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CIBC 2016 Institutional

Investor Conference

Donald Tremblay

Chief Financial Officer

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Forward Looking Statements

This presentation may include forward-looking statements or information (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities

legislation. All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumptions were made and on management’s

experience and perception of historical trends, current conditions, and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking

statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”, “believe”, “expect”, “anticipate”, “intend”,

“plan”, “project”, “foresee”, “potential”, “enable”, “continue”, or other comparable terminology. These statements are not guarantees of our future performance and are subject to risks,

uncertainties, and other important factors that could cause our actual performance to be materially different from that projected. In particular, this presentation contains forward-looking

statements pertaining to our business and anticipated future financial and share price performance; our success in executing on our growth projects, including increasing customer

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

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

Renewables Inc. (“TransAlta Renewables”); the timing and the completion and commissioning of projects under development, including major projects such as the South Hedland Power

Project and Sundance 7, and their attendant costs; expectations regarding TransAlta Corporation’s (“TransAlta”) offer control in the Alberta market following the expiry of the power

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

depreciation, and amortization (“EBITDA”), comparable funds from operations (“FFO”), and comparable free cash flow; expectations for demand for electricity in both the short term and

long term, and the resulting impact on electricity prices; the impact of load growth, increased capacity, and natural gas costs on power prices; expectations in respect of generation

availability, capacity, and production; expectations regarding the role different energy sources will play in meeting future energy needs; expected financing of our capital expenditures;

expected governmental regulatory regimes and legislation and their expected impact on us and the timing of the implementation of such regimes and regulations, as well as the cost of

complying with resulting regulations and laws; our trading strategies and the risk involved in these strategies; estimates of future tax rates, future tax expense, and the adequacy of tax

provisions; accounting estimates; anticipated growth rates in our markets; the estimated contribution of Energy Marketing activities to gross margin; and expectations relating to the

performance of TransAlta Renewables’ assets and plans for the sale of contracted assets to TransAlta Renewables.

Factors that may adversely impact our forward-looking statements include risks relating to: fluctuations in market prices and the availability of fuel supplies required to generate electricity;

our ability to contract our generation for prices that will provide expected returns; the regulatory and political environments in the jurisdictions in which we operate; environmental

requirements and changes in, or liabilities under, these requirements; changes in general economic conditions including interest rates; operational risks involving our facilities, including

unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather; disruptions in the source of fuels, water, or wind required to

operate our facilities; natural or man-made disasters; the threat of domestic terrorism and cyberattacks; equipment failure and our ability to carry out or have completed the repairs in a

cost-effective manner or timely manner; commodity risk management; industry risk and competition; fluctuations in the value of foreign currencies and foreign political risks; the need for

additional financing; structural subordination of securities; counterparty credit risk; insurance coverage; our provision for income taxes; legal, regulatory, and contractual proceedings

involving the Corporation; outcomes of investigations and disputes; reliance on key personnel; labour relations matters; development projects and acquisitions, including delays in the

construction of the South Hedland Power Project; failure to proceed with plans for raising project-level debt; failure to proceed with plans for the sale of contracted assets to TransAlta

Renewables as a result of failure to agree to commercial terms with the independent directors of TransAlta Renewables, adverse market conditions or failure to obtain any required

regulatory, shareholder or other third party approvals; and the satisfactory receipt of applicable regulatory approvals for existing and proposed operations and growth initiatives. The

foregoing risk factors, among others, are described in further detail in the Risk Management section of this MD&A and under the heading “Risk Factors” in our Annual Information Form.

Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements.

The forward-looking statements included in this document are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new

information, future events or otherwise, except as required by applicable laws. In light of these risks, uncertainties, and assumptions, the forward-looking events might occur to a different

extent or at a different time than we have described, or might not occur. We cannot assure that projected results or events will be achieved.

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

to similar measures presented by other entities. These measures may not be comparable to similar measures presented by other issuers and should not be considered in isolation or as a

substitute for measures prepared in accordance with IFRS. For further information on non-IFRS financial measures we use, see the section entitled “Non-IFRS Measures” contained in

our Management Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com.

