1 1

2014 Investor Day

Positioned for Growth

November 2014

2 2

Forward Looking Statements

This presentation contains certain “forward looking statements” and “forward looking information” within the meaning of applicable securities laws, 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 TransAlta’s beliefs and assumptions based on information available at the time the assumptions were made, 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 TransAlta’s 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 of improved availability and reduced operating costs and major maintenance outage durations at TransAlta’s coal-fired power plants;

estimates as to the future demand for, and supply of, electricity in the Province of Alberta; estimates as to the long-term investment in new electricity generation

capacity in the Province of Alberta; estimates as to the contractedness and growth in contractedness of TransAlta’s electricity generation portfolio; growth

opportunities available to TransAlta and expectations of growth in EBITDA from future growth projects; expansion opportunities at TransAlta’s Fortescue River Gas

Pipeline and South Hedland Generating Station; potential investment opportunities for gas-fired generation, hydro-electric generation, and carbon capture and

storage and gas conversions for coal-fired generation; plans for the financing of future growth projects and the reduction of indebtedness, including potential

sources of funding such as preferred share offerings and the sale of assets to TransAlta Renewables Inc.; the potential inventory of assets available for drop-

downs to TransAlta Renewables Inc.; expectations for increased cash flows upon the expiry of government mandated power purchase arrangements; the timing of

the completion and commissioning of projects under development and their attendant costs; estimated spending on growth and sustaining capital and productivity

projects; expectations in respect of future electricity prices and the impact of natural gas prices on electricity prices. Factors that may adversely impact these

forward looking statements include risks relating to, among other things: fluctuations in electricity prices and the availability of fuel supplies required to generate

electricity; the regulatory and political environments in the jurisdictions in which TransAlta operates; environmental requirements and changes in, or liabilities

under, these requirements; changes in general economic conditions including interest and exchange 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 disasters; the threat of domestic terrorism and cyber-attacks; equipment failure; energy trading risks; industry risk

and competition; the need for, and availability of, additional financing; the state of capital markets; counterparty credit risk; limitations in insurance coverage;

reliance on key personnel; labour relations matters; and risks associated with acquisitions and the permitting and construction of development projects. The

foregoing risk factors, among others, are described in further detail in the Risk Management section of TransAlta’s 2013 annual Management’s Discussion and

Analysis (“MD&A”) and under the heading “Risk Factors” in our 2014 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.

Except to the extent required by law, TransAlta assumes 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.

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 International Financial Reporting Standards (“IFRS”). Refer to the Non-IFRS financial measures section of

TransAlta’s 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 Funds

from Operations and Free Cash Flow, and Earnings and Other Measures on a Comparable Basis, sections of the MD&A

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

3 3

Dawn Farrell President & CEO

Overview

4 4

• 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 ~9,000 MWs

• Sponsor and majority 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 1,695 MW

• Wind 1,271 MW1

• Hydro 914 MW1

• Gas Pipeline 270 km

• Energy Marketing

Customer Business 700 MW

5 5

Short-term Plan

• Continued focus on operational excellence

• Deliver committed growth of $650 million

• Funding plan in place to improve balance sheet and finance South Hedland

• Positioning TransAlta for roll-off of Sundance A PPA

• Pursue options for extending life of the Alberta coal fleet and investing in the

