Q1 2025 TransAlta Corp Earnings Call
Carmen: Good morning and welcome. My name is Carmen and I'll be your operator for today. At this time I would like to welcome everyone to TransAlta Corporation first quarter 2025 results conference call.
Carmen: All lines have been placed on mute to prevent any background noise.
Carmen: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1-1 on your telephone keypad.
Carmen: If you would like to withdraw your question, please press star 1-1 again. Thank you. Miss Paris, you may begin your conference.
Carmen: Thank you, Carmen. Good morning, everyone. My name is Stephanie Paris, and I am the Vice President of Investor Relations and Corporate Strategy of TransAlta.
Welcome to TransAlta's first quarter, 2025 conference call.
John Kousinioris: With me today are John Kousinioris, President and Chief Executive Officer, Joel Hunter, EVP Finance and Chief Financial Officer, and Blaine Van Mell, EVP Commercial and Customer Relations.
John Kousinioris: Today's co-being webcast, and I invite those listening on the phone lines to view the supporting slides that are posted on our website. A replay of the call will be available later today, and the transcript will be posted to our website shortly thereafter.
John Kousinioris: All information provided during this conference call is subject to the forward-looking statement qualification set out here on slide 2, detailed further NRM DNA and incorporated in full for the purposes of today's call.
John Kousinioris: All amounts referenced during Canadian dollars, unless otherwise noted. The non-IFRS terminology used, including adjusted EBITDA and free cash flow, are reconfailed in the MBA for your
John Kousinioris: On today's call, John and Joel will provide an overview of TransAlta's quarterly results. After these remarks, we will open the call for questions. With that, I will turn the call over to John .
John Kousinioris: Thank you, Stephanie. Good morning, everyone, and thank you for joining our first quarter conference call for 2025.
John Kousinioris: As part of our commitment towards reconciliation, I want to begin by acknowledging that our company operates on the traditional territories of indigenous peoples across Canada, Australia and the United States.
John Kousinioris: We recognize the rich and diverse histories, cultures and contributions of the First Nations, Inuit, Métis, Aboriginal and Native American communities.
John Kousinioris: and it is with gratitude and respect that we thank the people who have lived on these lands for generations for reminding us of the ongoing histories that precede us.
John Kousinioris: Before diving into our quarterly results, I want to take a moment to reflect on our strategic direction.
John Kousinioris: We're excited about the growing demand for electricity across our core markets.
John Kousinioris: Whether it is driven by population growth, economic expansion, electrification trends, increased use of electric vehicles, the rise of AI and data centers, or supportive policy environments, it's clear the future is very bright for our industry and our company.
with opportunity, however, comes complexity.
John Kousinioris: We face real challenges, political and regulatory uncertainty, long interconnection cues, tariffs, supply chain challenges, and rising costs, all of which serve to make near-term organic green fuel growth more difficult.
John Kousinioris: In response, we are focused on diversifying our portfolio and increasing the stability and contractedness of our cash flows.
John Kousinioris: This means our reliance on the Alberta market will evolve and likely decrease over time. It also means that we will remain technology agnostic, as we believe a mix of generation sources is essential to meet growing demand safely, reliably and sustainably. [inaudible]
John Kousinioris: Our deep operational experience across fuel types uniquely positions us to advance a balanced growth portfolio including reliable thermal assets and clean locally sourced power generation.
John Kousinioris: We will continue to pursue growth with discipline and a sharp focus on shareholder value. In the near term, that includes maximizing the value of our legacy thermal assets, evaluating and many opportunities, maintaining a strong balance sheet, and returning capital to our shareholders through dividends and share buybacks.
John Kousinioris: At the same time, we're positioning our company to deliver sustained value to the rest of this decade and into the next.
I'll now turn to the quarter.
John Kousinioris: We delivered exceptional operational performance across our entire sleep during the first three months of the year.
John Kousinioris: While our Albert Immersion portfolio was impacted by softer than expected prices, our hedging strategy and active asset optimization generated realized prices that were well above spot prices during the quarter.
John Kousinioris: We delivered a just-a-d bit of $270 million and pre-cash flow of $139 million or $0.47 per share.
John Kousinioris: And we announced an 8% increase to our common share dividend to 26 cents per share on an annualized basis which represents our sixth consecutive annual dividend increase.
John Kousinioris: In the year to date, we have also returned $24 million or $8 cents per share to share holders through share buybacks at an average price of $12.42 per share.
John Kousinioris: Returning capital to shareholders remain a key part of our capital allocation strategy which we adapt to market conditions and the timing and progress of our growth opportunities.
John Kousinioris: We plan to renew our annual normal course issue a bit at the end of this month, and we retain the option to continue to make a creative share buybacks during the year of up to $100 million.
We had a number of business highlights during the quarter.
First, we achieved exceptional average fleet availability of 94.9%
John Kousinioris: Second, we mothballed Sundance Unit 6 on April 1 for a period of up to two years depending on market conditions.
John Kousinioris: This reflects our ongoing commitment to optimize our portfolio and minimize costs.
John Kousinioris: We maintain the flexibility to return Sunday on 6th to service when market fundamentals improve or opportunities to contract the facility are secured.
John Kousinioris: Third, we completed the integration of Hardland Generation safely, on schedule, and have realized their targeted synergies across both the corporate and operational teams.
John Kousinioris: And finally, we continue to engage with the government of Alberta and the ISO on the restructured energy market design or rent.
John Kousinioris: The government and the ISO recently announced that they had refined the scope of the REM, most notably by removing the day ahead energy and commitment products that had previously been proposed.
John Kousinioris: The revised scope includes the day ahead procurement of operating reserves and new ramping and silvery services, along with a higher offer and price cap.
John Kousinioris: The proposed offer cap of up to $2,200 per megawatt hour with the ability for pricing to administratively go up to
John Kousinioris: $3,000 per megawatt hour is a significant and positive change to the current offer and price cap of $999 per megawatt hour which has been in place unchanged for over 20 years.
John Kousinioris: The ISO also intends to move forward with a locational, marginal pricing framework and plans to allocate transmission system and auxiliary services costs on the basis of cost causation, also a positive development from our perspective.
John Kousinioris: We expect the government of Alberta and the ISO to provide more details on the RAM later this month and are actively engaged with both parties on the redesign. Thank you very much.
John Kousinioris: We remain supportive of initiatives that provide long-term stability and reliability, as well as incentives for existing and new infrastructure investment.
During the quarter, we also advanced our strategic priorities.
John Kousinioris: First, we're pleased to announce our strategic partnership with Nova Clean Energy.
