Q3 2025 TransAlta Corp Earnings Call
Good morning. My name is Olivia and I'll be your conference operator. Today at this time, I would like to welcome everyone to transfer the cooperation third quarter 2025 conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star 1 1 on your top 1, key pad,
Stephanie Paris: Thank you, Livia. 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 Q3 2025 Conference Call. With me today are John Kousinioris, President and Chief Executive Officer, Joel Hunter, EVP Finance and Chief Financial Officer, Blain van Melle, EVP Commercial and Customer Relations, and Nancy Brennan, EVP Legal and External Affairs. Today's call is 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.
If you would like to try a question, please press star 1 1 again, thank you. Miss Ferris, you may be, can you conference?
Thank you, Olivia. Good morning, everyone. My name is Stephanie Paris and I am the vice president of investor relations and corporate strategy of transalta, Welcome to trans. Also, this third quarter 2025 conference call
With me today, are John kousinioris, president and chief executive officer, Joel Hunter EVP, finance and Chief Financial Officer.
Lane van Melle. EVP, commercial and customer relations. And Nancy Brennan EVP legal, and external affairs.
Stephanie Paris: All the information provided during this conference call is subject to the forward-looking information statement qualifications set out here on slide 2, detailed further in our MD&A, and incorporated in full for the purposes of today's call. All amounts referenced are in Canadian dollars unless otherwise noted. The non-IFRS terminology used, including Adjusted EBITDA and Free Cash Flow, are reconciled in the MD&A for your reference. 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.
Today's call is 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.
All the information provided during this conference call is subject to the forward-looking information statement qualification set out here on slide 2 detailed further in our MDA and Incorporated in full for the purposes of today's call.
All amounts referenced are in Canadian dollars, unless otherwise noted.
The non-ifrs terminology used including adjusted Ava and free cash flow are reconciled in the mdna for your reference.
John Kousinioris: Thank you, Stephanie. Good morning, everyone, and thank you for joining our Q3 2025 conference call. 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. We recognize the rich and diverse histories, cultures, and contributions of the First Nations, Inuit, Métis, Aboriginal, and Native American communities. It is with gratitude and respect that we thank the peoples who have lived on these lands for reminding us of the ongoing histories that precede us. TransAlta delivered solid performance during Q3, demonstrating our fleet's resilience during challenging market conditions. Our Alberta portfolio hedging strategy and active asset optimization continued to generate realized prices well above spot prices while availability remained high across the fleet.
On today's call John and Joel will provide an overview of transal to quarterly results. After these remarks, we will open the call for questions with that. I will turn the call over to John.
Thank you Stephanie. Good morning, everyone and thank you for joining our third quarter conference. Call for 2025
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, we recognize the rich and diverse histories cultures and contributions of the First Nations Inuit matei Aboriginal and Native American communities and it is with gratitude and respect that we thank the people who have lived on these lands for reminding us of the ongoing histories that precede us.
John Kousinioris: During the quarter, we delivered Adjusted EBITDA of CAD 238 million, Free Cash Flow of CAD 105 million or CAD 0.35 per share, an average fleet availability of 92.7%. Based on our results to date and expectations for Q4, we remain confident in achieving our 2025 guidance range. We're tracking to the lower end of the Adjusted EBITDA range and the midpoint to Free Cash Flow, which Joel will speak to later in the call. As you all know, a key priority for our company is to progress our legacy thermal opportunities, which we continued to do during the quarter. In Alberta, our data center project will contribute to powering a new industry in the province. In Washington, our Centralia project will support reliability for decades to come. Commercial negotiations for both projects continued to progress during the quarter.
Transalta, delivered, solid performance. During the third quarter, demonstrating our fleet's resilience during challenging market conditions, our Alberta portfolio hedging strategy and active asset optimization. Continue to generate realized prices, well above spot prices, while availability remained High across the fleet.
138 million, free cash flow of 105 million or 35 cents per share, an average Fleet availability of 92.7%.
Based on our results to date and expectations for the fourth quarter. We remain confident in a 2025 guidance range we're tracking to the lower end of the adjusted beta range and the midpoint of free cash flow which Joel will speak to later in the call.
As you all know, a key priority for our company is to progress our Legacy thermal opportunities, which we continue to do during the quarter. In Alberta our data center project will contribute to powering a new industry in the province. And in Washington our centria project will support reliability for decades to come
John Kousinioris: While we remain confident in our advancement of these key priorities, we've decided to shift the timing of our investor day to Q1 2026 following data center and Centralia announcements. We will provide you with detailed updates on both projects and their impact on our company, as well as the opportunities we see across all of our core markets at that time. Returning to the quarter, we executed agreements to extend our committed credit facilities totaling CAD 2.1 billion with our syndicate of lenders. Our syndicated facility of CAD 1.9 billion now has a maturity of 30 June 2029, and our bilateral credit facilities of CAD 240 million were extended by 1 year to 30 June 2027.
Commercial negotiations for both projects, continue to progress during the quarter. And while we remain confident in our advancement of these key priorities, we've decided to shift the timing of our investor day to the first quarter of 2026 following data center and centria announcements. We will provide you with detailed updates on both projects and their impact on our company, as well. As the opportunities we see across all of our core markets at that time.
