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FINAL TRANSCRIPT

TransAlta Corporation

Annual General Meeting

Event Date/Time: April 28, 2015

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PRESENTATION

Operator

Gordon Giffin — Chair, Board of Directors

Good morning. My name is Gordon Giffin, and I am Chair of the Board of Directors of

TransAlta, and I will act as Chairman of this meeting.

We, on behalf of the Board and management and the employees of TransAlta, I want to

welcome our shareholders and our proxy holders to this meeting and any other guests who have

joined us.

Our Vice-President, Legal and Corporate Secretary, Maryse St.-Laurent, seated to my far left,

will act as Secretary of the meeting. I’d also like to introduce someone who needs no introduction,

Dawn Farrell, our President and CEO, who you will hear from later.

As our meeting is being webcast live, we also welcome those joining us on the Internet.

A few brief procedural matters, and then we’ll get into the business of the meeting. We

certainly welcome, as I said, shareholders to this meeting and other guests. But I remind you that only

shareholders and proxy holders who are owners of TransAlta shares as of the close of business of

March 4th of this year are entitled to vote or take active part in the formal business of this meeting.

Should you wish to speak during the meeting, we ask that you identify whether you’re a

shareholder or proxy holder and that you state your name, and if a proxy holder, please state the name

of the shareholder in whose interest you are speaking.

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After the end of the formal part of our meeting I’ll make some remarks on behalf of the Board

of Directors and we’ll hear from our CEO, Ms. Farrell, and following those presentations we will be

happy to take questions.

Just a brief safety message before we get started. If for any reason we have an emergency,

there are exits at the back of the room and front of the room, and I’m supposed to say if there is a

power outage you’ll be able to see the exit signs. But of course, we won’t have a power outage. I don’t

know who put that in my remarks.

At this point, I would like to call to order the formal part of the TransAlta Corporation Annual

Meeting of Shareholders.

We’ll first go through the formal parts of this meeting. Nazim Nathoo and Gloria Gherasim of

CST Trust Company, the Company’s transfer agent, are in attendance today, and I will appoint them to

act as our scrutineers for the meeting.

I ask now Ms. St.-Laurent to file with the records of this meeting the proof of service of the

notice of this meeting, which was mailed on March 18, 2015, to all shareholders of record at the close

of business on March 4th.

The scrutineers have provided me with a preliminary report on the attendance at this

meeting which indicates that 1,078 shareholders are present in person or by proxy representing

123,142,211 common shares of the Company constituting 44.46 percent of our outstanding common

shares are represented at this meeting.

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I therefore declare that a quorum is present, and that the meeting is properly constituted for

the transaction of business. A copy of the scrutineers’ report will be filed with the records of this

meeting.

In order to have the meeting move smoothly from a procedural point of view, we have asked

a number of TransAlta employees who are also shareholders to move and second the motions to be

put before the meeting. If you would like discussion on a motion before the vote, please raise your

hand and identify whether you’re a shareholder or proxy holder and I will recognize you.

Starting with the minutes of the last Annual Meeting of Shareholders, which was held on April

29th of last year, I declare that the minutes have been verified and signed and are filed in the

Corporation’s minute book. Anyone wishing a copy of the minutes may pick one up from the table

located in the lobby outside this room.

The next item is the receipt of the annual consolidated financial statements of the

Corporation and the auditor’s report for the year ended December 31, 2014. The audited consolidated

financial statements of the Corporation and the auditor’s report are contained on Pages 82 through

155 of our annual report, and were mailed to shareholders in accordance with securities law together

with a notice of the meeting on March 18th of this year.

Copies of those are available in the lobby outside, and I request that the Secretary file it with

the—copy of the annual report with the minutes of this meeting.

Mr. Gordon Graham, a representative of Ernst & Young LLP (phon), the auditors of the

Corporation, is available at this meeting to answer questions during the general question period.

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The next item of business is the election of Directors. The Board has set the number of

Directors to be elected at 10. We are satisfied that this number of Directors is appropriate to provide

significant range and depth of expertise and to meet corporate governance requirements.