John Kousinioris: Nova is the U.S. development arm of Blue Star Energy Capital, a platform founded in 2022 and led by Declan Lincoln, the former CEO of Orsteads, Armstrong Renewables Business,
John Kousinioris: and Neil O'Donovan, a former EVP at Orsted who served as CEO of its onshore business unit.
John Kousinioris: Nova's development team under the leadership of Declan and Neil has a successful track record of investing in and developing grid-scale wind, solar and storage projects across the United States with over 10 billion of capital investment in global clean energy.
Our relationship has a number of components. [inaudible]
John Kousinioris: We have negotiated and structured a US $100 million revolved in credit facility and a US $75 million term loan to NOBA with phase draws over the first two years.
John Kousinioris: Providing an annual return on capital, secured against project values, and strategically safely sized in balance with their other capital allocation priorities.
John Kousinioris: We have secured the exclusive option to purchase projects developed by Nova in the WEC, one of our core growth markets that are competitive on a risk-adjusted return basis.
John Kousinioris: and the transaction provides TransAlta with potential upside through an equity conversion option which could provide us up to a 23% ownership stake in NOVA.
Our investment thesis in Nova is as follows
John Kousinioris: First, it aligns us with the world-class developer, enhancing our ability to achieve strategic growth priorities in the latter part of the decade with technology-agnostic customer solutions in the Western U.S.
John Kousinioris: Second, it provides competitive differentiation to an advantage path to late-stage development M&A with exclusive purchase rights from Nova.
John Kousinioris: And third, it allows us to monitor, govern, and influence project development by NOVA prior to any notice to proceed, resulting in attractive return profiles that can be augmented by our capabilities.
The investment in Nova compliments our existing growth capabilities.
John Kousinioris: We remain focused on executing our near-term brownfield projects, opportunistic M&A, and selective complementary projects.
John Kousinioris: Opportunities will be evaluated and selected with you to ensure we are unlocking the most value for our shareholders.
John Kousinioris: Moving to our legacy thermal sites, we continue to make significant steps forward in both the United States and Alberta.
John Kousinioris: At our Centrelia site, we're advancing discussions with our customer on a redevelopment opportunity to extend the operating life of Centrelia through a contracted coal to gas conversion.
John Kousinioris: Our team is forecasting significant near-term capacity and energy supply deficiencies in Washington State and our Centralia facility can play an integral role in supporting ongoing reliability in the region.
John Kousinioris: Over the past number of months, we've been progressing engineering and commercial negotiations including term sheets and pricing with the target of executing a definitive agreement in mid-2025.
John Kousinioris: Aside from the cold gas conversion, we also continue to evaluate other opportunities to build out the Centrelia Energy Campus on our significant land holdings, including wind, solar, batteries, and next generation technologies.
John Kousinioris: We expect to be able to share detailed development plans for Centralia in the coming months as we finalize negotiations.
John Kousinioris: We're also advancing opportunities that are legacy thermal sites in Alberta which we believe offer ideal conditions for data center opportunities, including speed to power
Tearform Reliability, and Competitive Power Pricing. [inaudible]
John Kousinioris: We're now actively in the commercialization phase of the project with discussions around detailed and de-risk commercial offerings, which are being showcased to potential customers including through access to our virtual data room.
John Kousinioris: We continue to focus on securing exclusivity with key partners by mid-year with detailed design and definitive agreements expected by your end. A data center would be operational 18-24 months after signing definitive agreements.
John Kousinioris: Finally, we continue to focus on our financial strength and capital discipline. In March, we successfully closed the 450 million, seven-year senior, unsecured green note offering with a coupon of 5.65% maturing in 2032.
John Kousinioris: This marked a return to the Canadian debt capital market by the company for the first time since 2013, and we're extremely pleased that the offering was well received.
John Kousinioris: The majority of the net proceeds were used to repay our $400 million variable rate term loan facility in advance of its scheduled maturity later in the year.
John Kousinioris: Following the offering, we exit the quarter with over 1.5 billion in available liquidity, including approximately $240 million of cash on half, which positions us well to execute our strategic priorities.
I'll now pass the call over to you all [inaudible]
Joel: Thanks, John , and good morning, everyone. Overall, we are pleased with our first quarter operational performance across all of our business segments and remain confident in our ability to meet our 2025 guidance range.
Speaker Change: During the quarter, we generate $270 million of adjusted EBITDA, which was $72 million lower when compared to the first quarter of 2024, primarily due to the milder weather in Alberta, which contributed to lower power prices.
Speaker Change: Turning to our segmented results, relative to the same period of 2024.
Speaker Change: The hydro-sagment-produced adjusted EBITDA of $47 million, which declined due to lower spot power and infillary prices in Alberta, partially offset by higher merchant and infillary services volumes, and positive contributions from her hedging activities.
Speaker Change: The wind and source segment produced adjusted EBITDA of $102 million, an increase of 15%, primarily due to the addition of our Oklahoma wind facilities and higher production volumes from the fleet.
Speaker Change: Adjusted EBITDA and the gas segment decreased by 17% to $104 million, mostly due to lower realized power prices in Alberta and higher carbon pricing, partially offset by the additional part land in fleet optimization.
Speaker Change: The Energy Transition Segment delivered $37 million of adjusted EBITDA, an increase year over year due to lower purchase power costs which were driven by higher availability at our
Speaker Change: Energy Marketing Adjusted E, but I decreased by $18 million to $21 million, primarily due to muted market volatility across North American natural gas and power markets.
Speaker Change: Corporate costs increase to $41 million, largely due to increased spending, sports, strategic, and growth initiatives in the addition of corporate costs related to heartland.
Speaker Change: Our adjusted EBITDA composition was amended to remove the impact of realized gains and losses on closed exchange positions, which was included in adjusted EBITDA until the fourth quarter of 2024.
Speaker Change: Adjustment was intended to explain a timing difference between our internally and externally reported results, and was useful at a time when markets were more volatile.
Speaker Change: The minor quarterly adjustments are reflected in the quarterly results file posted to our website.
Speaker Change: As a reminder, our adjusted EBITDA excludes the impact of ERP integration and heartland acquisition costs.
Speaker Change: Our free cash flow excludes the impact of the Brazil penalties, which were paid in January of this year. These items are not reflective among going operations or performance of our operating assets.
Speaker Change: Free cash flow of $139 million in the first quarter was lower than the same period last year. This was primarily due to lower adjusted EBITDA, along with higher sustaining capital expenditures and higher net interest expense.
Speaker Change: The decline year-over-year was primarily due to incremental generation from the addition of new gas, wind and solar supply in the province, as well as benign weather in the quarter.
Speaker Change: Throughout the quarter, we deployed hedging strategies to enhance our portfolio margins and mitigate the impact of lower merchant power prices.