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Coal: 4,931 MW ~6 facilities in Alberta and the Pacific

Northwest

Gas: 1,315 MW

12 facilities in Canada and Australia;

also 270km pipeline

RNW owns all Australian gas assets (425

MW) and 506 MW gas facility in Ontario

Wind & Solar:

1,402 MW

28 facilities in Canada and the U.S

RNW owns ~90% of wind facilities

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

TA owns all of the Alberta hydro facilities

TransAlta’s Diversified Portfolio

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Proven Track Record

EBITDA and Cash Metrics (1)

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

over 100 years of operating experience

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

positioned in Canada, the United States and Western Australia

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

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$0

$200

$400

$600

$800

$1,000

$1,200

2012 2013 2014 2015E 2016E

EBITDA ($M) FFO/Share FCF/Share

2014 Free EBITDA (2)

25%

7%

35%

24%

9%

Canadian Coal U.S. Coal Gas Wind Hydro

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

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

(2) Free EBITDA = EBITDA – Sustaining Capital

5 5

0

1,000

2,000

3,000

4,000

5,000

6,000

2016 2017 2018 2019

Open Merchant Short term contract / Hedges

Long-term contract PPAs

Contracted Portfolio Supports Stable EBITDA

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

Alberta • Well hedged through 2016

• Market shocks allow opportunity to further

hedge at prices higher than the current

market

Pacific Northwest • Puget Sound Energy and other long-term

contracts provide base of between

~280MW and 380MW

• Additional shorter-term hedges managed

dynamically to capture market volatility

Merchant exposure in Alberta and the

Pacific NW

2016 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$40/MWh

2017 Hedge prices

AB ~$45 - $50/MWh

PacNW ~$45 - $50/MWh

Total portfolio contractedness1

MW 87% 84% 72% 70%

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Energy Marketing Capability - A Competitive Advantage

Energy

Marketing

and

Asset

Optimization

• Transacting in multiple markets

provides us with a competitive

advantage

• Targeting $40 to $60 million in

gross margin annually from

Proprietary Trading

• Preparing for roll off of Alberta

PPAs

• Increase customer contracts from

700 MW today to 3,000 MW by

2021

• Service behind the fence large

industrial customers in Canada,

U.S. and Australia

• Centralia

• Hydro peaking capability

• Ontario Gas supply and

dispatching

Asset Optimization

(30%)

External Customer

Business (50%)

Proprietary Trading

(20%)

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Strategic Objectives

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A Prudent and Proactive Plan

1) Deliver Operational Excellence

2) Maximize Financial Flexibility

3) Strategically Grow our Portfolio of Gas-Fired and

Renewable Generation

Strategic Objectives

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Executing our Strategic Objectives

2015 2016

Operational

Excellence

• Reduced costs by ~$50 million

with productivity and efficiency

initiatives at Canadian Coal and

Corporate

• Continue to focus on Alberta coal

mining operations

Maximize

Financial

Flexibility

• Raised approximately $1 billion

of capital through the use of

TransAlta Renewables

• On-track to meet our guidance

• FFO expected to be at the low

end of guidance range despite

low power prices

• Reposition our capital structure by

pursuing project-level debt

• Proactive planning for debt

maturities in 2017

• Similar guidance ranges to 2015

despite continued challenging

market conditions expected in

2016

Strategic

Growth

• Acquired 71 MWs of wind and

solar assets in the U.S.

• Received approval to construct

and operate Sundance 7

• Secure a coal transition agreement

• Prepare to capitalize on

opportunities in gas-fired and

renewable generation

• Longer-term focus given Alberta

dynamics

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Financial Strategy

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$27 $204

$400 $400 $400

$520

$0

$200

$400

$600

$800

2016 2017 2018 2019 2020

CAD

USD

Upcoming Debt Maturities

Proactively Preparing for Debt Maturities

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

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

• TransAlta recently raised:

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

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

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

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

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Maximizing Financial Flexibility

Reposition TransAlta’s capital structure

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

maturities

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

20% by 2018

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

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

2017

• Execute a similar strategy in 2017

• Refinance 2018 debt maturities of CAD$177 million and

U.S.$520 million

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Utilizing our Contracted Asset Base

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

• Long-term contracted assets with credit worthy counterparties

• Strong operating history and well planned maintenance programs

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

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

Hydro • ~50 MW in Ontario and B.C.

Gas • ~525 MW in Ontario

• Longer-term, additional ~$1.3 billion with additional work on contracting

(Hydro and Wind in Alberta and Australian portfolio)

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Competitiveness

Financial Flexibility

Strategic Growth

Strengthening our Financial Position – Why?