I would like to introduce the Directors standing for election to our Board. There are detailed

biographies of each of the Directors contained in our proxy circular, and I would ask that you refer to

that document for their extensive background information. I won’t go through all of it when I introduce

each individual. As I call your names, if you all would stand briefly as we go through the list.

First, Bill Anderson. Bill is a resident of Toronto, Ontario and has been a Director since 2003.

He brings several years of experience of finance and accounting to our Board.

Next, John P. Dielwart. John is a resident of Calgary and has been a Director since 2014. John

brings to the Corporation and our Board several years of experience as a business leader in this

community, entrepreneurship, and special knowledge of commodity markets.

Timothy W. Faithfull. Tim is a resident of Oxford, England, and has been a Director since 2003.

Tim brings to the Corporation and our Board many years of experience in leadership in the

international oil and gas industry, and in particular knowledge of large project development and

commodity risk management.

Dawn L. Farrell, our President and CEO, a resident of Calgary, who was appointed to the

Board in 2012.

Alan J. Fohrer. Alan is a resident of Arcadia, California, and has been a Director since 2013. He

brings to the Corporation and the Board experience in accounting and finance and executive leadership

in the power generation business from both a regulated and deregulated market perspective.

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Thomas Jenkins. Tom is a resident of Canmore, Alberta, and has been a Director since 2014.

Tom brings to the Corporation and the Board several years of experience as an entrepreneur, an

innovator, and a leader in information technology and innovation.

Yakout Mansour. Yakout, now a resident of El Dorado Hills, California, has been a Director

since 2011. He brings to the Corporation and our Board decades of experience in our industry in

generation, transmission, and energy-competitive markets in both a regulated and deregulated market

environment.

Georgia Nelson. Georgia is a resident of Chicago, Illinois, and has been a Director since 2014.

Georgia brings to the Corporation and the Board specialized knowledge in power generation

operations, the coal and mining industry, as well as experience in human resources management.

Beverlee Park. Beverlee is a resident of West Vancouver, British Columbia, and is a new

nominee to the Board. Beverlee brings to the Corporation and our Board years of experience in finance

and accounting, as well as leadership experience in large organizations, including the power sector.

Last, myself, Gordon Giffin. I am a resident of Atlanta, Georgia, and I won’t try and profess

what I bring to the Board, and I ask that you look at the proxy material to see my background.

Those are the 10 individuals standing for election to our Board this year, and I would now like

to ask—open the meeting for nominations for the Board.

Carolyn Dahl Rees — Shareholder

Mr. Chair, my name is Carolyn Dahl Rees. I’m a shareholder and I nominate William D.

Anderson; John P. Dielwart; Timothy W. Faithfull; Dawn L. Farrell; Alan J. Fohrer; P. Thomas Jenkins;

Yakout Mansour; Georgia R. Nelson; Beverlee F. Park; and Ambassador Gordon D. Giffin, to be elected

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as Directors of the Corporation, to hold office until the next Annual Meeting of Shareholders, or until

their successors are elected or appointed.

Gordon Giffin

Thank you, Carolyn. Is there any discussion on the motion? Thank you. With no discussion, I

declare the nominations for the Board closed.

Since the number of nominees does not exceed the number of Directors to be elected, I

request a motion that the nominees be elected as Directors of the Corporation to hold office until the

next Annual Meeting of Shareholders, or until their successors are elected or appointed.

Calvin Johnson — Shareholder

My name is Calvin Johnson. I am a shareholder, and I so move.

Gordon Giffin

Thank you, Calvin. Any discussion on that motion? May I have a seconder?

Brenda Marshall — Shareholder

My name is Brenda Marshall. I am a shareholder of the Corporation, and I second the motion.

Gordon Giffin

Thank you, Brenda. I’ll call to question on the motion. All in favour of the motion, please

signify by raising your hands. Contrary? I declare the motion carried.

Appointment of auditors. I request a motion that Ernst & Young LLP be appointed auditors of

the Corporation, to hold office until the close of the next Annual Meeting of Shareholders at such

remuneration as shall be fixed by the Board of Directors.

Todd Stack — Shareholder

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My name is Todd Stack. I am a shareholder, and I so move.

Gordon Giffin

Thank you, Todd. Any discussion on that motion? With no discussion, may I have a seconder

on the motion, please?

