfd Share/Other Distributions (100)$ (100)$ (100)$ (100)$

Free Cash Flow (FCF) 300$ 325$ 350$ 375$

Common Share Dividends (194)$ (194)$ (194)$ (194)$

Excess Cash Flow 106$ 131$ 156$ 181$

Dividend/FCF Payout Ratio 65% 60% 56% 52%

¹ Average sustaining capital over a three year cycle

Range of Potential Cash Flows

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Markets and Growth

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Western U.S.

Markets where TransAlta is Positioned for Growth

Alberta

Western Australia Ontario / BC

Alberta expected to remain the strongest economy in

Canada

3.7% GDP growth rate over the last 20 years and similar growth expected through 2015

Strong load growth and coal generation retirements will drive demand for new generation

AESO estimates 6,000 MW of new generation will be required by 2022

Key opportunities include cogeneration and combined cycle natural gas plants

Load growth of ~1.4% / year over next ten years in both PacNW and California

State level RPS targets are a key driver

33% target in California will require in the range of 15,000 MW of renewables by 2020

Total renewables investment expected to be 25,000 to 30,000 MW in WECC by 2020

Need for dispatchable capacity will result in opportunities for natural gas generation as well

Real GDP growth in Western Australia is expected to be 3.3% for the 2013-14 fiscal year. The following 3 years are expected to average 3.4% annual growth. This exceeds growth in Australia as a whole

Mining, which made the largest industry contribution to GDP growth in 2012-2013, will continue to be the driver of new opportunities in Western Australia

No load growth expected in Ontario for the next few years with conservation measures expected to increase

In Ontario, nuclear retirements/refurbishments expected to drive need for new capacity longer term

Gross BC annual load growth is expected to be around 3% to the end of the decade. Load growth at 1.7% net of demand response and conservation

Opportunities in BC around generation for LNG

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Alberta Interconnected Electric System (AIES)

Reserve Margin, 2000 - 20181

1AESO Long Term Adequacy Metrics August 2013

Alberta continues to

see considerable

demand growth due to

industrial and mining

activities, and their

indirect impacts

Also, significant

retirements in capacity

in next 10 years:

800 MW of coal

retiring in 2019

1,200 to 3,200 MW

of new capacity

(above that

currently being built)

required by 2020

Alberta – Strong Fundamentals

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Since deregulation, AB Pool prices have averaged $65 / MWh

Source: AESO

Historical Power Prices in Alberta

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Data: NGX, Alberta Electric System Operator

AB forward market is a poor predictor of future spot market settles

Forward prices tend to reflect spot fundamentals not future fundamentals

$/MWh

Average annual Alberta power prices compared to historical forward Alberta power prices

Alberta Forward Market

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Secured in 2014

Full year of 68 MW New Richmond

wind farm

144 MW Wyoming Wind Farm

Escalation on Solomon contract

Secured 2015 +

Australian gas pipeline (COD 2015)

Escalation on Solomon contract

Full year of Puget contract, with

prices and volumes increasing

Post PPA value on Sundance 1&2

Potentially generating $100 mm

EBITDA more in 2018/2019

Post PPA value on other Alberta PPA

units

Potentially generating $300 -

$400 mm EBITDA more per

year post 2020

Actively Pursuing

Renewables

Acquisitions in Canada, U.S. and

Australia

Gas

Sundance 7 combined cylce in

Alberta

Cogeneration in Alberta and B.C.

Combined and simple cycle across

Canada, U.S. and Australia

Other

Transmission opportunities in

Alberta

Investments in solar technologies

Pipeline expansions in Australia

Future EBITDA Growth

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Summary

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Attractive Valuation

Metrics Relative to Comparable Companies

TEV/2014E EBITDA

¹ Debt does not include preferred shares

Debt¹/2014E EBITDA

Balance Sheet Strength

0.0x

2.0x

4.0x

6.0x

8.0x

10.0x

12.0x

14.0x

16.0xTA Corp TA Renewables Other Companies

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

7.0x

8.0x

9.0x

10.0xTA Corp TA Renewables Other Companies

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Strategy Unchanged, Ability to Execute Enhanced

Integrated approach to driving long-term shareholder value

Diversified and highly contracted portfolio

Attractive and sustainable dividend

Strong balance sheet and free cash flow

Well positioned for growth in markets with strong fundamentals

Significant upside post-PPA