Maintain investment grade credit metrics to remain competitive

Agency Rating Outlook S&P BBB- Stable

DBRS BBB Stable

Fitch BBB- Stable

Moody’s Ba1 Stable

1 Access to capital markets

2 Lower cost of debt

3 Access to customers

Current Ratings:

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TransAlta Corporation and TransAlta Renewables are strategically aligned

Leveraging TransAlta Renewables

TransAlta Renewables

TransAlta

Public

~60-80% ~20-40%

• TransAlta is the largest shareholder

of TransAlta Renewables and will

maintain ~60-80% ownership

• Unlocks the value of long-life contracted

assets on attractive terms

• Provides access to lower cost funding

• Funds growth and debt reduction

• Strong currency to support accretive

acquisition of third party assets

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TransAlta Renewables (TSX:RNW)

• Created in August 2013 to provide stable, consistent returns for investors through the

ownership of highly contracted power generation and other infrastructure assets.

$3.0 billion Market Cap

$2.4 million in 2014

adjusted EBITDA

$176 annual dividend per share

$0.84 billion Enterprise Value

Enterprise Value¹ $2.8 Billion

Market Cap. $2.0 Billion

2015E EBITDA² $245 Million

Dividend Yield 9.6%

Generating Capacity (including South Hedland) 2,470 MW

TransAlta Corporation’s Ownership ~64%

¹ Does not include capital required to complete South Hedland Project

² Average estimate of research analysts covering TransAlta Renewables

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

Wind

Hydro

Gas Fired

Gas Pipeline

Transmission

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Sarnia, Le Nordais and Ragged Chute (SLR) Transaction

• Closed the $540 million investment by TransAlta Renewables in three assets owned

by TransAlta in January 2016

• Received cash proceeds of $172.5 million, $215 million in convertible unsecured

subordinated debentures and approximately 15.6 million common shares of TransAlta

Renewables

• Sarnia

• 506 MW co-generation

• Located in Ontario

• PPA to 2025 with OPA, Industrial contracts expiring

between 2022-2024

• Alstom 11N2 technology

• Le Nordais

• 56.25 MW generation at Cap-Chat

• 42.75 MW generation at Matane

• Located in Quebec

• PPA to 2033 with Hydro Quebec

• NEG Micon technology

• Ragged Chute

• 7 MW generation

• Located n Ontario

• PPA to 2029 with OPA

• Kaplan/GE technology

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Australian Transaction

• $1.78 billion investment in high quality portfolio underpinned by long-term contracts

and proven technology

• Received ~$217 million in net cash proceeds and ~$1,067 million of common and

Class B shares in TransAlta Renewables

• Southern Cross

• 245 MW generation & 500 km transmission

• PPA to 2023 with BHP

• Parkeston (50% interest)

• 55 MW generation

• PPA to 2016 with Newmont

• Solomon

• 125 MW generation

• PPA to 2033¹ with FMG

• South Hedland

• 150 MW generation

• Two PPAs expiring in 2042 with Horizon Power & FMG

• COD expected first half of 2017

• Fortescue River Gas Pipeline (43% interest)

• 270 km gas pipeline

• PPA to 2035 with FMG

• COD Q1 2015

¹ Includes five year extension

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Significant Drop-Down Inventory

Potential Drop-Down Candidates from TransAlta Corporation

Gas Fired

Generation

• ~400 MW in Alberta & Ontario including:

• 244 MW Poplar Creek facility in AB

• ~150 MW from 4 facilities through TA Cogen

• ~$140M EBITDA

Alberta Hydro

• ~800 MW from 13 units in Alberta, representing

90% of Alberta’s hydro

• ~$60 - $120M EBITDA

Other

Renewables

• 20 MW wind facility in ON

• 45 MW wind facility in AB

• 50 MW wind facility in Minnesota

• 21 MW solar facilities in

Massachusetts

Recently

acquired from

Rockland Capital

Recently

acquired from

Suncor

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Growth Strategy

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Recent Growth Accomplishments

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

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

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

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

Strategically reinvesting in our business for the long-term

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Long-Term Investment Opportunities

Gas-Fired and Renewables

• Alberta’s Climate Leadership Plan – requirement for

gas generation

• Sundance 7, low cost gas-fired option in our portfolio

• Expansion & acquisition opportunities in the United

States & Australia

• Evaluating hydro pumped storage at TransAlta’s

existing hydro sites

Coal Optionality

• Evaluating coal to gas conversions

• Flexibility under the Federal GHG legislation allows

optimization of cash flows across Alberta coal units

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Alberta Market

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TransAlta’s Position in the Alberta Market