Speaker Change: which resulted in realizing a approximately 2,300 gigawatt hours of hedges and an average price of $71 per megawatt hour, a 178% premium to the average spot price.
Speaker Change: In addition, our hydro fleet delivered an average realized merchant price of $70 per megawatt hour, a 175% premium to the average spot price, while the gas fleet realized a 140% premium price of $70 per megawatt hour, a 75% premium to the average spot price, a 75% premium to the average
Speaker Change: By optimizing our fleet throughout the quarter and fulfilling hedges with purchase power, we were able to respond to higher demand from the ASO and deliver additional and service volumes across the fleet.
Speaker Change: In the quarter, our average realized price for ancillary services settled at $28 per megawatt hour, or approximately 70% of the average spot price.
Speaker Change: Despite relatively benign weather in the quarter, which resulted in lower spot power prices, we captured additional margins by fulfilling a portion of our higher price hedges with purchase power when prices were below our variable cost production, leading to an overall realized price per megawatt hour produced of 122 dollars. [inaudible]
Speaker Change: The Alberta Merchant portfolio continues to notably outperform the challenging spot price environment due to our hedging and optimization activities.
Speaker Change: Looking at the balance in the year, we have approximately 5,800 gigawatt hours of our Alberta generation hedged an average price of $69 per megawatt hour, well above the current forward curve of $45 per megawatt hour.
Speaker Change: Going forward, we will continue to optimize your fleet and reduce production in low price high supply hours by fulfilling our financial hedges and customer requirements with open market purchases.
Speaker Change: Looking at next year, our team has increased our hedge position to 6,400 gigawatt hours at an average price of $68 per megawatt hour, well above current forward pricing levels.
Speaker Change: As a result of our hedging and optimization strategies, and supported by the performance of our contractive fleet, we remain confident in our ability to achieve results within our guidance range for 2025, for both adjusted EBITDA and free cash flow.
John Kousinioris: As I stated last quarter, 75% or 2025 expected generation revenue is underpinned by our contracted assets and hedging position. I'll now turn the call back over to John .
John Kousinioris: Thank you, Joel. We remain focused on the following priorities for 2025.
John Kousinioris: First, improving our leading and lagging safety performance indicators while achieving strong
John Kousinioris: Second, delivering adjusted EBIT and pre-cash flow within our 2025 guidance ranges.
Third, maximizing the value of our legacy thermal energy campuses.
John Kousinioris: Fourth, successfully executing on M&A opportunities that they arise, and finally, implementing an upgrade to our ERP system.
I believe TransAlta offers a compelling investment opportunity.
John Kousinioris: We're a safe and reliable operator with strong cash flows underpinned by our diversified hydro, wind, solar and gas portfolio, located across three countries and complemented by our leading asset optimization and energy market and capability.
John Kousinioris: We are a clean electricity leader with a focus on tangible greenhouse gas emission reductions as we remain on track to achieve our ambitious 2026 CO2 emissions reduction to market.
John Kousinioris: There is tremendous value in our legacy thermal sites, which our team is actively working to repurpose to meet the evolving needs of customers.
John Kousinioris: We remain disciplined in our approach to growth, focused on delivering value to our shareholders.
John Kousinioris: We're working to diversify our portfolio and increase the stability and contractiveness of our cash flows through both existing as well as new assets, advancing a growth portfolio that can deliver meaningful reliable thermal opportunities as well as clean, locally sourced power generation.
Our company has a sound financial foundation. [inaudible]
John Kousinioris: Our balance sheet is flexible, and we have ample equity to pursue and deliver multiple growth opportunities with the ability to also return capital to shareholders through dividends and share repurchases.
John Kousinioris: And most importantly, we have our people. Our people are a great asset and I want to thank all our employees and contractors for their commitment in setting the company up for success in 2025.
Thank you. I'll now turn the call over to Stephanie.
Stephanie Paris: Thank you, John . Operator Carmen, would you please open the call for questions from the annals? Thank you so much. And I'm sorry, Minder, to ask a question that is star one one to get in the queue and star one one to remove yourself. One moment for our first question.
And he comes from Robert Hope with Squashabank, please proceed.
Robert Hope: Thank you everyone. Maybe to start off with the NOVA clean energy investment. How do you think about this investment and its 7% return relative to your existing U.S. renewable development pipeline?
Robert Hope: Yeah, good morning, Robert. So when we think of no, we're not really thinking of it in the context of really the lone facility that we made. [inaudible]
Robert Hope: Available to them. That is something that enables a highly capable team to be able to move forward and execute on their business strategy, which we're supportive of. So the prize for us.
Robert Hope: is not the 7% coupon that we'll be clipping for the next five years, so also the credit facilities there. It's really about being able to take advantage of their development expertise, particularly as they focus on the Western United States. [inaudible]
Robert Hope: with the view to exercising our kind of exclusive first option that we have to acquire those projects and also direct.
Robert Hope: the development of those projects to get preferential returns on those projects. So really the funding is enabling their team to actually create value substantively for us in the latter part of the decade as they advance projects in the wake.
Speaker Change: I appreciate that. And then in your prepared remarks, you notice that there's some challenges on organic growth for the industry, just given the current environment. Do this push you move more towards M&A rather than building new projects both on the renewable and the gas site?
Yeah, Robert, I think.
Speaker Change: So look, I mean, when we look at where we're trading, when we look at the cost, which have increased significantly for Greenfield development, which puts pressure, frankly, on PPA prices, and even the time to grow things, we're seeing
Badger, and I would say Joel Blain probably de-risked
Speaker Change: Opportunities more on the M&A side. So we do have a small M&A team. I would say they're pretty busy right now. They're busy in looking at a variety of projects. Mostly I would say with a US flavor right now in terms of specific assets. [inaudible]
Speaker Change: The kind of multiples that we're seeing for some types of contracted renewables, and I think candidly more important for us, certain types of gas assets that are available, you know, work for where our company is, and that that candidly is.
Speaker Change: A Focus For Us, and I think, you know, given our strong balance sheet, and our free cash low expectations over the next little bit, that is a focus for us, I would say, our priority. Along with our legacy assets, Robert, which are core, you know, we're setting the company up to deal with.
Speaker Change: Why do I would call conventional greenfield growth in the latter part of the decade which is really what Nova was about but certainly today legacy investments which have much higher returns and also MNA which I think provide appropriate risk of just returns our room.
are the way we're focused on it for sure. [inaudible]
All right, appreciate the color. Thank you.
Moderator: Thank you. Thank you. Our next question is from Maurice Choy with RBC Capital Markets. Please proceed.
Maurice Choi: Thanks and good morning everyone. I'm just sticking with the strategy discussion here.
