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The market price of TransAlta (NYSE: TAC ) has risen sharply over the past two weeks, breaking through the $20 level and reaching $24.37 (all figures are in CAD unless otherwise stated). This represented an 80% upside from the $13.54 market priceI am a seasoned investor and financial journalist with over twenty years of experience in sell-side equity research, corporate and project finance, M&A and valuations, focusing on Canadian electric utilities, and infrastructure sectors. For ten years I worked as an ...

Core Points - TransAlta Corporation will release its third quarter 2025 results on November 6, 2025, before market opening [1] - A conference call and webcast will be held on the same day at 9:00 a.m. Mountain Time (11:00 a.m. Eastern Time) to discuss the results [1] - Related materials will be available on TransAlta's Investor Centre section of its website [4] Company Overview - TransAlta owns, operates, and develops a diverse fleet of electrical power generation assets in Canada, the United States, and Australia, focusing on long-term shareholder value [5] - The company is one of Canada's largest producers of wind power and Alberta's largest producer of thermal generation and hydro-electric power [5] - TransAlta has achieved a 70% reduction in GHG emissions, equating to 22.7 million tonnes CO2e since 2015, and has received an upgraded MSCI ESG rating of AA [5]

Core Insights - EagleNXT has received an order for 12 eBee TAC™ tactical mapping drones from Tough Stump Technologies, enhancing its presence in defense and public safety markets [1][4] - The eBee TAC drones are designed for rapid aerial reconnaissance and intelligence gathering, with capabilities such as 90 minutes of flight time and a range of 34 miles (54 km) [2] - The partnership with Tough Stump Technologies is long-standing, with eBee systems being utilized in ARTEMIS deployments since 2018, indicating a strong collaborative relationship [4] Company Overview - EagleNXT is a leading provider of advanced drone and aerial imaging solutions, with over one million flights conducted globally across various sectors including defense, public safety, and agriculture [6] - The company has achieved multiple industry firsts, including FAA approvals for Operations Over People (OOP) and Beyond Visual Line of Sight (BVLOS), as well as EASA C2 certification in Europe [6] - EagleNXT's drone systems are included on the U.S. Department of Defense's Blue UAS Cleared List, positioning the company as a trusted provider of secure UAS solutions [4][6] Product Features - The eBee TAC drone offers absolute accuracy down to 0.6 inches (1.5 cm) using RTK/PPK technology, making it suitable for generating high-resolution 2D maps and 3D models [2] - The integration of eBee TAC drones into Tough Stump's ARTEMIS™ kits enhances operational precision and agility for defense and public safety teams [3][4] - The ARTEMIS system combines EagleNXT's eBee platforms with Hexagon US Federal's geospatial technologies for improved visualization and integration with tools like ATAK [3]

Core Points - TransAlta Corporation will hold an Investor Day on November 18, 2025, in Toronto, starting at 9:00 a.m. ET [1][4] - The event will feature presentations from key executives, including the President and CEO, and the Executive Vice President and CFO, focusing on the company's strategic priorities and financial outlook [2] - The Investor Day will be conducted in a hybrid format, allowing both in-person and live webcast attendance, with registration closing for in-person attendance on November 10, 2025 [3] Company Overview - TransAlta operates a diverse fleet of electrical power generation assets across Canada, the United States, and Australia, emphasizing long-term shareholder value [5] - The company is a major producer of wind power in Canada and the largest producer of thermal generation and hydro-electric power in Alberta [5] - TransAlta has achieved a 70% reduction in GHG emissions, equating to 22.7 million tonnes CO2e since 2015, and has received an upgraded MSCI ESG rating of AA [5]

Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of CAD 349 million, an increase of CAD 33 million compared to 2024, driven by favorable ancillary service pricing and asset optimization [12][14] - Free cash flow for the quarter was CAD 177 million, consistent with the same period last year, translating to CAD 0.60 per share [8][14] - Average fleet availability was reported at 91.6% [8] Business Line Data and Key Metrics Changes - Hydro segment adjusted EBITDA increased to CAD 126 million from CAD 83 million in the previous year, attributed to higher intercompany sales and emissions credits [12] - Wind and solar segment adjusted EBITDA remained stable at CAD 89 million, with higher environmental revenue offset by lower pricing from Oklahoma assets [12] - Gas segment adjusted EBITDA decreased to CAD 128 million from CAD 142 million, primarily due to lower realized power prices and higher carbon costs [12] - Energy Transition segment adjusted EBITDA rose to CAD 19 million, a CAD 17 million increase year-over-year [12] - Energy Marketing adjusted EBITDA decreased by CAD 13 million to CAD 26 million due to subdued market volatility [12] Market Data and Key Metrics Changes - The average spot price in Alberta for the second quarter was CAD 40 per megawatt hour, down from CAD 45 per megawatt hour in 2024 [14] - The company realized an average price of CAD 111 per megawatt hour produced, benefiting from hedging strategies [16] Company Strategy and Development Direction - The company is focused on delivering adjusted EBITDA and free cash flow within 2025 guidance ranges, improving safety performance, and maximizing the value of legacy thermal energy campuses [17][19] - There is a strong emphasis on pursuing strategic M&A opportunities and maintaining financial strength through credit facility extensions [18][19] - The company aims to repurpose legacy thermal sites to meet the growing demand for reliable generation [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2025 guidance and highlighted the positive impact of Alberta's data center strategy on future investments [10][19] - The company remains committed to achieving its 2026 CO2 emissions reduction target and sees significant value in its legacy thermal sites [19] Other Important Information - The company successfully recontracted its wind facilities in Ontario, extending contract dates to 2031 and 2034 [9] - The Alberta government is supportive of developing a data center industry while ensuring an affordable and reliable electricity system [10] Q&A Session Summary Question: Data center discussions and MOU execution - Management indicated that there are no significant impediments to finalizing the MOU, but it requires time to finalize terms and work with customers [23][25] Question: Midlife natural gas M&A focus - Management confirmed that there is an increasing focus on natural gas opportunities, particularly in core markets like the Pacific Northwest and Desert Southwest [26][27] Question: Phase one timeline and Alberta's capacity for data centers - Management noted that while the timeline for MOU has evolved, they remain confident in Alberta's ability to support gigawatt-scale data centers [34][36] Question: Carbon credit sales and their relevance - Management emphasized the value of their environmental attribute portfolio and its importance in maintaining competitiveness and supporting data center discussions [58][59]