Current By 2020

• 40% of total generation; ~15% of total

customer business

• 30% of total customers under

1 - 5 year contracts

• 11% of total offer control • ~30% of total offer control

• ~80% contract coverage through

Alberta legislated PPAs and long-term

contracts

• Offering to large-scale customers

for cost of service long-term

contracts

• Capital needs to support strong

availability across the coal PPAs

• Manage coal plant availability to

support end of life with less

capital

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$20

$25

$30

$35

$40

$45

$50

$55

$60

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2015 2016 2017

Managing Low Merchant Prices in Alberta

Opportunities

• The Alberta PPA’s were designed for low price periods

• TransAlta’s Alberta fleet has the lowest cost structure among Alberta generators

• Disciplined investment until prices recover

Risk

• If low prices persist to 2018, there is potential for the upside from the post-PPA value

of Sundance 1 & 2 to be reduced

Alberta Forward Curve

Oversupply in the Alberta power market and low gas prices

are driving historic lows for Alberta power prices

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$-

$10

$20

$30

$40

$50

$60

Hydro Wind Coal Cogen/CC GasPeakers

Competitive Position - Low Cost Generation in Alberta

Diversity and optionality positions TransAlta for success in Alberta

• TransAlta has the largest and most diverse fleet in the Alberta market

• Low-cost structure allows us to be competitive while earning strong margins

• Diverse assets combined with marketing platform allows us to serve customers

in short and long-term

Marginal Costs Customer Representation

TransAlta’s Average

Marginal Cost in AB

$/MWh

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Total Market Capacity: 15,777 MW

TransAlta currently has 11% offer control in the Alberta market – this will

increase to ~30% after the expiry of the Alberta PPA’s

Value Potential as Alberta Legislated PPAs Expire

TransAlta 11%

Capital Power 10%

ATCO 11%

ENMAX 18% Uncontrolled

11%

TransCanada 17%

Other 22%

TransAlta ~30%

Capital Power 15%

ATCO 12%

ENMAX 8%

Oil and Gas 15%

TransCanada 2%

Other 15%

Current Post PPA

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Environmental Regulations

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0

1000

2000

3000

4000

5000

6000

7000

8000

9000

Current 2021 2026 2030

TransAlta's Generation Capacity (MW)

Transitioning to Clean Power

• Significant optionality and opportunity for replacing mandatory coal retirements

• ~700 MW of Hydro expansion at Brazeau and BigHorn

• ~200 MW of other AB hydro expansions

• Coal to gas conversions

• Solar in the Wabamum area

• Wind expansion/repowering

• Brownfield & greenfield Cogeneration

Coal

Wind

Gas

Solar

Hydro

Potential Opportunities

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Coal Transition in Alberta – The Facts

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

approximately 39% of the overall supply

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

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

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

• Three other coal units in Alberta will be decommissioned by 2029, representing

approximately 450MW

Plant MW (Net) Annual GWh1

Retirement Under

Federal GHG

Regulations

Retirement Under AB

Climate Leadership

Plan

Sundance 1 & 2 560 4,170 2019 2019

Sundance 3 368 2,740 2026 2026

Sundance 4 406 3,023 2027 2027

Sundance 5 406 3,023 2028 2028

Sundance 6 401 2,986 2029 2029

Keephills 1 & 2 790 6,046 2029 2029

Sheerness 1 98 708 2036 2030

Sheerness 2 98 707 2040 2030

Genesee 3 233 1,675 2055 2030

Keephills 3 232 1,675 2061 2030

¹ Based on 85% availability

Note: Sheerness 1 and 2 capacity based on 25% ownership interest

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Appendix

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Financial performance by Business Segment

Business Segment 2011 2012 2013 2014

EBITDA ($M)

Canadian Coal $273 $373 $309 $386

U.S. Coal $211 $148 $66 $62

Gas $275 $312 $327 $309

Wind $163 $151 $180 $177

Hydro $105 $127 $147 $85

Energy Marketing $101 ($13) $61 $76

Corporate Segment ($84) ($83) ($67) $(59)

Comparable EBITDA ($M) $1,044 $1,016 $1,024 $1,036

Comparable FFO ($M) $812 $788 $729 $762

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Sustaining Capex by Business Segment

Sustaining Capital $M

Business Segment 2011 2012 2013 2014

Generation Segment

Canadian Coal $121 $316 $237 $211

U.S. Coal $63 $32 $16 $12

Gas $69 $49 $58 $63

Wind $7 $4 $9 $12

Hydro $32 $14 $14 $21

Corporate $27 $24 $22 $23

Sustaining Capital $319 $439 $341 $342