Maurice Choi: So, I guess when listen to your prepared remarks, you mentioned diversifying your portfolios so that's a geography or power market thing, and here's a mention increasing stability and contractors with cash flows so that's contracted versus merchant. So, if I can just think holistically about your strategy here.
Maurice Choi: I'm trying to understand like what is the ideal outcome here, whether that's a three or five year plan, how do you see what markets you're planning to be in and also to that and given that you're not investment great credit rated, what is the contrast to even a target versus merchant? [inaudible]
John Dielwart, John Dielwart, John Dielwart, John Dielwart, John
John Kousinioris: Yeah, good morning, Maurice. Look, I think, you know, if you were to look at sort of where the company was over the course of the last
Speaker Change: Three or four years, and frankly, historically, you would have seen a company that was, you know, had probably about 50% of its EBITDA.
Speaker Change: being largely from Alberta and an equivalent amount that would have been merchant, which have been largely again in the province of Alberta. I think as we roll forward and frankly, you're seeing it this year, I think you heard Joel say that about 75% of our...
our revenue is effectively contracted.
Speaker Change: in terms of what we're seeing evolve for the company. Our focus is on increasing that reliability and stability of the organization.
Speaker Change: I think you'll see the kind of cash contributions coming from the merchant fleet.
Speaker Change: Decline, I think, over time. And I think you'll see that Alberta, although, you know, continuing to be an important component of business for the company be kind of limited in terms of where we'll be putting capital in the future. I mean, as we learned with the Harland acquisition, our ability to actually deploy more capital in the province of Alberta is restricted, can't really from a competition perspective. I don't know.
Speaker Change: So we are focused on the US, we do have Western Australia, and as we look at
Speaker Change: the kind of growth that we're focused on. It all has a contracted
Speaker Change: Field to it. There might be a slight merchant position that our energy marketing team can trade around and create sort of incremental value and incremental returns.
Speaker Change: Given their expertise, but I think it's a natural evolution of the company, and I think the point I'm trying to make is it's not accidental. It's something that we've been focused on doing, you know, deliberately over the course of the last few years and think ultimately it's the way that we'll end up creating more value for our shareholders.
Speaker Change: I don't know Joel, if you want to add anything to that. I want to add one other comment I would make to this is that you know today we are roughly 52% contracted and over time we would like to be an excessive 70% contracted. Thank you very much.
Speaker Change: to have that stability to earnings and cash flows that we've been indicating as part of our strategy.
Speaker Change: I think with that, you know, then comes a stronger business risk profile than ideally over time can improve our credit ratings as you've highlighted, you know, as we think about how we become more contracted, we have that opportunity to improve our credit ratings, but again, fixed time.
Speaker Change: But I would say just on the credit rating point, I think we're very comfortable with our
Criterating today, we see no. No.
Speaker Change: Kind of impediment to executing our strategy and all of the options that we have that we're pursuing in the organization and in many respects I would say Joel, it's a bit of a sweet spot frankly in terms of. [inaudible]
Speaker Change: Balancing, Access to Market, Flexibility, and cost effectiveness in terms of coupon. We just look at our recent note offering and it was very well received at very competitive pricing so we feel very comfortable with where we are.
Speaker Change: Understood. I was getting at the reliance on the Alberta market might decrease in the coming years.
Speaker Change: Still focusing on Alberta, what have you been hearing, or are you expecting in terms of how the new federal government can, uh, might amend, say, the OBPS standards, the clean electricity regulations, or even industrial carbon tax?
Yeah, I'd say um...
It's pretty early. I would say, um, [inaudible]
Speaker Change: Maurice on that. I mean, we don't even have ministers yet, frankly, in the in the portfolios under a carny government are working.
Speaker Change: I would say assumption which is supported by some of the preliminary discussions we have had is kind of a status quo. I would say right now we're not at least in terms of our business planning expecting any sort of significant shifts.
How Reminder That [inaudible]
It's critically important that from a carbon pricing perspective
Speaker Change: We remain pretty competitive with our most significant trading partners and it's not lost on
Speaker Change: But right now, very difficult to say, so we're our expectation to sort of a steady regulatory kind of environment at the federal level.
Speaker Change: Are any of these policy landscapes, or even the REM, are any of these?
Speaker Change: in your discussions with the data center counterparties in major hurdles, whether that particularly is about the time and delay or even absolute obstacles to have anything in Alberta.
Speaker Change: Um, I think the, the simple answer to that right now would be no, that, that hasn't been...
Speaker Change: A major issue in any of the discussions we've been having from a data center opportunity
Speaker Change: Generally, and I would go so far as to say, you know, Blain even in our discussions around Centralia, we tend to focus on the Canadian. [inaudible]
Speaker Change: Regulatory Environment, I mean, we, you know, it's not, it's not like we're worried about.
Speaker Change: You know, federal or state-flash provincial kind of regulations kind of upending.
Speaker Change: are focused on extracting value from our legacy assets. The only thing it's done from a data center perspective.
Speaker Change: is, you know, we are focused on how we can use the renewable credits that are generated from our, you know, considerable renewables lead in the province of Alberta to kind of defray or reduce kind of the carbon exposure from the offering that we make from a data center perspective in that.
Speaker Change: That's something that we uniquely can do in the province of Alberta, but generally speaking, it has not been a critical path discussion if I can put it out.
Very clear. Thank you.
Thank you, one moment for our next question.
Benjamin Pham: And he comes from the line of Benjamin Pham with BMO. Please proceed.
Benjamin Pham: Thanks, good morning. Maybe the first question to keep those data center. You've put the size and the focus in your phase three this point. Thank you very much.
Speaker Change: Do you, are you sure you get the sense that even though the focus is 400 megawatts plus that in your discussions that there's this room for us to be scaled up over the medium to long term as part of those negotiations. Thank you very much.
Speaker Change: So good morning Ben. The the initial discussions that we've been having have been primarily focused on the base 400 megawatts candidly. I think people know the way of the ability to add. [inaudible]
Speaker Change: 400, and in fact our Q application contemplates that we would do an 800 megawatt.
Speaker Change: My development there, but right now, where the focus is on things being sequential.
Speaker Change: Um, but I would say that it is attractive to be able to tell people at least in the discussions that we've been having that that if the demand is there or the long term planning is there that that that anticipates them scaling up, that is something that we can do on site there. And you know, one of the great things about. [inaudible]
Speaker Change: That area is that we've got, I think it's 1.2 gigawatts of kind of transmission access, you know, in that particular location. I think it's actually about 2.1 gigs.
Speaker Change: at Sundance, which is obviously a later and more of a redevelopment, but I think we're in pretty good shape there.