Jennifer Pierce — Shareholder

My name is Jennifer Pierce. I’m a shareholder, and I second the nomination.

Gordon Giffin

Thank you, Jennifer. I’ll call a question on that motion. Please signify your assent by raising

your hand. Opposed? I declare that motion carried. Thank you.

The next item of business is the consideration and approval on an advisory basis of a

resolution approving TransAlta’s approach on executive compensation. The text of the resolution is

specifically set out on Page 23 of the proxy circular dated March 9th, which was mailed to shareholders

with the materials for this meeting.

Since the vote is advisory, the results of this resolution are not binding on the Board of

Directors. The Board and the Human Resources Committee, however, will consider the outcome of the

vote as part of its ongoing review of executive compensation and the systems in place for designing

that compensation.

The results of the shareholder advisory vote will be included in the Company’s report on

voting results, which is filed with securities regulators.

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I request a motion that the resolution to accept the Company’s approach to executive

compensation as set out on Page 23 of the March 9, 2015, management proxy circular of the Company

be approved on an advisory basis.

Donald Wharton — Shareholder

My name is Donald Wharton. I am a shareholder, and I so move.

Gordon Giffin

Thank you, Don. Any discussion on this motion? No discussion. May I have a second?

Lora Brenan — Shareholder

My name is Lora Brenan. I’m a shareholder of this company, and I second.

Gordon Giffin

Thank you, Lora. Again, please signify your approval of the motion by raising your hand. Any

opposed? I declare the motion carried.

Do we have a final scrutineers’ report at this point? Is it the same? Well, I think it’s pretty

much the same, but I’ll reflect the numbers to be accurate.

The scrutineers have completed their report of shareholders attending the meeting. The

count indicates that 1,087 common shareholders are present in person or by proxy representing

123,157,152 common shares representing 44.47 percent of the outstanding common shares present at

this meeting. I don’t know if that’s a record, but it’s a substantial percentage of our shares represented

at the meeting.

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With the formal part of the meeting now concluded, I declare the meeting closed for the

transaction of business. And before I turn the podium over to Dawn to give the remarks of the CEO, I’d

just like to make a few remarks on behalf of the Board of Directors.

At the outset, I’d like to acknowledge and sincerely thank four talented and dedicated

Directors who have been serving on our Board for several years who have decided not to seek

reelection. To Martha Piper; Michael Kanovsky; Kent Jespersen; and Karen Maidment, on behalf of the

Board and management, I want to thank you for your thoughtful and diligent service. You will be

missed.

I am extremely pleased to welcome Bev Park, John Dielwart, and Tom Jenkins as new

Directors. This trio brings a breadth of experience and accomplishment to the Board, and we look

forward to the new insights you will bring to our Board and the meaningful contributions we know that

each of you will make to the Company.

As we meet here today, I am pleased to report to our shareholders that your company is

making real progress along the strategic path we outlined for you at recent annual meetings. While

unforeseen challenges always arise, like an economic downturn in Alberta with corresponding low

power prices, and policy and regulatory hurdles that still confront our business, TransAlta is making

real progress.

The senior management team of the Company, led by our CEO, Dawn Farrell, is diligent and

focused and dedicated to moving this company forward. Our newest senior executive leaders, CFO

Donald Tremblay and EVP Coal and Mining, Wayne Collins, hit the ground running in 2014 and made

material contributions to the Company.

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On the finance side, Donald has led us on a path towards a stable balance sheet, thanks to

debt reductions of $500 million last year and more to come this year. He was also a key architect of the

recent financing transaction for our Australia growth done in collaboration with TransAlta Renewables.

On operations, Wayne has enhanced our focus on operational excellence in our Canadian

coal fleet. Our availability in that fleet increased almost 8 percent last year, and overall availability of

our generation fleet exceeded 90 percent last year.

While executing on our finance and operations plans we have also been able to fulfill our

commitment to provide prudent growth as well. Our development team, led by Brett Gellner,

completed a natural gas pipeline project to fuel TransAlta power station in Australia and developed

that new 150 megawatt power station project in South Hedland, Australia where construction has

begun. Projects like these, along with our continued commitment to renewables like wind power,

underpin the growth and future earnings for our company.