Financial Data and Key Metrics Changes - TransAlta reported adjusted EBITDA of CAD 349 million for Q2 2025, an increase of CAD 33 million compared to the same period in 2024, driven by favorable ancillary service pricing and asset optimization [11][12] - Free cash flow for the quarter was CAD 177 million, consistent with the same period last year [13] - Average fleet availability was 91.6% [6] Business Line Data and Key Metrics Changes - Hydro segment adjusted EBITDA increased to CAD 126 million from CAD 83 million year-over-year, attributed to higher intercompany sales and emissions credits [11] - Wind and solar segment adjusted EBITDA remained stable at CAD 89 million, impacted by lower tax attributes revenue from Oklahoma assets [12] - Gas segment adjusted EBITDA decreased to CAD 128 million from CAD 142 million, primarily due to lower realized power prices and higher carbon and natural gas pricing [12] - Energy Transition segment adjusted EBITDA rose to CAD 19 million, a CAD 17 million increase year-over-year [12] - Energy Marketing adjusted EBITDA decreased by CAD 13 million to CAD 26 million due to subdued market volatility [12] Market Data and Key Metrics Changes - Alberta's spot price averaged CAD 40 per megawatt hour in Q2 2025, down from CAD 45 per megawatt hour in 2024 [13] - The hydro fleet achieved an average realized merchant price of CAD 82 per megawatt hour, a 105% premium to the average spot price [14] - The gas fleet realized a 55% premium to the average spot price [14] - Ancillary service pricing settled at CAD 42 per megawatt hour, a 5% premium to the average spot price [15] Company Strategy and Development Direction - The company aims to maximize the value of its legacy thermal energy campuses and capture opportunities in securing data center customers [17] - TransAlta is focused on maintaining financial strength and flexibility while pursuing strategic M&A opportunities [18] - The company is committed to achieving its 2026 CO2 emissions reduction target and enhancing its diversified portfolio [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting 2025 guidance ranges and highlighted the positive momentum in securing data center opportunities in Alberta [11][17] - The company is optimistic about the development of a data center industry in Alberta, which is expected to rebalance the current oversupply of generation [10][36] - Management acknowledged the importance of clarity from the ISO regarding future phases of data center development [52] Other Important Information - TransAlta successfully recontracted its Melancon and Wolf Island wind facilities, extending contract dates to 2031 and 2034 respectively [6][7] - The company is actively engaged in commercial negotiations for its Centralia site and expects to share detailed development plans soon [10] Q&A Session Summary Question: What are the gating factors to successfully execute an MOU for data centers? - Management indicated that there are no significant impediments, but finalizing terms takes time [22][24] Question: How is the organization viewing midlife natural gas M&A opportunities? - Management confirmed that it is an increasing focus, with several opportunities being explored in core markets [26][27] Question: Has the timeline for securing an MOU changed since the Q1 call? - Management acknowledged that while there has been progress, the timeline has evolved due to clarity from the ISO [32][34] Question: Can Alberta deliver power to gigawatt scale data centers? - Management expressed confidence in Alberta's ability to support a vibrant data center industry, which would benefit their diverse fleet [36] Question: How is the carbon credit portfolio being managed? - Management emphasized the value of their environmental attributes and their role in ensuring competitiveness and meeting customer needs [56]

Second Quarter Results Kananaskis, Alberta AUGUST 1, 2025 The forward-looking statements contained in this presentation are based on many assumptions including, but not limited to, the following: no significant changes to applicable laws and regulations; no unexpected delays in obtaining required regulatory approvals; no material adverse impacts to investment and credit markets; no significant changes to power price and hedging assumptions; no significant changes to gas commodity price assumptions and trans ...

Core Insights - TransAlta Corporation reported strong operational performance in Q2 2025, highlighting the effectiveness of its diversified fleet and hedging strategies, which resulted in realized prices above spot prices [2][4] - The company is optimistic about achieving its 2025 outlook despite challenges in the Alberta price environment [2] Financial Performance - Q2 2025 operational availability was 91.6%, up from 90.8% in Q2 2024 [5][6] - Production increased to 4,813 GWh in Q2 2025 from 4,781 GWh in Q2 2024 [5] - Revenues for Q2 2025 were $433 million, down from $582 million in Q2 2024 [5] - Adjusted EBITDA rose to $349 million in Q2 2025 from $316 million in Q2 2024 [5][6] - Adjusted earnings before income taxes increased to $122 million in Q2 2025 from $112 million in Q2 2024 [5] - Net loss attributable to common shareholders was $112 million in Q2 2025, compared to net earnings of $56 million in Q2 2024 [6] Segment Performance - Hydro segment revenues increased to $126 million in Q2 2025 from $83 million in Q2 2024 [8] - Wind and Solar segment revenues were stable at $89 million in Q2 2025 compared to $88 million in Q2 2024 [8] - Gas segment revenues decreased to $128 million in Q2 2025 from $142 million in Q2 2024 [8] - Energy Transition segment revenues significantly increased to $19 million in Q2 2025 from $2 million in Q2 2024 [8] - Energy Marketing segment revenues decreased to $26 million in Q2 2025 from $39 million in Q2 2024 [8] Key Business Developments - The company extended its committed credit facilities totaling $2.1 billion, with maturity dates extended to June 30, 2029, for the syndicated credit facility [9] - TransAlta signed an agreement for the divestiture of the 48 MW Poplar Hill asset as part of a consent agreement with the federal Competition Bureau [10] - The company successfully recontracted its Ontario wind facilities, extending contract dates until 2031 and 2034 [11] Shareholder Returns - TransAlta announced a Normal Course Issuer Bid (NCIB) to repurchase up to 14 million common shares [13] - During the first half of 2025, the company purchased and canceled 1,932,800 common shares at an average price of $12.42 per share [14]