Speaker Change: Like our base offering is on the four with the ability to expand to eight and most of the technical work I would say that we've been done, that we've done is mostly focused on that 400 megawatt K2 offering.
Okay, you're dead, and then-
Speaker Change: Is there more of a later a year update on that or maybe there's something maybe before mid-year?
So, it's more of the latter. We're pretty-
Speaker Change: I would say from a commercial perspective, I'm pretty happy with how things are advancing so look and Blain has been doing a great job here of pushing that forward and I'll turn it over to him to kind of give you a sense of timing, but we're pretty advanced on things like
Speaker Change: you know, pricing, timelines, you know, permitting, kind of the nature, you know, tenor, all those kinds of things. Blaine, maybe you can give a little bit of color to it. I think that's accurate, John.
Speaker Change: Charging something in mid-year here. So as John said, we've advanced a lot of those commercial discussions.
Blaine: Just working with our customer there to finalize some terms to get something that would be useful. We have commenced a lot of the pre-feed engineering work.
Blaine: A lot of work done on what we need to do from a permitting standpoint so that when we do get some definitive agreements in place, we can hit the ground running, get the permits in place, and move forward with some more definitive engineering to allow the ground structure to start as soon as possible.
Blaine: And, you know, then what I would say is that the tenor is a real, you know, that we're exploring would be a real positive one from a company perspective. It's something we can do pretty quickly and candidly the cost for megawatt of delivering, you know, 670 megawatts.
Blaine: To our customer, it's just a fraction of what a new build would be, both from a timing and from a capital perspective. So we're pretty excited about that. It's pretty advanced.
Okay, Chris, thanks for the updates.
Thank you [inaudible]
Speaker Change: Thank you. Our next question comes from Julie and the Maul in Smith, which effort please proceed.
Speaker Change: And this is a turnaround for Julian Good Morning. Just a question on hedging here and thank you for the commentary on the hedge build in 25 and in 2026. Can you speak to your perspective hedging strategy in the outer years of the plan? Are you seeing opportunities to add significant positions in future years given kind of the status of the forward curve and how do you expect this to evolve all over time?
Speaker Change: Yeah, good morning. So look, hedging is actually probably one of the biggest focuses that we have and I'm speaking primarily here in relation to the province of Alberta, so we're pretty to the province of Alberta.
Speaker Change: Heavily Hedge, I would say, for 2025 and Blain, again, our optimization team reports into Blain.
Speaker Change: When we look at a full year, 2026, I think we're in, we're about, sorry, 6500.
Speaker Change: Giggleaw hours of hedges that we're at, they're at a price that's roughly in that $68 range going forward, where's the forward curve?
Speaker Change: for 2020, six in the province of Alberta, is in the low to mid-40s right now. I think the last numbers I had...
It was around 44, 44.30 for 2026.
We continue to add positions.
in 2027 and beyond.
Speaker Change: Probably in the range of 35% or 40% of our hedge position includes our commercial and industrial book in the province of Alberta.
Speaker Change: That would typically have about a three-year tenor, and our customers tend to be, I would say, Blain relatively sticky there, although the prices that were able to obtain in the CNI business
Speaker Change: You know, I've come down a little bit. They are at a significant premium to what we are seeing the wholesale forward price B. So, you know, like if one is kind of in the mid 40s.
Speaker Change: You know, we're still able to extract north of $60, I would say, a megawatt hour substantially above $60, a megawatt hour through our CNI business.
Speaker Change: Another development that's occurred in the province of Alberta is one of our competitors in the CNI space.
Speaker Change: is the emphasizing their CNI business. They're shifting a little bit on that and this isn't secret, it's Enmax who's been focusing on that. So we're now, I think we're if we're not the largest, we're pretty close to being the largest CNI provider in the in the province. So that's a real
Speaker Change: Focus for us. So that would be one. The other one would be just our focus on data centers, like candidly
Speaker Change: You know, we're trying to reduce the merchant exposure effectively of that Alberta fleet and contract it up.
Speaker Change: Whether it's through financial hedges, and there's limited liquidity going forward, I would say Blain, it's more our CNI business and what we're doing with our data center strategy. Blain, I don't know if there was anything for you to add. I think that's a good point John . We made a concerted effort in the last few years to increase the size of that CNI business knowing the premiums that we extract from it. We did a strategic acquisition of a different smaller portfolio. Two years ago, brought those customers on to our portfolio and really have a new business. We're going to be able to do that.
Speaker Change: Use that as a strategic competitive advantage to get our contracted levels of the Alberta version fleet higher.
Speaker Change: I mean, we foresaw three, three and a half, four years ago that we were expecting an over-supply situation like the one that we find ourselves in with pricing that candidly is pretty close to what we were forecasting was going to be the case. So this isn't something that we've worked on.
Speaker Change: Sort of loudly, I'd say it's something that we've been really focused on over the course of really since about 2020 2021.
Speaker Change: Great. Thanks. And then the free cash flow was a little softer in the first quarter, but there's still confidence in the full year guide. Just acknowledging the hedge dynamics of course, but perhaps can you explain the order by quarter cash dynamics you're expecting through the end of the year and what might be some drivers or watch items that you that move you toward the top or bottom end of the guidance range. Thank you.
Speaker Change: Yeah. No, we are confident in hitting our recastful measure, which is our principle measure. That's the one that we primarily focus on as a company. Look, we've got our hedge position going forward. I'd say Q1 was relatively atypical from a weather perspective. It was.
Speaker Change: Pauli Voss, but not as you could expect going forward. So, you know, if we end up with sort of more typical weather, especially in Q3 and
Speaker Change: Could a latter part of Q2? We're very much focused on costs, I would say, internally within the organization and that's something that we're working hard to make sure that we manage and we've already had a fair bit of sustaining capital spend up front where we did a little bit of gas work, certainly as compared to what it was like I think in the first quarter of 2024. So there's a number of...
Speaker Change: of puts and takes. And so we remain confident in our ability to get there. We like our hedge position. I think we like our fuel costs and where they are going forward. I think the fleet availability has been excellent. So when we get opportunities, I think we can flex up.
Speaker Change: I'm particularly here in the province of Alberta, so we remain pretty confident in our ability to get there [inaudible]
Great. Thank you for the time.
Thank you.
Speaker Change: Our next question comes from the line of Patrick Kenny with NBF, please proceed.
Thanks. Good morning, everyone.
Patrick Kenny: Johnson Trelia, John , you mentioned being agnostic on technology, but I guess...
Speaker Change: You know, as you approach the finish line here from a commercial standpoint,
Patrick Kenny: Would you say you're also agnostic on the type of customer as well, just in terms of...