Our trading operations under Rob Shaefer continue to effectively and prudently protect the

value of our assets and add to earnings. Cynthia Johnston has led our efforts to drive efficiencies in our

cost structure and to identify and mitigate risk. And Dawn de Lima has enhanced our HR practices,

instilling a culture of opportunity, responsibility, and accountability.

To be clear, while I wanted to recognize our senior leadership, there is an entire raft of

talented young people in this company supporting those leaders who are our executives of tomorrow.

Our CEO, Dawn Farrell, who has assembled this talented team, provides the leadership and

vision necessary to keep the Company focused on our strategy. No one could work harder to advance

this company, or care more for its employees and shareholders than Dawn.

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So while we have by no means reached our destination as a company, we are making real

progress on our journey. Our strategy remains consistent: strengthen our balance sheet; drive for

operational excellence; identify and convert on prudent growth; work with policy makers to achieve

constructive policy and regulatory frameworks; and deliver value to our shareholders.

And we are gaining ground. Achieving each of the milestones in our plan I mentioned earlier

contributed to year-over-year increases in EBITDA and funds from operations. Importantly, this

progress is being recognized slowly but surely by the market. Since January, even during challenging

economic times in Alberta, our share price has increased almost 17 percent.

The journey continues; the destination remains in focus. Please continue along the path with

us.

Thank you for coming, and I’ll turn the podium over to our CEO.

Dawn Farrell — President and Chief Executive Officer

Thank you, and good morning and welcome, everybody. And thank you, Ambassador, for

acknowledging the work of our team, and of course all of our hardworking employees. And my thanks

also goes to you and our Board for your guidance and your sage advice as we execute our strategy.

It’s really great to see a number of you returning this year, and many of us in—there’s a

number of us through the audience and at the front here that will stay behind, and stop by the tables

and have lunch and be available to really get into further discussion on our strategy and really answer

many of your questions.

Now Ambassador Giffin outlined our priorities in his comments, and what I’d like to do is just

really expand on the work that we did in 2014 to improve operations, deliver our financial results, and

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grow the business. This work continues, and is positioning us for what appears to be a low-price

commodity environment in our key markets in the next couple years.

I’ll also make some comments on why I believe our recent transaction with TransAlta

Renewables is positive for shareholders and why this strategy will continue to unlock value. And I’ll end

my remarks with some commentary on the work that we’re doing to grow our business and to increase

our competitiveness.

Now I’m personally very proud of what the team achieved in 2014. We accomplished most of

what we set out to do, and by responding to early indications that power prices would decline in 2015

we are well on the path to meet the challenges ahead.

A key piece of work for us in 2014 was to improve the availability of our Canadian coal

business. We achieved an overall adjusted fleet availability of 88.6 percent in 2014, up from 80.9

percent a year earlier in 2013. That’s an improvement of almost 8 percent, and it’s our strongest

performance since 2003.

What that meant was that in 2014 we also achieved our strongest overall fleet availability in

more than a decade at 90.5 percent, and that included our gas, wind, and hydro businesses altogether.

And we did this—and I think this is what we’re the most proud about as a management team—we did

this while delivering the best-ever safety results in the Company’s history.

In 2014, our plan was to achieve financially between 1.5 billion and 1.25 billion of EBITDA,

and we achieved 1.36 billion, so that was great. Our range, our forecast of funds from operations was

between 735 and 755, and we surpassed that by achieving 762, so good financial results as well as

operational and safety.

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Over the past years our work on costs, productivity, and growth now has us positioned near

the top of the sector among our peers where we show approximately a 13 percent cash return on our

capital employed, as you can see on this slide on the bottom left of the screen.

Now when we look at this same ratio and we add in depreciation—so when we do an

accounting return—we are only at around 5.5 percent, so we’re middle of the pack. That’s not good

enough, and that will improve as the PPAs roll off and as we do further initiatives to position the

Company for competitiveness.

In 2014, the work that the operations team did to achieve cost reductions and increase

availability, combined with the work that the marketing team did to successfully optimize our assets

and sell forward contracts, contributed to a successful financial outcome.