[Forward-Looking Statements](index=2&type=section&id=Forward-Looking%20Statements) This section outlines the nature of forward-looking statements, including predictions, estimates, and assumptions, and highlights the inherent risks and uncertainties that could cause actual results to differ materially [Forward-Looking Statements Overview](index=2&type=section&id=Forward-Looking%20Statements%20Overview) This section outlines the nature of forward-looking statements, including predictions, estimates, and assumptions, and highlights the inherent risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are predictions based on estimates and assumptions, subject to risks and uncertainties that could cause actual results to differ materially[4](index=4&type=chunk)[5](index=5&type=chunk) - Key areas covered by forward-looking statements include strategic objectives, capital allocation, sustainability goals, 2025 Outlook, financial and operational performance, asset optimization, growth strategies, ongoing transactions, project costs/schedules, regulatory outcomes, industry conditions, and legal proceedings[6](index=6&type=chunk)[7](index=7&type=chunk) - Assumptions underlying these statements include no significant changes to laws, regulations, market conditions, power/gas prices, interest/foreign exchange rates, demand for generation, facility integrity, debt ratings, or unforeseen economic events[6](index=6&type=chunk)[8](index=8&type=chunk) - Adverse factors include fluctuations in power/commodity prices, changes in supply/demand, ability to contract generation, development/acquisition risks, financing difficulties, ESG target achievement, regulatory changes, operational risks, cybersecurity threats, economic risks, and legal disputes[8](index=8&type=chunk)[11](index=11&type=chunk) [Description of the Business](index=4&type=section&id=Description%20of%20the%20Business) TransAlta Corporation is a major Canadian publicly traded power generator with a diverse fleet across Canada, the U.S., and Western Australia [Business Overview](index=4&type=section&id=Business%20Overview) TransAlta Corporation is a major Canadian publicly traded power generator with a diverse fleet across Canada, the U.S., and Western Australia, including hydro, wind, solar, battery storage, natural gas, and coal - TransAlta is one of Canada's largest publicly traded power generators, operating a diverse fleet (hydro, wind, solar, battery storage, natural gas, coal) across Canada, the U.S., and Western Australia[12](index=12&type=chunk) - Strategic priorities include optimizing the Alberta portfolio, executing growth, realizing value from legacy assets, maintaining financial strength, defining next-gen power solutions, and leading in ESG and market policy[13](index=13&type=chunk) [Portfolio of Assets](index=4&type=section&id=Portfolio%20of%20Assets) TransAlta's asset portfolio is geographically diversified and includes both merchant and high-quality contracted assets, with a total gross installed capacity of 9,014 MW as of June 30, 2025 - The asset portfolio is geographically diversified across core markets (Canada, U.S., Western Australia) and includes both merchant and high-quality contracted assets[14](index=14&type=chunk)[15](index=15&type=chunk) - Merchant exposure is primarily in Alberta (**58% of capacity**), managed through hedging strategies with commercial and industrial (C&I) customers and financial hedges[15](index=15&type=chunk)[16](index=16&type=chunk) Total Gross Installed Capacity (MW) | Segment | Alberta (MW) | Canada (excl. AB) (MW) | U.S. (MW) | Western Australia (MW) | Total (MW) | Number of facilities | | :---------------- | :----------- | :--------------------- | :-------- | :--------------------- | :--------- | :------------------- | | Hydro | 834 | 88 | — | — | 922 | 24 | | Wind & Solar | 764 | 751 | 1,024 | 48 | 2,587 | 36 | | Gas | 3,650 | 705 | 29 | 450 | 4,834 | 26 | | Energy Transition | — | — | 671 | — | 671 | 2 | | **Total** | **5,248** | **1,544** | **1,724** | **498** | **9,014** | **88** | [Contracted Capacity](index=5&type=section&id=Contracted%20Capacity) Approximately 52% of TransAlta's total installed capacity is contracted with creditworthy counterparties, providing stable long-term earnings with a weighted average contract life of 5 years - Approximately **52% of total installed capacity** is contracted with creditworthy counterparties, providing stable long-term earnings and cash flow[15](index=15&type=chunk)[19](index=19&type=chunk) Contracted Capacity | Segment | Contracted Capacity (MW) | Contracted Capacity as a % of Total Capacity (%) | | :---------------- | :----------------------- | :--------------------------------------------- | | Hydro | 88 | 10 | | Wind & Solar | 2,159 | 83 | | Gas | 2,071 | 43 | | Energy Transition | 381 | 57 | | **Total** | **4,699** | **52** | Weighted Average Contract Life (years) | Segment | Weighted Average Contract Life (years) | | :---------------- | :------------------------------------- | | Hydro | 1 | | Wind & Solar | 10 | | Gas | 4 | | Energy Transition | — | | **Total** | **5** | [Highlights](index=6&type=section&id=Highlights) This section presents TransAlta's consolidated financial and operational highlights, including performance metrics, revenues, and key financial indicators for Q2 and H1 2025 [Consolidated Financial and Operational Highlights](index=6&type=section&id=Consolidated%20Financial%20and%20Operational%20Highlights) For Q2 and H1 2025, TransAlta delivered strong operational performance with increased availability and production, despite a decrease in revenues, while maintaining strong liquidity - The acquisition of Heartland Generation in December 2024 added **1,747 MW** to gross installed capacity[23](index=23&type=chunk) Consolidated Financial and Operational Highlights (Q2 & H1 2025 vs. 2024) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Availability (%) | 91.6 | 90.8 | +0.8 | 93.3 | 91.5 | +1.8 | | Production (GWh) | 4,813 | 4,781 | +32 | 11,645 | 10,959 | +686 | | Revenues (CAD millions) | 433 | 582 | -149 | 1,191 | 1,529 | -338 | | Adjusted EBITDA (CAD millions) | 349 | 316 | +33 | 619 | 658 | -39 | | Net (loss) earnings attributable to common shareholders (CAD millions) | (112) | 56 | -168 | (66) | 278 | -344 | | Cash flow from operating activities (CAD millions) | 157 | 108 | +49 | 164 | 352 | -188 | | Available liquidity (CAD millions) | 1,497 | N/A | N/A | 1,497 | N/A | N/A | | Adjusted net debt to adjusted EBITDA (times) | 3.8 | N/A | N/A | 3.8 | N/A | N/A | | Total assets (CAD millions) | 8,939 | N/A | N/A | 8,939 | N/A | N/A | | Total liabilities (CAD millions) | 7,276 | N/A | N/A | 7,276 | N/A | N/A | [Operating Performance](index=8&type=section&id=Operating%20Performance) TransAlta experienced improved availability across its fleet, particularly in Energy Transition and Hydro segments, contributing to increased overall production for both Q2 and H1 2025 Availability by Segment (%) | Segment | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hydro | 97.0 | 90.5 | 95.3 | 91.2 | | Wind and Solar | 94.7 | 94.3 | 94.3 | 93.9 | | Gas | 90.2 | 95.3 | 92.9 | 94.9 | | Energy Transition | 81.3 | 59.0 | 89.1 | 69.0 | | **Total** | **91.6** | **90.8** | **93.3** | **91.5** | - Higher availability in Q2 and H1 2025 was primarily due to lower planned and unplanned outages at the Centralia facility (Energy Transition) and in the Hydro segment, partially offset by higher unplanned outages in the Gas segment[35](index=35&type=chunk)[36](index=36&type=chunk) Total Production (GWh) | Segment | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hydro | 572 | 426 | 955 | 777 | | Wind and Solar | 1,513 | 1,499 | 3,418 | 2,997 | | Gas | 2,486 | 2,854 | 5,990 | 6,382 | | Energy Transition | 242 | 2 | 1,282 | 803 | | **Total** | **4,813** | **4,781** | **11,645** | **10,959** | - Total production increased by **1% in Q2** and **6% in H1 2025**, driven by Heartland gas facilities acquisition, improved Centralia availability, and higher Hydro production, partially offset by Gas segment dispatch optimization due to lower market prices[41](index=41&type=chunk)[45](index=45&type=chunk) Market Pricing (Q2 & H1 2025 vs. 2024) | Market Price Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :---------------------------------- | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Alberta spot power price ($/MWh) | 40 | 45 | -11% | 40 | 72 | -44% | | Mid-Columbia spot power price (US$/MWh) | 34 | 29 | +17% | 42 | 67 | -37% | | Ontario spot power price ($/MWh) | 36 | 28 | +29% | 50 | 31 | +61% | | Natural gas price (AECO) per GJ ($) | 1.64 | 1.14 | +44% | 1.83 | 1.54 | +19% | - Alberta spot power prices decreased significantly (**11% in Q2, 44% in H1**) due to a mild winter and increased supply[42](index=42&type=chunk)[43](index=43&type=chunk) - AECO natural gas prices increased (**44% in Q2, 19% in H1**) due to lower storage levels[42](index=42&type=chunk)[43](index=43&type=chunk) [Financial Performance Review of Consolidated Information](index=11&type=section&id=Financial%20Performance%20Review%20of%20Consolidated%20Information) Consolidated revenues decreased significantly in both Q2 and H1 2025, primarily due to lower derivative and trading activities and unfavorable market conditions, leading to a net loss Consolidated Statement of Earnings (Q2 & H1 2025 vs. 2024) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Revenues | 433 | 582 | 1,191 | 1,529 | | Fuel and purchased power | (173) | (154) | (450) | (477) | | Carbon compliance recovery (costs) | 74 | 8 | 25 | (32) | | Operations, maintenance and administration | (173) | (144) | (346) | (278) | | Depreciation and amortization | (150) | (131) | (296) | (255) | | Asset impairment charges | (13) | (5) | (28) | (6) | | Fair value change in contingent consideration payable | — | — | 34 | — | | Interest expense | (88) | (80) | (181) | (149) | | Foreign exchange loss | (17) | (1) | (21) | (6) | | (Loss) Earnings before income taxes | (95) | 94 | (46) | 361 | | Income tax expense | (11) | (28) | (18) | (57) | | Net (loss) earnings attributable to common shareholders | (112) | 56 | (66) | 278 | - Q2 2025 revenues decreased by **$149 million (26%)** due to higher unrealized mark-to-market losses from derivatives in Gas, Wind & Solar, Energy Transition, and Hydro segments, partially offset by the Heartland acquisition[49](index=49&type=chunk)[55](index=55&type=chunk) - H1 2025 revenues decreased by **$338 million (22%)** due to lower Alberta power prices, higher dispatch optimization in Gas, and increased unrealized mark-to-market losses, partially offset by the Heartland acquisition[58](index=58&type=chunk)[62](index=62&type=chunk) - Carbon compliance recovery increased significantly in both periods due to higher utilization of internally generated emission credits and lower fuel consumption in the Gas segment, despite an increase in carbon price[55](index=55&type=chunk)[62](index=62&type=chunk) - Asset impairment charges increased by **160% in Q2** and **367% in H1 2025**, mainly due to increased decommissioning and restoration provisions on retired assets and an impairment charge on Planned Divestiture assets[51](index=51&type=chunk)[60](index=60&type=chunk) [Adjusted EBITDA](index=14&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA increased by 10% in Q2 2025 to $349 million, driven by Hydro and Energy Transition segments, but decreased by 6% in H1 2025 to $619 million Adjusted EBITDA (CAD millions) | Period | 2025 | 2024 | Change | | :---------------------- | :--- | :--- | :----- | | 3 months ended June 30 | 349 | 316 | +33 | | 6 months ended June 30 | 619 | 658 | -39 | - Q2 2025 Adjusted EBITDA increased due to higher environmental/tax attributes revenue and volumes in Hydro, and higher market optimization/availability in Energy Transition, partially offset by lower Gas and Energy Marketing contributions[66](index=66&type=chunk) - H1 2025 Adjusted EBITDA decreased due to lower Gas segment performance (dispatch optimization, lower prices, higher carbon price) and subdued market volatility in Energy Marketing, partially offset by positive contributions from Wind and Solar (new facilities) and Energy Transition (lower purchased power costs)[69](index=69&type=chunk) [Free Cash Flow](index=16&type=section&id=Free%20Cash%20Flow) Free Cash Flow (FCF) remained consistent in Q2 2025 at $177 million but decreased by $82 million (21%) in H1 2025 to $316 million Free Cash Flow (FCF) (CAD millions) | Period | 2025 | 2024 | Change | | :---------------------- | :--- | :--- | :----- | | 3 months ended June 30 | 177 | 177 | 0 | | 6 months ended June 30 | 316 | 398 | -82 | - FCF for Q2 2025 was consistent with Q2 2024, with higher Adjusted EBITDA offset by increased sustaining capital expenditures and net interest expense[72](index=72&type=chunk) - FCF for H1 2025 decreased due to lower Adjusted EBITDA, higher sustaining capital expenditures (Canadian gas facilities, Heartland acquisition), and increased net interest expense[76](index=76&type=chunk) [Capital Expenditures](index=18&type=section&id=Capital%20Expenditures) This section details TransAlta's capital expenditures, distinguishing between sustaining capital for maintenance and growth capital for new projects [Sustaining Capital Expenditures](index=18&type=section&id=Sustaining%20Capital%20Expenditures) Sustaining capital expenditures increased in both Q2 and H1 2025, primarily driven by higher major maintenance at Canadian gas facilities and Heartland-acquired assets - Sustaining capital expenditures are incurred for major maintenance to sustain existing capacity or production[79](index=79&type=chunk) Sustaining Capital Expenditures (CAD millions) | Segment | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :---------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hydro | 6 | 10 | 10 | 13 | | Wind and Solar | 7 | 4 | 11 | 7 | | Gas | 40 | 11 | 51 | 14 | | Energy Transition | — | 12 | — | 12 | | Corporate | 4 | 3 | 8 | (6) | | **Total** | **57** | **40** | **80** | **40** | - Total sustaining capital expenditures increased by **$17 million in Q2** and **$40 million in H1 2025**, mainly due to higher major maintenance for Canadian gas facilities and Heartland-acquired assets, offset by no major maintenance in Energy Transition[80](index=80&type=chunk)[81](index=81&type=chunk) [Growth and Development Capital Expenditures](index=19&type=section&id=Growth%20and%20Development%20Capital%20Expenditures) Growth and development capital expenditures decreased in H1 2025 compared to H1 2024, as many development projects achieved commercial operation in the first half of 2024 - Growth capital expenditures add megawatts or generate new incremental revenues, covering engineering, design, contracting, permitting, payroll, and overhead[83](index=83&type=chunk) Growth and Development Spending (CAD millions) | Segment | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :---------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hydro | 1 | 3 | 1 | 6 | | Wind and Solar | — | — | — | 48 | | Gas | 15 | 12 | 26 | 16 | | Energy Transition | 2 | — | 2 | — | | **Total** | **18** | **15** | **29** | **70** | - Growth and development capital expenditures were lower