Transalta Corp (NYSE: TRNTF)

TransAlta Corporation is a power generator that owns and operates a diverse portfolio of electricity facilities across Canada the United States and Western Australia. The company has more than a century of experience in the electricity sector and focuses on hydro wind solar natural gas and coal assets while also providing energy marketing services. TransAlta aims to cease coal fired generation at the end of 2025 and is working toward a 2030 target of 75 percent scope 1 and 2 greenhouse gas emissions reductions from 2015 levels. Its long term goal is to achieve carbon net zero by 2045. The company seeks to deliver reliable affordable and sustainable power to customers through a balanced generation mix and disciplined capital allocation.

TransAlta generates revenue primarily from the sale of electricity and related services to wholesale markets utilities and commercial customers. The company receives payments for electricity sold under long term and short term contracts and also earns income from the sale of environmental attributes associated with its hydro and wind facilities. Contracted assets such as cogeneration plants provide steam and electricity to industrial partners under long term offtake agreements creating stable cash flows. The Energy Marketing segment earns a stand alone gross margin by marketing and scheduling the merchant asset fleet procuring natural gas transport and storage and providing knowledge to support the growth team. Additionally TransAlta benefits from the Off Coal Agreement with the Government of Alberta which provides annual net cash payments of approximately 41 million Canadian dollars contingent on meeting certain conditions.

The company operates through the following segments: Hydro Wind and Solar Gas Energy Transition and Energy Marketing.

• Hydro segment holds a net capacity interest of 922 megawatts with facilities located in Alberta British Columbia and Ontario the segment sells electricity under contracts and markets the environmental attributes generated by its hydro facilities notable facilities include those on the Bow River System Oldman River System and various run of river installations the hydro portfolio contributes to earnings stability through long term power purchase agreements and the sale of renewable attributes to counterparties.

• Wind and Solar segment has a gross installed capacity of 2,587 megawatts across 36 facilities situated in Canada the United States and Western Australia the segment generates power that is sold under contracts to utilities and in wholesale markets the wind and solar portfolio includes onshore wind farms solar parks and hybrid projects that benefit from provincial and federal renewable incentive programs the segment’s output helps diversify the generation mix and reduces reliance on fossil fuel based units.

• Gas segment operates a gross installed capacity of 4,834 megawatts across 26 facilities including natural gas fired cogeneration simple cycle and combined cycle units in Alberta Ontario and Western Australia the segment sells electricity to the IESO Horizon Power and other counterparties and provides steam to industrial customers such as Stellantis Canada Nova Chemicals and Suncor specific assets include the Sheerness 1 and Sheerness 2 units the Sundance 6 unit the Keephills 2 and Keephills 3 units the Ottawa Sarnia and Windsor cogeneration facilities and the Australian Parkeston South Hedland and Southern Cross Energy plants the gas portfolio benefits from long term contracts that provide predictable revenue streams and the ability to hedge merchant exposure through financial instruments.

• Energy Transition segment consists of the Centralia coal facility and the Skookumchuck hydro facility in Washington State providing a net capacity of 671 megawatts the Centralia facility is a 670 megawatt unit that operates under a long term merchant contract with Puget Sound Energy scheduled to conclude at the end of 2025 the Skookumchuck hydro facility is a one megawatt unit that supplies water to the Centralia plant and is also contracted to Puget Sound Energy until 2025 the segment manages the transition from coal to cleaner generation conducts reclamation activities at the Centralia mine and has invested approximately 55 million US dollars in community initiatives in Washington State to support economic development and retraining efforts.

• Energy Marketing segment is responsible for marketing and scheduling the merchant asset fleet in North America excluding Alberta procures natural gas transport and storage provides knowledge to support the growth team and generates a stand alone gross margin through a North American energy marketing and trading platform it also manages hedging strategies with commercial and industrial customers in Alberta by securing a base of counterparties and supplementing with financial hedges to reduce exposure to wholesale price volatility the segment’s activities contribute to overall profitability by capturing value from the optimization of the company’s merchant generation portfolio.

TransAlta is positioned as one of Canada's largest publicly traded power generators competing with companies such as Brookfield Renewable Partners Innergex Renewable Energy Capital Power and Ontario Power Generation its competitive advantages include a geographically diverse asset base a balanced mix of contracted and merchant generation strong risk management capabilities and long term relationships with creditworthy counterparties the company’s focus on environmental social and governance performance and its clear transition away from coal further differentiate it in the evolving energy landscape.

The company serves a broad customer base that includes utilities such as Puget Sound Energy Consumers Energy Amway the IESO Horizon Power and FMG industrial customers including Suncor Stellantis Canada Nova Chemicals Canadian Natural Resources Limited Chevron Shell and BHP and commercial and industrial counterparties in Alberta that purchase electricity and natural gas under various agreements additional customers include hospitals and treatment centres served by the Ottawa facility and the automotive sector supported by the Windsor facility’s steam supply to Stellantis Canada.