Now we also set out to grow the business, and we did that by acquiring a power station at

Solomon in Western Australia in 2012. We then built a gas pipeline to that plant, which we finished last

year, and then in April of last year we won the right to build the South Hedland project, also in Western

Australia.

The gas pipeline is now commissioned and it’s generating cash for you. The South Hedland

plant was the third leg of the stool, and it began construction in January, and its cash flows will come

on stream in 2017.

So from 2012 to 2017, we’ve built a solid business in Australia, and we’ve invested almost $1

billion in high-quality behind-the-fence gas-fired assets to serve miners in the Western Australia

market with an incremental increase in EBITDA of approximately $130 million. TransAlta and TransAlta

Renewables shareholders will both benefit from the new cash in 2017 once the plant is commissioned.

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TransAlta’s competitive advantage is its diversity of assets, markets, and customers. Adding a

business in Western Australia has been both important for growth and it has reduced risk.

Now last year a second big priority for us was to focus on strengthening our balance sheet to

get it ready—to ensure that it was ready for the expiration of the PPAs, which start to roll off in 2018,

and to ensure that we can successfully finance the kind of growth that we’ve just shown you that

we’ve done in Western Australia.

Last year we met our debt reduction targets of $500 million, and this year our target is to

reduce debt again by an additional 300 million to $500 million. All of our rating agencies have recently

reaffirmed our investment-grade ratings with stable outlooks.

Moody’s publicly acknowledged our progress in strengthening our balance sheet. They do

continue to have a negative outlook, which we believe will be reassessed once they see us deliver on

our plan.

Now we believe that the benefits of remaining investment grade in our business serve both

shareholders and bondholders. A strong financial position gives us greater access to capital markets

and a lower cost of debt.

We know that our customers want to work with investment-grade generators. Our offers to

them can span more than 25 years, and they want to ensure that we’re going to be there for the long

term. And a low cost of capital is always an advantage in a capital-intensive business.

So in short, our investment-grade rating helps us ride through periods of low commodity

prices and makes us more competitive. It gives us financial flexibility, and it gives us the opportunity to

participate in strong growth projects when we find them.

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Now our key strategy for strengthening our balance sheet is the movement of renewable and

certain gas-fired plants from TransAlta to TransAlta Renewables. This strategy allows us, first, to unlock

the underlying value of those assets, and then raise capital while we continue to manage and operate

those assets.

We are the largest shareholder of TransAlta Renewables, and currently own 76 percent of the

company. Creating TransAlta Renewables and growing it together with TransAlta benefits both sets of

shareholders. The continued ownership of TransAlta Renewables by TransAlta supports our credit

rating and our dividend.

TransAlta does have several additional assets that could be contenders for a drop down to

Renewables, and the excess cash we generate can either strengthen the balance sheet or be re-

invested in profitable growth projects.

I’d now like to talk about some of our future growth plans. 2014 was a good year, and it gave

us the kind of growth that we think is very valuable for our shareholders. So I’d now like to look at

what we’re thinking about for 2015 and beyond when it comes to growth.

Now we’re growing TransAlta in four different, but quite related ways, so let me talk about

those four. First, we’re working with customers who may want us to own and run their generation

assets here in their home market. Some of these customers want their own behind- the-fence

generation and others want longer-term contracts.

Second, we will sell the output from Sundance units 1 and 2 when the PPAs roll off in 2018.

We've been gearing up to do this since 2012, and we already have 700 megawatts of customers on our

books.

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Third, we can extend the life of existing plants through a number of mechanisms, and we'll

continue to review all the economics of these kinds of life extension projects. And particularly we'll

look at in our coal fleet whether or not we can life extend through a conversion to gas as we move

closer to 2020.

And fourth, we'll continue to acquire assets that fit our strategy, and as well move assets that

meet TransAlta Renewables criteria. Acquisitions can either be funded by TransAlta, or by TransAlta

Renewables, depending on the asset profile.

Now I'm going to talk a little bit deeper about each of those four strategies because I think

they're important to the future of your company, but before I do, it's really worth watching this video

of the team and what they've done in Western Australia because I think it'll give you a real feel for the

kind of growth that we go after.