in H1 2025 compared to H1 2024, as many development projects achieved commercial operation in the first half of 2024[84](index=84&type=chunk) [Significant and Subsequent Events](index=19&type=section&id=Significant%20and%20Subsequent%20Events) This section outlines key corporate and financial events, including credit facility extensions, asset divestitures, senior note issuances, and dividend increases [Corporate and Financial Events](index=19&type=section&id=Corporate%20and%20Financial%20Events) TransAlta executed several key corporate and financial actions, including extending credit facilities, recontracting Ontario wind facilities, divesting Poplar Hill, and issuing senior notes - On July 16, 2025, TransAlta extended **$2.1 billion** in committed credit facilities, pushing maturity dates to June 30, 2029 (syndicated) and June 30, 2027 (bilateral)[85](index=85&type=chunk) - The company recontracted its Melancthon 1, Melancthon 2, and Wolfe Island wind facilities through the Ontario IESO MT2e, extending contracts until April 30, 2031, and April 30, 2034, respectively[86](index=86&type=chunk) - An agreement was signed for the divestiture of the **48 MW Poplar Hill asset**, as required by the Heartland Generation acquisition consent agreement[87](index=87&type=chunk) - TransAlta issued **$450 million of senior notes** with a **5.625% annual coupon**, maturing March 24, 2032, and used the proceeds to repay a **$400 million variable rate term loan facility**[88](index=88&type=chunk)[89](index=89&type=chunk) - A strategic investment was made in Nova Clean Energy, LLC, including a **US$75 million term loan** and **US$100 million revolving facility**, granting TransAlta exclusive rights to purchase Nova's late-stage development projects in the western U.S[91](index=91&type=chunk) - The Sundance Unit 6 facility was mothballed for up to two years, with flexibility to return to service based on market conditions[92](index=92&type=chunk) - The Board approved an **8% increase** to the common share dividend, raising it to **$0.065 per common share quarterly ($0.26 annualized)**, marking the sixth consecutive annual increase[93](index=93&type=chunk) - The company received approval for a Normal Course Issuer Bid (NCIB) to repurchase up to **14 million common shares** by May 30, 2026, allocating up to **$100 million** for share repurchases[95](index=95&type=chunk)[96](index=96&type=chunk) [Segmented Financial Performance and Operating Results](index=21&type=section&id=Segmented%20Financial%20Performance%20and%20Operating%20Results) This section provides a detailed review of TransAlta's financial and operating performance across its Hydro, Wind and Solar, Gas, Energy Transition, Energy Marketing, and Corporate segments [Overall Segmented Financial Performance](index=21&type=section&id=Overall%20Segmented%20Financial%20Performance) TransAlta's overall segmented financial performance in Q2 2025 saw an increase in Adjusted earnings before income taxes, but a decrease in Adjusted net earnings attributable to common shareholders Segmented Financial Performance (CAD millions) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Hydro Adjusted EBITDA | 126 | 83 | 173 | 170 | | Wind and Solar Adjusted EBITDA | 89 | 88 | 191 | 177 | | Gas Adjusted EBITDA | 128 | 142 | 232 | 267 | | Energy Transition Adjusted EBITDA | 19 | 2 | 56 | 29 | | Energy Marketing Adjusted EBITDA | 26 | 39 | 47 | 78 | | Corporate Adjusted EBITDA | (39) | (38) | (80) | (63) | | **Total Adjusted EBITDA** | **349** | **316** | **619** | **658** | | Adjusted earnings before income taxes | 122 | 112 | 150 | 256 | | (Loss) earnings before income taxes | (95) | 94 | (46) | 361 | | Adjusted net earnings attributable to common shareholders | 54 | 70 | 84 | 197 | | Net (loss) earnings attributable to common shareholders | (112) | 56 | (66) | 278 | - Adjusted earnings before income taxes increased by **$10 million (9%) in Q2 2025**, driven by higher Adjusted EBITDA and realized foreign exchange gains, partially offset by higher depreciation and interest expense[99](index=99&type=chunk)[100](index=100&type=chunk) - Net loss before income taxes increased by **$189 million (201%) in Q2 2025**, primarily due to higher unrealized mark-to-market losses across multiple segments and increased foreign exchange losses and asset impairment charges[99](index=99&type=chunk)[101](index=101&type=chunk)[104](index=104&type=chunk) - Adjusted earnings before income taxes decreased by **$106 million (41%) in H1 2025**, mainly due to lower Adjusted EBITDA, higher depreciation from new facilities, and increased interest expense[102](index=102&type=chunk)[104](index=104&type=chunk) - Net loss before income taxes increased by **$407 million (113%) in H1 2025**, driven by higher unrealized mark-to-market losses, asset impairment charges (including Planned Divestitures), and foreign exchange losses, partially offset by an impairment reversal[103](index=103&type=chunk)[105](index=105&type=chunk) [Hydro Segment](index=23&type=section&id=Hydro%20Segment) The Hydro segment showed strong performance in Q2 2025 with a 52% increase in Adjusted EBITDA, driven by higher environmental and tax attributes revenue, increased merchant and ancillary services volumes due to higher availability, and higher ancillary services prices Hydro Segment Performance (CAD millions, except GWh/%) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Availability (%) | 97.0 | 90.5 | +6.5 | 95.3 | 91.2 | +4.1 | | Total energy production (GWh) | 572 | 426 | +146 | 955 | 777 | +178 | | Adjusted revenues | 147 | 100 | +47 | 212 | 207 | +5 | | Adjusted EBITDA | 126 | 83 | +43 | 173 | 170 | +3 | | Adjusted earnings before income taxes | 118 | 75 | +43 | 156 | 155 | +1 | - Q2 2025 Adjusted revenues increased by **47%** due to higher environmental/tax attributes revenue (intercompany sales of emission credits), increased merchant and ancillary services volumes (higher availability), and higher ancillary services prices, partially offset by lower Alberta spot power prices[109](index=109&type=chunk)[113](index=113&type=chunk) - H1 2025 Adjusted revenues increased by **2%** due to higher merchant and ancillary services volumes, increased environmental/tax attributes revenue, and higher volume of favorable hedging positions settled, partially offset by lower Alberta spot power and ancillary services prices[110](index=110&type=chunk)[114](index=114&type=chunk) [Wind and Solar Segment](index=25&type=section&id=Wind%20and%20Solar%20Segment) The Wind and Solar segment saw a slight increase in Adjusted EBITDA for both Q2 and H1 2025, driven by higher environmental and tax attributes revenue and the full impact of new wind facilities. However, Adjusted earnings before income taxes decreased due to higher depreciation and amortization Wind and Solar Segment Performance (CAD millions, except GWh/%) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Gross installed capacity (MW) | 2,587 | 2,584 | +3 | 2,587 | 2,584 | +3 | | Availability (%) | 94.7 | 94.3 | +0.4 | 94.3 | 93.9 | +0.4 | | Total production (GWh) | 1,513 | 1,499 | +14 | 3,418 | 2,997 | +421 | | Adjusted revenues | 129 | 122 | +7 | 274 | 242 | +32 | | Adjusted EBITDA | 89 | 88 | +1 | 191 | 177 | +14 | | Adjusted earnings before income taxes | 37 | 41 | -4 | 86 | 87 | -1 | - Q2 2025 Adjusted