Alberta power market

• Utilize TransAlta Renewables to access lower cost equity

• Maintain strong balance sheet and investment grade credit rating

6 6

Medium-term Plan

• Leverage our competitive strengths for serving large commercial,

industrial and utility scale customers

• Deliver reliable, low cost, environmentally-sensitive products to our

customers

• Provide generation directly to customers from a very competitive fleet

and services offerings

7 7

Presenters

Wayne Collins

Executive VP Coal and

Mining Operations

Rob Schaefer

Executive VP Trading

and Marketing

Brett Gellner

Chief Investment Officer

Donald Tremblay

Chief Financial Officer

Advancing our strategy to position our

fleet for a post-PPA world

Optimizing the value of our assets and

expanding our customer business to position

for a post-PPA world

Growing the company

Funding our growth

8 8

Investment Proposition

Deliver shareholder value through both dividend yield and investing in growth

• Diversified and highly contracted portfolio

• Significant near and long-term EBITDA growth

• Well positioned for growth in markets with strong fundamentals

• Access to low cost capital for funding growth

• Sustainable dividend yield

9 9

Wayne Collins EVP – Coal and Mining Operations

Alberta Coal Operations

10 10

Driving Performance at Alberta Coal

• Stabilised mining and coal fired power plant operations

• Aging plant risks understood and being pro-actively managed

• Improved Availability

• Improved competitiveness – reduction of costs

11 11

Alberta Operations – Fundamental Assessment

• Strong capability

• Risks understood

People

• Mature systems underpin consistent,

predictable performance

Systems and Processes

• Opportunities to improve turnaround

performance & operating costs

• Stable fuel costs

Competitiveness

12 12

Predictable Performance

Predictable performance underpins stable future cash flows

• Historical investment supports future

performance

• Operations Diagnostic Centre • Real time identification of departures from

expected performance

• Reliability team • 1,900 GWhs of historical losses formally

investigated

• Corrective actions identified

• >50% implemented to date

• Reduce turnaround durations • New approach - 5 days average reduction

in 2015

• Operational integrity program • Early warning of key control breakdowns

Alberta Coal Availability (Operated Units)

72%

74%

76%

78%

80%

82%

84%

86%

88%

90%

2013 2014E 2015E 2016E

13 13

Aging Plant Risk – Understood and Being Managed

• K1 / K2 rewinds completed

• Condition monitoring in place

• Sun 3-6 spare rotor available (early 2015)

• Sun 3 Stator replacement (early 2015)

Generators

• Sun 1 and 2 – waterwall replacement completed

• Improved diagnostic and crack assessment tools

in use

• Practical personnel risk management in use

Boiler – Corrosion Fatigue

• Spare transformer on site

• Online and offline condition monitoring in place Generator Transformers

Foundation for sustainable future availability performance

• Spare parts

• Online and offline condition monitoring in place Steam Turbines

14 14

New 3-Year Major Maintenance Contract with Alstom

Improvement of our long term availability and competitive position

• Substantial improvements in cost and duration starting in 2015

• Average 15% cost reduction / turnaround

• Average 5 days duration reduction / year

• Total cost reduction over 3 years $34 M

• Turnkey approach

• Alstom scope covers 90% of work

• Improved efficiency of execution and integration of work

• Shared risk / reward model

• Drivers to better align TransAlta / Alstom business objectives

• Schedule, cost, plant availability, safety

• 3 year initial term with options to extend – performance based

15 15

$0

$20

$40

$60

$80

$100

$120

$140

$160

2013 2014E 2015E 2016E

Disciplined Operating Cost Management

Improvement of our competitive position - resilience to power price variation

• Operational cost reduction

initiatives

• Critical review of work

• Rationalize

procurement across

mine and power

plants

• Target: Achieve 1st

quartile plant manageable

costs by 2017

Operating Costs excluding Fuel

& Environmental costs

$M

$30M

EBITDA

16 16

Sunhills Mining – Fuel Costs Stabilized

Future fuel cost certainty and improvement of our competitive position

• Coal cost / tonne improved in

2014 and forecast to be

sustained

• Costs managed despite

increases in mining input costs

• Future cost outcomes leveraged

off improvements in:

• Equipment availability

• Productivity

• Procurement rationalization

Alberta Coal Costs $/tonne

$22

$23

$24

$25

$26

$27

2013 2014E 2015E 2016E

Standard Cost of Coal / tonne

17 17

Rob Schaefer EVP Trading and Marketing

Alberta Market

18 18

Well Positioned in the Best Market in North America

• Insulated from near-term low prices with strong hedging program

• Growing customer business with flexibility to respond to changing customer

needs

• Developed and maintained a broad mix of fuel sources and assets for

maximum optionality

• Strong trading platform to take advantage of both asset optionality and market

volatility

• Gives TransAlta a unique competitive advantage in this market

19 19

Supply has outpaced load growth…

Short-term Alberta Market Conditions

Short-term price weakness expected to continue in 2015

-

200

400

600

800

1,000

1,200

1,400

Q1 Q2 Q3

Load growth Supply change

MW

$-

$20

$40

$60

$80

$100

$120

$140

Q1 Q2 Q3

2014 2013

$/MWh

…putting pressure on prices

2014 vs. 2013 Alberta Power Prices

20 20

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2014 2015 2016 2017

Open Merchant

Short term contract / Hedges

Long-term contract

PPAs

Total portfolio contractedness

2014 Contracted prices

AB ~$55/MWh

PacNW ~$40/MWh

2015 Contracted prices

AB ~$50 - $55/MWh

PacNW ~$40 - $45/MWh

MW

Hedges Mitigating Impact of Weaker Power Prices

90% 87% 81% 77%

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

21 21

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

3% Load Growth AESO Forecast

2% Load Growth

Market pays for investment

Alberta is One of the Strongest Markets in North America

Alberta prices have covered variable and

capital costs over time

Market forecast to require additional

supply in 2018+ period

Strong load growth drives supply

Historical Prices Alberta Reserve Margin $/MWh

$-

$20

$40

$60

$80

$100

Alberta

Average (Ontario, PJM (uppder deck) & ERCOT)

Implied

capacity

payment

22 22

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2015 - 2020 2015 - 2030

Alberta Requires Significant New Investment Longer-term

Load growth, coal retirements and extensions mean investment opportunity

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

• Alberta oil prices are

higher today than one

year ago

23 23

Marketing Platform Positioned for PPA Roll-off

• 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

0

500

1,000

1,500

2,000

2,500

3,000

2009 2012 2014 Mediumtarget

Post-PPAtarget

Large Industrial

C&I

Co-gen

TransAlta customer growth MW

24 24

$-

$10

$20

$30

$40

$50

$60

Hydro Wind Coal Cogen/CC GasPeakers

Low Cost Generation Optionality Serves Customers

Diversity and optionality positions TransAlta for success in Alberta

• TransAlta has the largest and most diverse fleet in the 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:

96% 29% 57% 7% 0%

Marginal Costs Customer Representation

TransAlta’s Average

Marginal Cost

$/MWh

25 25

Brett Gellner Chief Investment Officer

Growth

26 26

Positioned for Growth

Strong track record of growth $4.7 Billion invested last ten years

Significant growth underway $650 Million being invested generating an

additional ~$90 Million of EBITDA by 2017

Significant growth opportunities $10 Billion of opportunities are being

evaluated

Well positioned to compete Since 2012, successful in four competitive

process, resulting in over $1.0 Billion in

contracted investments

Growth Target: $40 - $60 million EBITDA per year

Accretive to cash flow per share

Maintain Investment Grade Ratings

27 27

Proven Track Record of Growth

Growth through a combination of greenfield and acquisitions1

$4.7 billion of growth during last ten years

$650 million of growth underway

$M

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Greenfield Acquisitions

$650M in

committed

capital

~$90M in

incremental

EBITDA

¹ Capital spend in any given year reflects the year in which the project was acquired or reached COD and does not reflect the actual timing of the spend

28 28

$-

$200

$400

$600

$800

$1,000

$1,200

2011 2012 2013 2014E

Base Excluding Centralia Centralia Proactive Initiatives¹

Initiatives Offsetting Lower Power Prices

¹ Includes K3, Solomon, New Richmond and Wyoming wind farms, and corporate cost reductions