Speaker Change: You know, behind the meter versus utility customers. And yes, how should we be thinking about, um.
Speaker Change: Your internal hurdle rates or target build multiples for some of the larger utility based ideas for Centralia versus say the key pills opportunity with a single object.
I think are, you know, strong. I mean, candidly,
Speaker Change: Stronger than we'd be able to get on a conventional new build, Greenfield kind of project.
Speaker Change: and probably I would say Joel up stronger than you'd expected in an M&A kind of transaction. Patrick, it's a similar story with respect to data centers and I mean the trick there is, you know, repurposing capital in part, we are spending capital to make facilities use or fit for purpose. So
Speaker Change: The real prize is really repurposing and extending the life of the legacy assets.
One of the things that we're working on. [inaudible]
Speaker Change: That Centrelia, which is a little bit unique, is we are actually a bit gas constrained there.
Speaker Change: from a supply perspective. So, although we're feeling very comfortable that we'll be in a position where we can deal with a Blaine at 670 megawatt gas plant to meet the needs of our customer there in terms of incremental thermal.
Speaker Change: You know, capacity, at-site, at Centralia, I think that's going to probably require a bit of deep bottle necking to actually take place.
Speaker Change: So, the next phase tends to be a bit greener is what I would say in terms of growth there. So, you know, wind potentially a little bit of solar with what I would call more conventional return. So those are important to us, but the priority right now is more on the cold gas.
Speaker Change: Conversion that we would be focused there. If we could debossal that.
Speaker Change: The site, candidly, it's an ideal location for data that we've got 12,000 acres of land there. It would be just from a geographic location about as good as you could get. So it is a bit of work that we're doing to see if we could do more. With respect to key pills, again, very good returns, and much more unconstrained obviously from a gas perspective so that it's sort of an unrestricted.
Speaker Change: kind of opportunity there. I don't know if that answers your question, Patrick, but I'm just trying to give you a bit of color.
Speaker Change: Yeah, that's great. Sounds like on par, I guess, from a later phase perspective. Yeah, and then just on the strategy to look for opportunities to diversify.
Patrick Kenny: the portfolio outside of Alberta. I know it's early days here with respect to BC's call for power, but just curious your initial thoughts on pursuing any green field opportunities in the province, or whether or not you might have any low-wing fruit to go after.
Yeah, we're not good.
Like I'll be candid, we're really not. [inaudible]
Patrick Kenny: All that focused on VCE is kind of a core market, so that is an area that the team is really set up to participate in. I would say our primary...
Patrick Kenny: Focus in the more media term in terms of facilities both organic growth but certainly M&A growth would be in the Western United States.
We're really trying to match.
Patrick Kenny: The skill set that we have is an organization, especially in our energy marketing group.
Patrick Kenny: with the opportunities that we see. We like the long-term fundamentals of the market there. I think they're excellent candidly. And when we talk about the Western U.S., it's kind of...
Patrick Kenny: all around California, not so much in California, if you see what I'm saying. [inaudible]
Patrick Kenny: So we like some of the return multiples that we're seeing there, and that's a real focus, particularly the Pac-North West and the Desert Southwest with the ability to be able to slow power in and out of California would be I would say. Bye.
Speaker Change: Joel Blain, kind of top of the wish list in terms of what the focus would be, Patrick. Thank you.
Speaker Change: Got it, okay, and then just coming back to Albert on the rim. I know the final rules are still TBD, but
Speaker Change: from what you're hearing on the ground. How do you foresee the value of Encillary Services is trending in the province under this?
Speaker Change: The new design and some of the new parameters being proposed just given how the supply demand dynamics have changed over the last five years or so.
Speaker Change: I guess where might you see some upside across your Alberta portfolio with respect to you. Thank you.
Speaker Change: Yeah, so look, we're, as you know, there was a bit of a pivot that took place [inaudible]
Speaker Change: Losing track of time now, following you, that's three weeks ago or so. So.
Speaker Change: And so we're reworking all of those assumptions. I would say thematically for ancillary services two things. I would say one we are expecting more volumes to be procured. I would say one we are expecting more volumes to be procured.
Over time, and I think from just a competitiveness perspective.
Speaker Change: We really like what our fleet can do, and frankly, we're even exploring a little project, we've got a capital project that we could do to actually even enhance our ability to provide off of our hydro, more ancillary services going forward. I also think with the lifting of some of the price gaps,
Speaker Change: that we've had in the province. When you see a bunch of volatility, that's when, you know, you might see more benefit from the fleet. So, I'd say we're pretty optimistic both from a volume perspective and from a pricing perspective, you know, over time as we take a longer term view on where this is going to go. I mean the reality remains that. So, you know, we're pretty optimistic. We're pretty optimistic. We're pretty optimistic. We're pretty optimistic.
Speaker Change: from a supply and demand perspective. We're a bit oversupplied in the province in the near term, which is something that we knew was the case, but I'd say I don't know, Blain, as we look at the
Speaker Change: Valence of the Decade. We're, I think, guardably optimistic in TransAlta. I agree, John , as we refresh some of our modeling currently doing right now, we start to see prices improve. Yeah, relatively well through 2028 into 2029. So just this little wall here as we chew through this. And with respect to the Ancillary Services.
Patrick, it really comes to you.
Speaker Change: fundamental hypothesis that as the grid continues to bring online more renewables, the need for balancing and frequency response and fat mapping units to maintain that greater liability will become ever more important and they'll have to be value put to that to pay for it.
Speaker Change: Yeah, so I, you know, and you've seen this before, Patrick, where we go through these periods where we've had, you know, some additions to the system and it takes three or four years to kind of be digested and then things tighten up. So we're working through it right now and you heard what Blaine said. So I think that's all right.
Thank you.
Okay, that's great color. Thanks guys, I'll leave it there.
Thanks so much, Patrick.
Speaker Change: Thank you. Our next question comes from John Mould with to the colon. Please proceed.
Speaker Change: Hi, good morning everybody. First thing we come back to the Alberta data centers and we're supposed to get this update for me, so this month.
Speaker Change: So why don't you give us a bit of a preview on what you're hoping for from ASO in terms of the methodology that they may use to allocate available capacity to proposals.
Speaker Change: You've previously articulated a view that there's about one and a half to two gigawatts of good capacity that should be available for large loads over the midterms. You've seen anything so far in market dynamics just given the supply increase from last year that would cause you to change that view when we are another.
Um, good morning, John. Um, look.
Speaker Change: We're waiting for the ISO to come in and provide some clarity on these issues as well. I can tell you that we have had...