revenues increased due to higher environmental/tax attributes revenue (emission credits sales), partially offset by lower tax attributes revenue from Oklahoma (lower wind resource) and lower Alberta pool prices[120](index=120&type=chunk)[122](index=122&type=chunk) - H1 2025 Adjusted revenues increased due to the full impact of White Rock and Horizon Hill wind facilities, higher environmental attributes revenue, increased production in Eastern Canada, and higher tax attributes revenue from Oklahoma facilities[121](index=121&type=chunk)[123](index=123&type=chunk) - Adjusted earnings before income taxes decreased in both periods due to higher depreciation and amortization from new wind facilities[120](index=120&type=chunk)[122](index=122&type=chunk)[124](index=124&type=chunk) [Gas Segment](index=27&type=section&id=Gas%20Segment) The Gas segment experienced a decrease in Adjusted EBITDA for both Q2 and H1 2025, primarily due to lower market prices, higher dispatch optimization, increased carbon prices, and higher natural gas prices. This was partially offset by positive contributions from the Heartland acquisition and increased utilization of emission credits Gas Segment Performance (CAD millions, except GWh/%) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Gross installed capacity (MW) | 4,834 | 3,087 | +1,747 | 4,834 | 3,087 | +1,747 | | Availability (%) | 90.2 | 95.3 | -5.1 | 92.9 | 94.9 | -2.0 | | Total production (GWh) | 2,486 | 2,854 | -368 | 5,990 | 6,382 | -392 | | Adjusted revenues | 282 | 300 | -18 | 648 | 646 | +2 | | Adjusted EBITDA | 128 | 142 | -14 | 232 | 267 | -35 | | Adjusted earnings before income taxes | 54 | 86 | -32 | 94 | 156 | -62 | - Q2 2025 Adjusted revenues decreased due to higher dispatch optimization (lower market prices), lower pool and realized power prices in Alberta, partially offset by the Heartland acquisition[131](index=131&type=chunk)[133](index=133&type=chunk) - Q2 2025 Adjusted EBITDA decreased due to lower adjusted revenues, higher OM&A (Heartland facilities), higher natural gas prices, and increased carbon price, partially offset by utilization of emission credits[131](index=131&type=chunk)[133](index=133&type=chunk) - H1 2025 Adjusted revenues increased slightly due to the Heartland acquisition and favorable hedge positions, offset by higher dispatch optimization and lower power prices in Alberta[132](index=132&type=chunk)[134](index=134&type=chunk) - H1 2025 Adjusted EBITDA decreased due to higher OM&A, natural gas prices, and carbon price, partially offset by Heartland contributions and emission credit utilization[132](index=132&type=chunk)[134](index=134&type=chunk) [Energy Transition Segment](index=29&type=section&id=Energy%20Transition%20Segment) The Energy Transition segment showed significant improvement in Q2 and H1 2025, with Adjusted EBITDA increasing by 850% and 93% respectively, primarily driven by higher production, improved availability at Centralia, and lower purchased power costs Energy Transition Segment Performance (CAD millions, except GWh/%) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Gross installed capacity (MW) | 671 | 671 | — | 671 | 671 | — | | Availability (%) | 81.3 | 59.0 | +22.3 | 89.1 | 69.0 | +20.1 | | Total production (GWh) | 242 | 2 | +240 | 1,282 | 803 | +479 | | Adjusted revenues | 88 | 65 | +23 | 241 | 276 | -35 | | Adjusted EBITDA | 19 | 2 | +17 | 56 | 29 | +27 | | Adjusted earnings before income taxes | 6 | (13) | +19 | 28 | (2) | +30 | - Q2 2025 Adjusted revenues increased by **35%** due to higher production driven by higher Mid-Columbia prices and higher availability[140](index=140&type=chunk) - Q2 2025 Adjusted EBITDA and Adjusted earnings before income taxes increased significantly due to higher adjusted revenues[140](index=140&type=chunk) - H1 2025 Adjusted revenues decreased by **13%** due to lower Mid-Columbia prices[142](index=142&type=chunk) - H1 2025 Adjusted EBITDA increased due to lower purchased power costs driven by higher availability, which resulted in fewer repurchases to fulfill contractual obligations during outages, partially offset by lower adjusted revenues[142](index=142&type=chunk)[145](index=145&type=chunk) [Energy Marketing Segment](index=31&type=section&id=Energy%20Marketing%20Segment) The Energy Marketing segment experienced a decrease in Adjusted revenues and Adjusted EBITDA for both Q2 and H1 2025, primarily due to subdued market volatility across North American natural gas and power markets and lower realized settled trades Energy Marketing Segment Performance (CAD millions) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Adjusted revenues | 34 | 48 | -14 | 62 | 97 | -35 | | Adjusted EBITDA | 26 | 39 | -13 | 47 | 78 | -31 | | Adjusted earnings before income taxes | 26 | 38 | -12 | 45 | 76 | -31 | - Adjusted revenues and Adjusted EBITDA decreased in both Q2 and H1 2025 due to comparatively subdued market volatility across North American natural gas and power markets and lower realized settled trades[147](index=147&type=chunk)[149](index=149&type=chunk) [Corporate Segment](index=32&type=section&id=Corporate%20Segment) The Corporate segment's Adjusted EBITDA decreased in both Q2 and H1 2025, primarily due to increased spending on strategic initiatives and Heartland-related corporate costs. Adjusted loss before income taxes also increased due to higher interest expense and unrealized foreign exchange losses Corporate Segment Performance (CAD millions) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Adjusted OM&A | 38 | 38 | — | 79 | 63 | +16 | | Adjusted EBITDA | (39) | (38) | -1 | (80) | (63) | -17 | | Adjusted loss before income taxes | (119) | (115) | -4 | (259) | (216) | -43 | | Loss before income taxes | (150) | (122) | -28 | (301) | (218) | -83 | - Adjusted EBITDA decreased in both Q2 and H1 2025 due to increased spending on strategic and growth initiatives and the addition of corporate costs related to Heartland[151](index=151&type=chunk)[152](index=152&type=chunk) - Adjusted loss before income taxes increased due to lower Adjusted EBITDA and higher interest expense (lower capitalized interest, higher credit facility fees), partially offset by higher realized foreign exchange gains[151](index=151&type=chunk)[152](index=152&type=chunk) - Loss before income taxes increased due to higher adjusted loss before income taxes, higher unrealized foreign exchange losses, and increased spending on ERP system upgrades[153](index=153&type=chunk) [Performance by Segment with Supplemental Geographical Information](index=33&type=section&id=Performance%20by%20Segment%20with%20Supplemental%20Geographical%20Information) This section provides a geographical breakdown of Adjusted EBITDA and Adjusted earnings (loss) before income taxes, highlighting regional contributions to overall performance [Adjusted EBITDA by Segment and Region](index=33&type=section&id=Adjusted%20EBITDA%20by%20Segment%20and%20Region) This section provides a geographical breakdown of Adjusted EBITDA and Adjusted earnings (loss) before income taxes, showing Alberta as the largest contributor to Adjusted EBITDA Adjusted EBITDA by Segment and Region (3 months ended June 30, 2025) | Region | Hydro | Wind & Solar | Gas | Energy Transition | Energy Marketing | Corporate | Total | | :------------------------ | :---- | :----------- | :-- | :---------------- | :--------------- | :-------- | :---- | | Alberta | 120 | 21 | 76 | (3) | 26 | (39) | 201 | | Canada, excluding Alberta | 6 | 32 | 27 | — | — | — | 65 | | US | — | 34 | 2 | 22 | — | — | 58 | | Western Australia | — | 2 | 23 | — | — | — | 25 | | **Adjusted EBITDA** | **126** | **89** | **128** | **19** | **26** | **(39)** | **349** | Adjusted EBITDA by Segment and Region (6 months ended June 30, 2025) | Region | Hydro | Wind & Solar | Gas | Energy Transition | Energy Marketing | Corporate | Total | | :------------------------ | :---- | :----------- | :-- | :---------------- | :--------------- | :-------- | :---- | | Alberta | 167 | 31 | 126 | (5) | 47 | (80) | 286 |\ | Canada, excluding Alberta | 6 | 80 | 54 | — | — | — | 140 | | U.S. | — | 76 | 5 | 61 | — | — | 142 | | Western Australia | — | 4 | 47 | — | — | — | 51 | | **Adjusted EBITDA** | **173** | **191** | **232** | **56** | **47** | **(80)** | **619** | [Optimization of the Alberta Portfolio](index=34&type=section&id=Optimization%20of%20the%20Alberta%20Portfolio) This section details TransAlta's strategy for its Alberta portfolio, including hedging, diversification, and the impact of market conditions on realized power prices [Alberta Portfolio Strategy and Performance](index=34&type=section&id=Alberta%20Portfolio%20Strategy%20and%20Performance) TransAlta's Alberta portfolio, comprising 58% of its capacity, is strategically managed through hedging and diversification of fuel types, despite lower overall production and spot prices - TransAlta's merchant exposure is primarily in Alberta, with **58% of capacity** located there and **77% available for the merchant market**, managed through hedging strategies and C&I customers[159](index=159&type=chunk)[164](index=164&type=chunk) - The Heartland acquisition added **1,747 MW of flexible capacity**, including contracted cogeneration and peaking generation, enhancing TransAlta's competitive position in Alberta[160](index=160&type=chunk)[193](index=193&type=chunk) Alberta Electricity Portfolio Production and Hedging (Q2 & H1 2025 vs. 2024) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | Change (QoQ) | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | Change (YoY) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------- | :--------------------------- | :--------------------------- | :----------- | | Total production (GWh) | 2,466 | 2,719 | -253 | 5,661 | 5,891 | -230 | | Production contracted or hedged (%) | 131% | 111% | +20% | 128% | 99% | +29% | | Hedged volumes (GWh) | 1,868 | 2,132 | -264 | 4,247 | 4,077 | +170 | | Adjusted gross margin ($ millions) | 271 | 219 | +52 | 433 | 442 | -9 | - Q2 2025 total production decreased by **9%** due to lower merchant production in Gas (dispatch optimization) and Wind & Solar (lower wind resource), partially offset by higher contract production in Gas (Heartland) and Hydro production[168](index=168&type=chunk)[169](index=169&type=chunk) - H1 2025 total production decreased by **4%** due to lower merchant production in Gas and Wind & Solar, partially offset by higher contract production in Gas (Heartland) and Hydro production[176](index=176&type=chunk)[177](index=177&type=chunk) Alberta Market and Portfolio Results (Q2 & H1 2025 vs. 2024) | Metric | 3 months ended June 30, 2025 | 3 months ended June 30, 2024 | 6 months ended June 30, 2025 | 6 months ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Alberta Spot power price average ($/MWh) | 40 | 45 | 40 | 72 | | Natural gas price (AECO) per GJ ($) | 1.64 | 1.14 | 1.83 | 1.54 | | Carbon compliance price per tonne ($) | 95 | 80 | 95 | 80 | | Realized merchant power price per MWh ($) | 111 | 97 | 111 | 105 | | Hedged power price average per MWh ($) | 70 | 84 | 70 | 86 | | Fuel cost per MWh ($) | 42 | 35 | 44 | 42 | | Carbon compliance (recovery) cost per MWh ($) | (8) | 11 | 6 | 13 | - Alberta spot power prices decreased to **$40/MWh** in both Q2 and H1 2025 due to milder weather and increased supply[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Realized merchant power price per MWh increased due to favorable hedge positions settling[181](index=181&type=chunk)[182](index=182&type=chunk)[183](index=183&type=chunk) - Carbon compliance cost per MWh decreased due to higher utilization of emission credits, despite an increase in carbon price from **$80 to $95 per tonne**[183](index=183&type=chunk) [Selected Quarterly Information](index=39&type=section&id=Selected%20Quarterly%20Information) This section presents TransAlta's selected quarterly financial and operational trends, highlighting seasonal impacts and key factors influencing performance [Quarterly Financial and Operational Trends](index=39&type=section&id=Quarterly%20Financial%20and%20Operational%20Trends) TransAlta's quarterly results are seasonal, influenced by electricity market dynamics and fuel costs, with Q2 2025 seeing a net loss attributable to common shareholders - Results are seasonal, with higher maintenance costs in spring/fall and higher electricity prices in peak winter/summer[184](index=184&type=chunk) - Hydro production peaks in spring, while wind speeds are higher in winter[184](index=184&type=chunk) Selected Quarterly Financial Information (CAD millions, except per share) | Metric | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | | :-------------------------------------------- | :------ | :------ | :------ | :------ | | Revenues | 638 | 678 | 758 | 433 | | Carbon compliance costs (recovery) | 41 | 39 | 49 | (74) | | OM&A | 143 | 234 | 173 | 173 | | Depreciation and amortization | 133 | 143 | 146 | 150 | | Earnings (loss) before income taxes | 9 | (51) | 49 | (95) | | Net earnings (loss) attributable to common shareholders | (36) | (65) | 46 | (112) | | Net earnings (loss) per share attributable to common shareholders, basic and diluted | (0.12) | (0.22) | 0.15 | (0.38) | | Cash flow from operating activities | 229 | 215 | 7 | 157 | - Operating results were impacted by the Heartland acquisition (Dec 2024) and commissioning of new wind and solar facilities in 2023-2024[186](index=186&type=chunk) - Revenues were impacted by higher production in Q1/Q2 2025, unrealized mark-to-market gains/losses, and lower realized pricing in 2024 (new supply in Alberta) but higher in Q1/Q2 2025 (favorable hedge positions)[186](index=186&type=chunk)[187](index=187&type=chunk) - Carbon compliance costs were reduced in Q2 2025 by using internally generated and purchased emission credits for 2024 GHG obligations, despite higher carbon prices (**$95/tonne in 2025 vs. $80/tonne in 2024**)[188](index=188&type=chunk)[189](index=189&type=chunk) - OM&A increased due to strategic/growth initiatives, Heartland facilities, Kent Hills/White Rock/Horizon Hill return to service/addition, and ERP system upgrade planning[188](index=188&type=chunk)[189](index=189&type=chunk) - Cash flow from operating activities was impacted by unfavorable changes in non-cash operating working capital, higher unrealized foreign exchange losses in Q2 2025, and higher provisions[188](index=188&type=chunk)[190](index=190&type=chunk) [Strategic Priorities](index=41&type=section&id=Strategic%20Priorities) This section outlines TransAlta's core strategic objectives, including optimizing its Alberta portfolio, executing growth plans, maintaining financial strength, and leading in market policy [Company