[Video Presentation]

Dawn Farrell

Great. You've got to love that. So as you can see, we've had a lot of success in Australia with

our behind-the-fence generation offers.

We do continue to see some good opportunities in Western Australia, and the market is

beginning to emerge here in Western Canada for customers who want to partner with us at their

cogeneration plants so that we can own and manage their assets.

Our growth team is actively pursuing several key customers here in Western Canada. We

have the opportunity to build a gas plant also at Centralia to replace our coal fleet generation in that

market, and we're currently in the process of obtaining permits for Sundance unit 7, which could be

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needed in the Alberta market by the end of the decade, depending on how supply and demand goes

here in the market, and of course what happens to oil prices as we go forward.

Now our second approach to growing our business is through our customer base. Our goal is

to have 30 percent of Alberta's market share by 2020, and of course that aligns with the PPAs rolling

off.

Our competitive advantages in Alberta include a low cost base of assets, we have a marketing

platform that balances our supply portfolio with customer needs, and energy marketing strategies that

capture both asset optionality and market volatility.

TransAlta today does serve medium and larger industrial, mining, and commercial customers,

and about half of our customers prefer to lock in power at a fixed price with the average contract

length of about three years. The other half prefer to leave their cost exposure open, and have

contracts that track the spot market.

We will have 500 more megawatts when the PPAs roll off Sundance units 1 and 2 in 2018 to

sell, and as prices improve here in the Alberta market we'll be getting ready to close some contracts.

Now the third way that we create value is really through life extensions effectively with our

asset base. Last year we converted our Ottawa plant to a peaker, and we're selling that output to the

Ontario Power Authority under a 20-year contract. Since 2012, we've recontracted almost 800

megawatts of plants and extended the lives of those plants from between five and fifteen years,

depending on the plant.

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Now we could be closing those facilities down, but instead we're making small investments

converting them to peakers, which means they just run during periods when electricity demand is

quite high. And we'll continue this strategy as we go forward.

And you could see more to come because, of course, as our coal plants run to the end of their

lives under the federal rules, they could easily become candidates for peakers in the future if the

economics of converting a coal plant to a gas plant are better than the economics of building a brand-

new gas-fired plant in the province.

Our development team is also working on a carbon capture and storage conversion project

for coal, and that would be something that would be complementary to a strategy of converting our

plants.

Now the final way we can grow value for you is by growing TransAlta Renewables, and we can

do that both by moving assets from TransAlta and by third party acquisitions, and it's another way to

create some value. And you just had to see the recent transaction to see how that worked.

As the value of TransAlta Renewables increases—because we're 76 percent of that entity

today—the value for TransAlta will also increase. And we do see our merger and acquisitions team

looking for assets that will fit into both portfolios.

Your team at TransAlta has added $4 billion of new projects during the last five years, and

really until now all of that growth replaced the declining cash flows that came from Centralia, from

lower prices in Centralia. But as we look ahead and we see South Hedland coming on stream in 2017

and we see new customer revenue from the Sundance units 1 and 2 in 2018, what we really see is that

we're starting to lift off of the current base.

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And what the work of the team is this year is to get one more project like a South Hedland. It

will probably be in Canada, and it will probably be in our own backyard here. And what we'd like to do

is get that all ready to be built for cash flows coming in the 2019 period.

So for TransAlta shareholders, another South Hedland-type investment; growing TransAlta

Renewables; recontracting assets; and growing our customer business will translate to value creation.

So we're trying to keep our strategies simple, clear, and focused.

Now, as always in business there are headwinds, and in the short term we have the challenge

of very low power prices here in Alberta as demand slows and there's a current oversupply of

generation in the market. On the left of this slide you can see the forward curves and the forecast for

Alberta and the Pacific Northwest markets, and to the right you can see our current hedge levels and

the average prices of our current hedges. And the good news is, as you can see on the right of this

slide, we have strong hedging levels in 2015 and in 2016 to overcome most of the current spot market

price disruption.

What you can't see on this slide is that last year our teams developed their plans with low

prices in mind as their base case. And they put in place many productivity initiatives to reduce costs to

meet the challenge of lower pricing. You'll see later today when we talk to the market in our first

quarter conference call that our hedges and our cost reduction initiatives are paying off, as we've

delivered a solid first quarter.