Speaker Change: You know, some discussions including what we're proposing to do. And our product is a little bit unique because it is more behind the meter in terms of what we're proposing. So we would be looking in our case to be supplying, you know, 90 percent. [inaudible]
plus
Speaker Change: of the data center needs from our facility effectively behind the meter and then like look into the market for Tenda.
Speaker Change: 12% of the time to meet the load that it would require. So it's a relatively given configuration which is a bit different from some of the others, relatively modest.
I would say impact.
Speaker Change: Generally, in terms of overall numbers before reliability becomes an issue, you know, I still think we're in that one to two gigs I haven't, at least that's based on the work that we've done, we'll see where the ISO lands. [inaudible]
Speaker Change: I had some very high level discussions around that with them and I didn't take away, I know they're still doing their work.
Any sense that that would go with up. [inaudible]
Significantly Different Direction [inaudible]
Speaker Change: from that, so we feel good about that. The other thing is, some of our units, even if you look at K2.
Speaker Change: Relatively lower sort of capacity factor so it is effectively like bringing new capacity to the market if you have a plant that's running you know 30% of the time and now you're going to be running at 90 or 92% of the time, which is what we're estimating we'll be able to do for our plants so we are effectively bringing. . .
Speaker Change: You know new capacity to be able to move forward and I think certainly the ISO understands that in terms of the Q and the interconnection and the work around that I like again I'm guardedly optimistic.
Speaker Change: There are two, you know, there's a tremendous number of applications. We certainly don't think they're all real. And I think the ISO is going to look at it. I think kind of an order of commercialization effectively. So, and I think that's the way they should look at it, like what's real versus what? [inaudible]
Speaker Change: You know what might be more speculative going forward so I think they're taking a pretty responsible and rational approach where you know hopefully we'll be able to bring forward.
Speaker Change: Some of the opportunities into the province before we need to have some of the harder discussions around.
Speaker Change: You know, transmission and incremental generation. And I don't think it's lost on the ISO that the capacity.
Speaker Change: for these things, ideally is located where existing capacity in generation and transmission exists, which is really around, you know, our facilities and obviously, I'd generally see as well further down and potentially even at share now, so net net I'd say
You know, pretty good in terms of where we are.
Speaker Change: Okay, that's great. Thanks for that color. I mean, maybe just, you know, going back to your just broader market interests and, you know, the comment about your reliance on Alberta decreasing over time and, you know, as you noted, function of your scale in the market.
Speaker Change: Desert Southwest. Just when you're you're thinking about where you want to allocate that growth capital. Is it mainly the Western US that you're looking at at this point? Are there other key markets? Yes.
Speaker Change: Right there, you'd like to grow your existing footprint or maybe you'd like to enter it at some scale right now. How do you think about that?
Speaker Change: So when we look at kind of the geographies, and look, we'll be having our strategy session later in the year where we'll be we'll be
Going through all of this in a bit more.
Detail with Everybody, but when we look at...
Speaker Change: Um, kind of the areas of focus growth for the company for going forward. We really look at it.
I would say three things.
We look at the fundamental...
Speaker Change: Dynamics of the markets and questions. So, what is the fidelity of pricing? How is it from a transmission perspective? You know, it doesn't have population and industrial growth.
Speaker Change: You know, from a long-term perspective, where do we think pricing is going? So it really is a deconstructed deep dive of the geography and questions. So that's first and foremost. It's like how do we feel about this jurisdiction versus that jurisdiction from a focused perspective?
Speaker Change: Number two, we look at it from an operational perspective. You know, is there a few types that we are good at operating and as you know, we've got quite a diverse
Speaker Change: Skill Set There. Are there synergies? Are there strategies that we can bring from an OEM and a perspective that would make sense given our footprint in the United States and Canada, existing footprints in the United States, Canada and Australia where we could add value. So there's that operational dimension. The last one is how can we add incremental value because of our customer relations. Let's move on.
relationship center, energy marketing capabilities.
Speaker Change: and that also directs us to particular geographies because of the skill sets.
Speaker Change: that we have there in our positions. Like, a lot of people don't realize it, but we're the largest trader of power in the Pacific Northwest, for example. It is a market that we're intimately familiar with. So when you distill it all down, you know, we've got three major areas of focus. [inaudible]
Speaker Change: Albert is one just because our scale and size of where we are here and our intimate understanding of the market here. But when we look at scale and scope, you know, Albert is pretty small. When we look at scale and scope and opportunity set going forward, certainly we feel great about the US generally, I would say, and the Western US in particular given some of the factors that I spoke about also Western Australia as well. But if you were to sort of prioritize those three markets, I think that the US would be the area of greatest interest. So. So.
Speaker Change: It's no surprise to see our M&A team focus on there and it's no surprise to see kind of the work that we're doing with Nova, for example, that focuses that area. Hopefully that gives you a bit of a sense.
Speaker Change: Yeah, that's great. Thanks for that, John . And just maybe one last one just on the heading side. I think you're you're heading levels for on the power side for.
2026 are up.
Speaker Change: Fairly substantially I think about 36% unsurprisingly bringing down the average price level. Your gas levels didn't change as much. I'm just wondering if you can provide a little more color on.
Speaker Change: Hi, you're thinking about hedging next year, and the gas costs side of things with Selengy Canada coming on, and all the dynamics have worked there.
You know, we look at
Speaker Change: So we model out what our expectations would be for pricing and how we think the merchant component of our fleet would be able to run over the course of the year. So for example, if I were to compare 2026 to, you know, going into 2021 in 2021, we thought the forward curve was...
Light.
Speaker Change: and we were open and we benefited from being more open as we go into 2026 just like you've seen in 2025.
You know, when we look at. [inaudible]
Speaker Change: The Forward Curve, we think that we can do better than that by hedging it up, and that's what we're doing. You're right, we have increased the number of hedges for full year 2026.
Speaker Change: I'd say Blain were still pretty comfortable with kind of that high $60 price, $68 price given kind of a forward curve signaling pricing that would be $20, $22, $23 below that going forward. So I don't think the team is done.
Speaker Change: Doing their work, frankly, on setting up the portfolio for 2026 plane, you can speak to that, but I think we're comfortable, and again you'll see us be relatively long, I would say, hedging in 2026.
I'm going for it on the gas side.
Speaker Change: I don't know, Blain, I'm not sure what the four corporate gaps are showing me, right now we're...
Speaker Change: sort of year-to-date. It's pretty low when you're looking at 20-26-3-ish, I think. And so we do have hedges in place, just like we do this year. I think our weighted average price for our hedge position for gas actually a bit higher than the spot price in year for gas more in that 360 range as opposed to kind of the the the twos that we're seeing today. But I think we're when we look at and when the guys do do their hedging.