Strategic Objectives](index=41&type=section&id=Company%20Strategic%20Objectives) TransAlta is focused on investing in electricity solutions, optimizing its Alberta portfolio, realizing value from legacy assets, and executing a technology-agnostic growth plan - The company's strategy focuses on generating meaningful, risk-adjusted returns by optimizing legacy thermal assets, operating a diverse renewable fleet, leveraging marketing capabilities, and expanding with contracted clean energy and selective gas assets[191](index=191&type=chunk) - Key strategic priorities include: Optimize Alberta Portfolio, Realize the Value of Legacy Generating Facilities, Execute Growth Plan, Maintain Financial Strength and Capital Discipline, Define Next Generation of Power Solutions, and Lead in Market Policy Development[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk)[199](index=199&type=chunk) - Financial strength is maintained with **$1.5 billion in liquidity** (as of June 30, 2025), an **8% common share dividend increase** (to **$0.26/share annualized**), and a commitment to repurchase up to **$100 million in common shares**[197](index=197&type=chunk) - TransAlta actively engages in policy development, particularly in Alberta's restructured energy market, to support reliability, affordability, and decarbonization by 2050[199](index=199&type=chunk) [Growth](index=42&type=section&id=Growth) This section details TransAlta's development pipeline, including mid-stage and early-stage projects, and projects currently under construction, focusing on clean energy expansion [Development Pipeline Overview](index=42&type=section&id=Development%20Pipeline%20Overview) TransAlta's development pipeline includes 475 MW of mid-stage projects and 4,078 MW of early-stage projects, focusing on redeveloping existing thermal sites and pursuing greenfield opportunities - The development pipeline includes **475 MW of mid-stage projects** and **4,078 MW of early-stage projects**, with a focus on redeveloping existing thermal sites and pursuing greenfield/M&A opportunities in Alberta, Western Australia, and the western United States[201](index=201&type=chunk) Early-Stage Projects (MW) | Project Category | Thermal Generation | Wind | Solar | Storage | Total | | :--------------- | :----------------- | :--- | :---- | :------ | :---- | | Various | 1,625 | 983 | 230 | 1,240 | 4,078 | Mid-Stage Projects (MW) | Region | Thermal Generation | Wind | Solar | Storage | Total | | :---------------- | :----------------- | :--- | :---- | :------ | :---- | | Canada | — | 100 | — | — | 100 | | United States | — | 185 | 150 | — | 335 | | Western Australia | — | — | 40 | — | 40 | | **Total** | **—** | **285** | **190** | **—** | **475** | Projects Under Construction | Project | Type | Region | MW | Estimated spend (CAD millions) | Spent to date (CAD millions) | Target completion date | PPA Term (years) | Status | | :------------------------ | :----------- | :---------------- | :---- | :----------------------------- | :--------------------------- | :--------------------- | :--------------- | :----------------------------------------- | | Mount Keith West Network Upgrade | Transmission | Western Australia | n/a | $34 — $36 | $19 | Q4 2025 | 13 | All major equipment delivered and installed; on-track to be completed on schedule. | [Financial Position](index=44&type=section&id=Financial%20Position) This section provides an overview of TransAlta's consolidated statements of financial position, detailing changes in assets, liabilities, and equity [Consolidated Statements of Financial Position Changes](index=44&type=section&id=Consolidated%20Statements%20of%20Financial%20Position%20Changes) TransAlta's total assets decreased by $560 million to $8,939 million as of June 30, 2025, primarily due to lower current assets and non-current assets Significant Changes in Condensed Consolidated Statements of Financial Position (June 30, 2025 vs. Dec. 31, 2024) | Metric | June 30, 2025 (CAD millions) | Dec. 31, 2024 (CAD millions) | Increase/(decrease) (CAD millions) | | :-------------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------------- | | Total current assets | 1,443 | 1,773 | (330) | | Total non-current assets | 7,496 | 7,726 | (230) | | **Total assets** | **8,939** | **9,499** | **(560)** | | Total current liabilities | 1,828 | 2,569 | (741) | | Total non-current liabilities | 5,448 | 5,087 | 361 | | **Total liabilities** | **7,276** | **7,656** | **(380)** | | Total equity | 1,663 | 1,843 | (180) | - Current assets decreased by **$330 million**, mainly due to lower risk management assets (market prices, contract settlements) and lower cash and cash equivalents (operating/investing activities)[215](index=215&type=chunk)[217](index=217&type=chunk) - Current liabilities decreased by **$741 million**, primarily due to advance repayment of the variable rate term loan, lower risk management liabilities, reduced accounts payable, lower contingent consideration payable, and timing of dividend payments[215](index=215&type=chunk)[217](index=217&type=chunk) - Non-current assets decreased by **$230 million**, mainly from depreciation of PP&E and transfers to assets held for sale, and lower risk management assets, partially offset by higher long-term financial assets (Nova investment)[215](index=215&type=chunk)[218](index=218&type=chunk) - Non-current liabilities increased by **$361 million** due to the **$450 million senior notes offering** and higher risk management liabilities, partially offset by a decrease in decommissioning provisions[215](index=215&type=chunk)[218](index=218&type=chunk) - Total equity decreased by **$180 million** due to net losses, net losses on derivatives, dividends declared, and share repurchases under the NCIB[216](index=216&type=chunk)[218](index=218&type=chunk) [Financial Capital](index=46&type=section&id=Financial%20Capital) This section details TransAlta's capital structure, including debt, equity, credit facilities, and returns to capital providers, highlighting financial leverage and liquidity [Capital Structure](index=46&type=section&id=Capital%20Structure) TransAlta's total capital decreased slightly to $5,955 million as of June 30, 2025, with total consolidated net debt increasing to $3,892 million Capital Structure (June 30, 2025 vs. Dec. 31, 2024) | Component | June 30, 2025 (CAD millions) | % | Dec. 31, 2024 (CAD millions) | % | | :-------------------------------------------- | :--------------------------- | :--- | :--------------------------- | :--- | | Net senior unsecured debt | 1,625 | 27 | 1,453 | 24 | | Exchangeable debentures | 350 | 6 | 350 | 6 | | Non-recourse debt | 1,460 | 25 | 1,508 | 25 | | Recourse debt (TransAlta OCP LP bond) | 180 | 3 | 192 | 3 | | Tax equity financing | 85 | 1 | 101 | 1 | | Lease liabilities | 147 | 2 | 151 | 2 | | **Total consolidated net debt** | **3,892** | **64** | **3,798** | **62** | | Exchangeable preferred shares | 400 | 7 | 400 | 7 | | Equity attributable to shareholders | 1,579 | 26 | 1,746 | 29 | | Non-controlling interests | 84 | 1 | 97 | 2 | | **Total capital** | **5,955** | **100** | **6,041** | **100** | - Total consolidated net debt increased to **$3,892 million (64% of total capital)** as of June 30, 2025, from **$3,798 million (62%)** at Dec. 31, 2024[220](index=220&type=chunk) - The company has