Now like all other businesses in this province, our teams are continuing to work on a number

of strategies to meet the challenge of our current economic headwinds in Alberta. The good news is

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that when prices recover, which they will, we will have the benefit of a lower cost structure as we

compete for new customers towards the end of this decade.

So in summary, we had a good 2014, we had a good start to 2015, and we're on the right path

to continuing to grow the Company. Our balance sheet is stronger than last year, and it's getting

stronger. We are focused on what we do best in markets that we know well, and every day we look for

new ways to overcome any challenges that might come our way.

So again, thank you to our loyal shareholders who come to these meetings and continue to

stay the course with us. We very much value your patience and loyalty, and very much look forward to

some of the conversations we'll have over lunch.

So I will now turn the podium back over to Ambassador Giffin to moderate the question-and-

answer session. And thank you.

Gordon Giffin

Thank you, Dawn. Before we begin the question period, just a few process points. I ask that

each person limit themselves to one question at a time, and try and keep it to two or three minutes.

And if you have more than one question if you'd let the next person ask their question and then come

back we can try and fit in any further questions you might have.

When you're prepared to ask a question if you’d raise your hand so one of our volunteers can

bring you a microphone, and please state your full name, whether you're a shareholder or a proxy

holder, and if a proxy holder what shareholder or which shareholder you represent.

Thank you. And the floor is now open for questions.

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Q&A

Brian Francis Hupka — Shareholder

Brian Francis Hupka (phon), shareholder. I suppose we've been provided with this

information, but how long does it take for one of these wind turbines to pay for itself on average

before it begins to make a profit? Thank you.

Dawn Farrell

So thank you for that question. And it really depends on the deal that we have, but I would

say a good rule of thumb is depending on the price and circumstances and the returns that we get and

whether or not it's a fixed-price contract over 25 years or there's some merchant in it, I would say on

average between seven and ten years, and then profits after that.

And we expect—a lot of our contracts are 25-year contracts, and then of course there's

extension possibilities after that. So the windmills themselves would last longer than that.

Gordon Giffin

I think there was a question right here.

Brian Bass — Shareholder

Excuse me. My name is Brian Bass (phon), and I'm a shareholder. Last year you conveyed, Ms.

Farrell, to the shareholders that TransAlta and the Government of Alberta were not in negotiations to

leverage its hydro facilities along the Bow River system for flood control. In fact, that was not true. The

province continues to look to TransAlta to change the operations at its dams to protect the City of

Calgary during the next inevitable flood. What has TransAlta put on the table, and what is the status of

the current agreement?

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Dawn Farrell

Yeah. So I think last year just shortly after the annual meeting we came to an agreement with

the Province of Alberta, and we ran a trial period for last year. And basically the agreement was that

the province would have us reduce the level of the Ghost Reservoir early in the season beyond what

we normally would to run for power. So effectively we create a greater hole in Ghost for that.

We then have just reached an agreement for again extending that trial to this year, and our

hope is that once we get past this year that we can engage in a longer-term contract for that. So we did

do a trial last year. We've reached agreement for this year, and our hope is that we could have

something that would be longer term in arrangement with the government.

And Lora Brenan, her hand is there, she runs our hydro business, and would be glad to talk to

you about that. And for the first, Brian, Brett Gellner, he'll put his hand up there; he'll find you as well

and can tell you everything you want to know about payback periods and returns and IRRs and all that

stuff.

Gordon Giffin

Any other questions? One more here.

Brian Bass

I had a chance to go up into the Wipress (phon) area and actually go down to the diversion

dam that's out in that area; travelled down the Ghost Valley. It was a bit of a frightening experience. I

don't know how many people have actually taken that trip. Nothing in particular to do with TransAlta

at all; it's just that as we were travelling down in a vehicle and I was kind of being led, there were so

many guns going off and people out there shooting, and so I guess from a safety perspective and from

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an Albertan perspective, I commend TransAlta for having to deal with that probably on a day-to-day

basis or on a weekend basis if any of your employees are out there.