They do assess. Yes.
Speaker Change: kind of the, what I would say the variable costs associated with the production and kind of assessing the positions as they go forward, so clearly the price of fuel and carbon is a key component in going forward. So, you know, not surprised at kind of where we are and we'll continue to do it. Blain on if you want any color to that. Yeah. Yeah.
Speaker Change: It's interactive. I would say we track it every month just so that you know John and it's probably the first when we do our Alberta Business Review it's topic number one topic number two topic number three as we go forward. [inaudible]
John Kousinioris: Okay, that's great. Thanks for all that detail. Those are my questions
Of course.
Thank you.
Speaker Change: Our next question is from Mark Jarvi with CIBC. Please proceed.
Mark Jarvey: Thanks for putting me in. I wonder if you guys could fill in a little bit more details around the NOVA structure, just in terms of what would you need to see happen for you to convert your equity? And then I guess on the late stage projects, how soon could that come? And from my understanding of reading it, that would require incremental capital beyond the capital of the authority committed so far. Is that correct?
Speaker Change: It is, Mark. Good morning. So, so on over the the so what basically happened there is the the team there was looking at developing a partnership that would fund kind of the next iteration of growth that they're developing and through a bunch of. [inaudible]
Speaker Change: Circumstances, we had the good fortune of connecting with them and getting to a place where their view of markets aligned with ours, and there was just a lot of comfort in working with each other going forward. So rather than them going sort of externally to see capital, we came up with the structure where we would lend them the capital that we did, both the term facility and the revolving credit facility for a limited period of time. We fully expect those funds that we're providing.
to them would be repaid.
Speaker Change: to the company if we don't end up converting. If we see that they're creating value because they're developing assets, we may not buy all of the assets that they're developing and selling them, or they're looking at maybe exiting their platform, we do have the ability to convert that loan amount into an equity component, and there's a formula that kind of contemplates what the value of that would be approaching a quarter of the equity value so that if they were looking to exit at some point in time in the future, our company
Speaker Change: He could participate in that and actually benefit from that as opposed to just getting the loan in 7%. I mean we didn't make the investment to make 7%. We made the investment to do better than that.
Speaker Change: On the actual assets themselves, I think realistically, we're looking at...
Projects that would be reaching FID, certainly not in 25.
Certainly not in 2026 [inaudible]
We think it's more sort of 27-28-ish [inaudible]
Speaker Change: in terms of where things are going forward as they work through their pipeline of assets and mechanically recalibrated a bit to the west.
Speaker Change: We have a very detailed structure of how, you know, all of the criteria that they have to meet before the project becomes appropriately eligible for TransAlta to consider actually acquiring it and ultimately developing it from NOVA. So it's very detailed. We're embedding an employee in their office in Chicago. So we're having oversight and frankly, we'll be rotating people through there as well. As we go.
Speaker Change: Ford. We have observers on the board. We have the ability to influence, you know, geographies and the types of counterparts they're pursuing and even technology types and OEM suppliers as we go forward. And so there's a very...
Speaker Change: I'm going to put it, detailed scripted kind of approach on how a project goes from a twinkle in the eye to a place where it makes sense for TransAlta to consider.
Speaker Change: Pulling the trigger and acquiring the project and the latter part of the of the decade to see it through so hopefully that gives you a little bit of a sense of what it's like [inaudible]
Speaker Change: and then how much of an equity stake would you have, would you be partner on some of those advanced stage projects or you take them?
Speaker Change: Offer them and develop them yourself. You'll be the sole sponsor of those projects when she gets FID.
Speaker Change: Yeah, the current vision would be the latter, Mark, we would end up acquiring the projects from them for a kind of a predetermined...
Speaker Change: Call it a development fee for them that still provides us with the return thresholds that we've prescribed. It makes sense for a company given our cost to capital, so that's exactly what it's like and if we don't
Speaker Change: Proceed to acquire the asset for whatever reason. They're then free to monetize the asset to a
Speaker Change: Give a sense, just based on what could come in that sort of three to four-year time frame number mega-lots, potential investment opportunity. Can you frame that at all in terms of financial numbers? Look, I think it's early days, but I would say that we wouldn't have done it if we didn't think that, you know, the kind of...
Speaker Change: Opportunity set that we would be getting would be well in excess of a gigawatt, you know, over, over, over that time period.
Speaker Change: Got it. And Joel, just for you now, with that there, you obviously still do the buyback, dividend increase, you've got some money, I'll keep them short for Centralia and key
Speaker Change: What else do you guys have in terms of funding capacity to do more M&A or Greenfield in a short term, or what else would you have to do then to sort of fill in the funding needs if you do see something you like on an M&A side of things?
Speaker Change: Yeah, Mark, a really good question. You know, the first thing we would look to is rotating capital we've highlighted for...
Speaker Change: You know, we have 88 assets in the portfolio today. A lot of these assets could be actionable in the marketplace. And so, you know, one of the things we would look to is there is an opportunity out there that's going to really add one term value to the shareholder where we can acquire the multiple below where we can actually invest the assets at. [inaudible]
We'd like to do that first.
Speaker Change: We always retain the option with common equity for the right offering. It has to be something that is transformational for us.
Speaker Change: MNB, highly creative both on an earnings per share basis and a cash flow per share basis. But the first source of capital, if you will, Mark would be looking to rotate a capital in the event that we have a shortfall, and we're looking at opportunities outside of our current top-based plan.
Mark Jarvey: Go ahead. I was just curious if you guys have been testing the water in terms of acid sales. If you are seen potential uses of capital opportunities to deploy, have you been seen what's out there in terms of acids that would be for the best. [inaudible]
Dahlia Realization and monetization opportunities.
I would say-
Mark Jarvey: Mark, the answer to that question is, although it's really stages, we have-
Mark Jarvey: Ben, selectively testing in relation to a couple of the facilities that we have in the portfolio and exploring the possibility of divesting them as we go forward given kind of the disconnect between what we think they're worth to ask versus what they might be worth in the market experience. Thank you very much.
Mark Jarvey: But with the view that any transaction of sort of net neutral on contractiveness.
Mark Jarvey: I think, broadly speaking, directly, we would be at least what we're looking at, might actually enhance or contract this work. Okay. All right. Thanks for fitting me in. Appreciate it.
Speaker Change: Thank you. Thank you. And this concludes our Q&A session for today. I would now like to turn the conference back to Stephanie Paris for closing remarks.
Stephanie Parris: Thank you everyone. That concludes our call for today. If you have any other questions, please don't hesitate to reach out to the TransAlta Investor Relations team.
Stephanie Parris: And thank you, this concludes our conference call. You may now disconnect. Good day, everyone.