Mr. John Kousinioris reports

TRANSALTA SIGNS LONG-TERM AGREEMENT FOR 700 MW AT CENTRALIA FACILITY ENABLING COAL TO NATURAL GAS CONVERSION

TransAlta Corp. has signed a long-term tolling agreement with Puget Sound Energy Inc. (PSE) to convert its Centralia unit 2 facility from coal to natural gas-fired generation. The agreement provides a fixed-price capacity payment that provides PSE the exclusive right to the capacity, energy and ancillary service attributes of, as well as the dispatch rights to, the 700-megawatt facility.

Highlights

• TransAlta to perform coal-to-gas conversion on its Centralia unit 2 facility in Washington state, with a planned contracted capacity of 700 MW;
• The converted facility will deliver reliable power to Puget Sound Energy under a long-term, 16-year fixed price contract through Dec. 31, 2044;
• The project is currently projected to deliver a build multiple1 of approximately 5.5 times;
• The converted facility maintains TransAlta's position in its strategic core jurisdiction of the Pacific Northwest and extends the life of one of its legacy assets.

"Our Centralia facility has a long history of providing reliable and affordable power in the Pacific Northwest region. We are pleased to extend the useful life of this asset and support the ongoing reliability needs of PSE and, by extension, its customers," said John Kousinioris, president and chief executive officer.

"The facility is scheduled to cease coal-fired generation at the end of 2025, and the conversion to natural gas will lower the emission intensity profile of the facility by approximately 50 per cent. We are grateful for the constructive and solution-oriented engagement we have received from the Department of Ecology and other state and local regulatory bodies through the development of this project and we are well positioned to receive required regulatory approvals in a timely manner. This project demonstrates the valuable role that legacy assets can play in supporting the state's clean energy laws and system reliability in a cost effective and timely fashion," added Mr. Kousinioris.

"When the facility re-enters operations, it will generate long-term contracted cash flow for TransAlta, earning a full return on and of capital within the contract term. The company is well positioned to execute this project given our deep technical, operational and engineering experience gained in previous coal-to-gas conversions," concluded Mr. Kousinioris.

Approximately $600-million (U.S.) of capital expenditures will be required to extend the useful life of the facility and convert it from coal to natural gas-fired generation, delivering an anticipated build multiple1 of approximately 5.5 times. The target commercial operation date is late 2028 and the facility will operate until the end of 2044 under the terms of the agreement. TransAlta anticipates declaring a final investment decision (FID) after receipt of all required approvals in early 2027. The agreement is subject to customary regulatory approvals, including PSE receiving satisfactory approval from the Washington Utilities and Transportation Commission.

About TransAlta Corp.

TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses, and utility customers with affordable, energy efficient and reliable power. Today, TransAlta is one of Canada's largest producers of wind power and Alberta's largest producer of thermal generation and hydroelectric power. For over 114 years, TransAlta has been a responsible operator and a proud member of the communities where we operate and where the company's employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and the Future-Fit Business Benchmark, which also defines sustainable goals for businesses. The company's reporting on climate change management has been guided by the international financial reporting standards (IFRS) S2 Climate-related Disclosures Standard and the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. TransAlta has achieved a 70-per-cent reduction in GHG (greenhouse gas) emissions or 22.7 million tonnes CO2e (carbon dioxide equivalent) since 2015 and received an upgraded MSCI ESG rating of AA.

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