It's really a tragedy that probably one of the most beautiful spots that we have in the

province is so badly managed by the government. So I'm acting on a positive side for the Company

saying I commend them for what they have to do.

I would like to further elaborate on a significant—like in the annual report it says there’s a

significant loss of hydro revenue in 2014. You provide two reasons in the annual report: there’s lower

water resources and diminished optimization of storage capacity. Would this be related to the

damaged Ghost diversion dam from the 2013 flood? And is it also sediment that's infilling in the

reservoirs? Thank you.

Dawn Farrell

Yeah. So I think the biggest reason for the change in revenue between the two years is the

way that you make money in hydro is through volatility. And what that means is there's 8,760 hours in

the year; you wait for really high-priced hours and you run then and you capture that pricing. So that's

one of the number one ways. So if you have a less volatile lower-priced year that takes up a lot of that

difference.

In terms of the Ghost diversion project, that would account for a little bit of loss there. And in

terms of the sediment that would be very small. And we have done some dredging this year to—I'm

looking at Lora—we haven't done or you were doing? Okay. So there is some loss from that, but that

sediment builds up over kind of 100 years, so it wouldn't be significantly different because of that

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flood. And again, Lora can take you through that, but I would say the biggest difference would be it's

mostly price-related rather than water-related.

Now in terms of the Ghost diversion project, of course we're just looking at how we're going

to rebuild that to make sure that it sustains itself through various flooding conditions.

Gordon Giffin

Question over here.

Andrew Pollocks — Shareholder

Yeah. Hi. Andrew Pollocks (phon) of Calgary, Alberta; beneficial shareholder, though not

proxy holder, and I only own two shares, but I enjoy asking questions at annual meetings, and so being

a shareholder gives me the opportunity to do that. Let's see, I'm just curious if you're expanding into

other countries, as you had in your video expansion into Australia, what sorts of criteria do you look at

in deciding which countries to expand into? And to what extent do you want to expand TransAlta's

international operations? Thank you very much.

Dawn Farrell

Great. Great question. So we actually expanded into Western Australia in 1997. And we

started with our first acquisition of a power station there that was—actually we built a little power

plant at Parkeston, and then we acquired a set of gas-fired assets that serve the BHP plants in the

Cagarilly (phon) area. And then we had those assets there for a long period of time. Our criteria at the

time was if you look at TransAlta, the market in Alberta is fairly small and we are restricted to be less

than 30 percent of the market over time because it's a competitive market. So we can really only be so

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big here. So we chose in the late '90s to expand into Western Australia and also into the Pacific

Northwest and Western in the US.

And what we look at are a couple of things. First of all, do they need what we do? So one of

the things that we're quite strong in is behind-the-fence gas-fired generation, and it turns out that the

mines in Western Australia all require gas generation to run and it's all behind the fence. So that was a

good—so that was a starter.

Secondly, we do look at the normal things people look at. Country stability is a good place to

do business; has it got common law? All that sort of stuff. So we have a second set of criteria there.

And then we also look at the returns, and so we very much look at can we achieve—our sort

of base level of return is what is an unlevered internal rate of return of around 10 percent. So if we see

projects where we can serve customers with technology that we're good at behind their fences at the

right return then we'll bid on those projects and try to win them.

So we started in '97. We held a small portfolio for about 10 years. And then we saw that

there were a number of opportunities coming, and that's when we started the expansion strategy

again. And that's how we got the first position there.

We also have a coal plant in Washington State, and we've been recently looking at can we

expand that business there or can we leverage that business there? For the most part TransAlta's

business is in Alberta and across Canada. And as you know, if you know the Canadian power market,

it's mostly owned by the Crowns. So BC Hydro, SaskPower, they're all owned by government. So it's a

great market in Canada, but not a lot of opportunities. So we do have to expand.

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We currently do not see ourself adding another region at this point. So we like the regions

that we're in, and we think there's lots of opportunity there. So those decisions were made quite a long

time ago.

Gordon Giffin

Anyone else? Well, with that I'll thank all of you for coming. We do have refreshments and

lunch next door, so we invite you to go there. And we'll continue the conversation with you in an

informal fashion over refreshments.

Thank you very much.