Growth and other proactive initiatives have offset declines

in PacNW power prices

With the cashflow shortfall addressed – focus is now on future growth

EBITDA ($M): 2011 to 2014 Est

- Impact of lower power

prices at Centralia

- Growth & Other initiatives¹

$M

29 29

Significant Near to Medium-term EBITDA Growth

~$190 million incremental EBITDA by 2018

Committed growth & Sundance A investment generates significant EBITDA

over next four years

$M

$900

$950

$1,000

$1,050

$1,100

$1,150

$1,200

$1,250

2014E 2017E 2018E

Existing Business Australia Sundance A

30 30

Solomon Power Station

128 MW dual fuel

located in Western Australia

Acquired in 2012

under PPA for 21 years

EBITDA USD$40 million

Project Description

• Output is fully contracted for 21 years with Fortescue Metals Group

• Flow through of fuel, O&M and maintenance capital costs

• Escalating tariff

Cost: USD$315 million

31 31

Fortescue River Gas Pipeline (FRGP)

270km – 16-inch diameter pipeline

located in Western Australia

Under Construction - COD Q1, 2015

under long-term contract for 21 years

EBITDA1 AUD$12 million

Project Description

• Joint venture with DBP Development Group a wholly owned subsidiary of

DUET Group (TransAlta has a 43% interest)

• Natural gas pipeline to TransAlta’s 125 MW dual-fuel power station at

Solomon Power Station

• Output is fully contracted for 21 years with Fortescue Metals Group ¹ Represents TransAlta’s share

Capital Cost¹: AUD$80 million

Expansion Opportunities

32 32

South Hedland Generating Station

Project Description

• The station will supply Horizon Power’s customers (77%) and as well as

Fortescue’s Port operations (33%)

• Most efficient gas plant at the Port

• Future opportunity to add an additional unit (~45 MW) and customer

¹ Based on first full year. Fuel costs are flow through

150 MW gas fired

located in Western Australia

Under Construction - COD Q1, 2017

under long-term contract for 25 years

EBITDA1 AUD$80 million

Capital Cost: AUD$570 million

Expansion Opportunities

33 33

Potential Investment Opportunities

Gas-fired

• 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

Transitioning Coal

• 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

Renewables/Transmission

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

• Privatization of Australia’s electricity assets

• Significant acquisition opportunities

34 34

Competitive Strengths

• Significant experience operating power generation assets for industrial/utility

customers

• Ability to take on development and construction risk

• Positioned to manage merchant risk and add incremental value to the assets

through energy services

• Willingness to partner

• Ability to create operational and corporate synergies

• Significant tax attributes for U.S. opportunities

• Creation of RNW provides source of low cost equity

• Significant cash flow available for reinvesting post PPA period starting in 2018

35 35

Donald Tremblay Chief Financial Officer

Funding Plan

36 36

Strategic Initiatives and Priorities

• Continue to strengthen our balance sheet

• Prepare our balance sheet for post Alberta PPA period

• Fund construction of South Hedland

• Use TransAlta Renewables as a competitive source of capital

37 37

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 Sept 30th, 2014, ~$1.6

billion in liquidity including

over $200 million in cash

120 27

177 400

500

400

520

$0

$200

$400

$600

$800

2015 2016 2017 2018 2019

CAD MTN USD Notes

$M

Agency Rating Outlook

S&P BBB- Stable

Moody’s BBB- Negative

DBRS BBB Stable

Debt Maturity Schedule

38 38

10%

12%

14%

16%

18%

20%

2013 2014E 2015E

Strengthening the Balance Sheet

Targeting $300 - $500 million reduction in net debt in 2015

• 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

¹ Assumes 50/50 treatment of Preferred shares

$M Senior Debt FFO / Debt1

3,000

3,200

3,400

3,600

3,800

4,000

4,200

4,400

2013 2014E 2015E

39 39

Significant Financial Capacity

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

40 40

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

41 41

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

42 42

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.

43 43

2015 Outlook

• 2015 cashflow and capital guidance to be provided in February on Q4 call

• Forward prices for 2015 in Alberta are in range of $50/MWh, PacNW $35/MWh

• Sustaining capital expenditures in line with 2014

• Fleet availability in range of 88 – 90%

• Additional cashflow from pipeline in Australia in early 2015