John Kousinioris: During the quarter, we completed the sale of a 100% interest in the 48 MW Poplar Hill facility as required under the terms of the Heartland Generation acquisition. Following the quarter, on 2 October, we also closed the sale of a 50% interest in the 97 MW Rainbow Lake facility. The proceeds from the divestitures go to Energy Capital Partners as agreed to under the terms of the transaction. This marks the successful conclusion of the remaining regulatory requirements for the Heartland acquisition. In August, the AESO announced its final design for the Restructured Energy Market or REM, which I will speak to momentarily. The Government of Alberta also introduced proposed amendments to the TIER regulations. The proposed changes include recognition of on-site emissions reduction investments as a compliance pathway under the TIER system. This may impact the emission credit market.
Returning to the quarter, we executed agreements to extend our committed credit facilities. Totaling 2.1 billion with her. Syndicate of lenders, our syndicated facility of 1.9 billion. Now has a maturity of June 3029 and our bilateral. Credit facilities of 240 million were extended by 1 year to June, 30 2027
During the quarter, we completed the sale of a 100% interest in the 48 megawatt popular Hill facility as required under the terms of the Heartland generation acquisition and following the quarter on October 2nd, we also closed the sale of a 50% interest in the 97 megawatt Rainbow Lake facility. The proceeds from the divestitures go to energy Capital Partners as agreed to under the terms of the transaction.
This marks, the successful conclusion of the remaining regulatory requirements for the Heartland acquisition.
In August the ASO announced its final design for the restructured energy Market or REM, which I will speak to you momentarily.
The government of Alberta also introduced proposed amendments to the tier regulations, the proposed changes include recognition of on-site emissions reduction Investments as a compliance pathway under the tier system.
John Kousinioris: However, as most of our credits are deployed internally towards our gas fleet's emissions obligations, we do not anticipate this change, if implemented, to be material to our business. Finally, we continue to engage directly and collaboratively with the Government of Alberta and the AESO on the Alberta Data Center strategy and their approach to Large Load Integration. Turning more specifically to the work that we're doing in realizing the value of our legacy generation sites, at our Centralia site, we're actively engaged in commercial negotiations with our customer and expect to be in a position to execute a definitive agreement before year-end. At that time, we will be able to share our detailed development plans for the site. We also continue to progress our Alberta Data Center strategy and the associated commercial negotiations.
This may impact the emission credit Market however as most of our credits are deployed internally towards our gas Fleet. Submissions obligations, we do not anticipate this change if implemented to be material to our business.
And finally, we continue to engage directly and collaboratively with the Government of Alberta and the ASO on the Alberta data center strategy and their approach to large load integration.
Turning more specifically to the work that we're doing in realizing the value of our Legacy generation sites at our centria site where actively engaged in commercial negotiations, with our customer and expect to be in a position to execute, a definitive agreement before year. End. At that time, we will be able to share our detailed development plans for the site.
John Kousinioris: Recently, we entered into a Demand Transmission Service contract with the AESO for 230 MW, representing the full allocation awarded to the company through phase 1 of the AESO's Data Center Large Load Integration program. In September, Parkland County unanimously approved the rezoning of over 3,000 acres of TransAlta-owned land surrounding our Keephills and Sundance facilities to support future data center development. We're grateful for this community support, which represents an important milestone to advance the opportunity for new investment, job creation, and economic growth in the region. We continue to work closely with our counterparties on their data center project and are steadily progressing towards the finalization of a memorandum of understanding. We also continue to engage directly with the provincial government and the ISO on phase 2 of the Large Load Integration program.
We also continue to progress, our Alberta data center strategy and the associated commercial negotiations.
Recently we entered into a demand transmission service contract with the ASO for 230, megawatts representing the full allocation awarded to the company, through Phase 1 of the Asos data center, large load integration program.
In September Parkland County unanimously approved. The rezoning of over 3,000 Acres of transalta owned. Land surrounding our key pills and Sundance facilities to support future data center development.
We're grateful for this community support which represents an important Milestone to advance the opportunity for new investment, job creation and economic growth in the region.
We continue to work closely with our counterparties on their data center project and are steadily progressing towards the finalization of a Memorandum of Understanding.
John Kousinioris: We're excited about the data center opportunity in Alberta and the meaningful investment it can bring to the province. In August, the AESO announced its final design for the Alberta Restructured Energy Market, or REM. The structure is consistent with our expectations, adds greater certainty to the market and supports system reliability, something our diverse and dispatchable generating fleet in Alberta is well-suited to provide. Notably, the REM will help ensure appropriate price signals are received by generators to enable reliable generation investment and ensure Alberta is competitive with other jurisdictions. The REM contemplates an increase in the provincial price cap to CAD 1,500 per MWh, and eventually to CAD 2,000 per MWh, with additional administrative scarcity pricing during periods of tight system conditions.
We also continue to engage directly with the provincial government and the ISO on Phase 2 of the large load integration program. We're excited about the data center opportunity, in Alberta and the meaningful investment. It can bring to the problems.
In August the ASO announced its final design for the Alberta restructured energy Market or rent. The structure is consistent with our expectations as greater certainty to the market and support system reliability. Something our diverse and dispatchable generating Fleet in Alberta is well suited to provide
The REM will help ensure appropriate price signals are received by generators to enable reliable generation investment and ensure Alberta is competitive with other jurisdictions.
John Kousinioris: The REM also creates a new ramping product to enhance system reliability, which our dispatchable fleet is well-positioned to serve, and mitigates against any adverse impact from the adoption of locational marginal pricing for incumbent generators through the allocation of financial transmission rights. The REM is expected to be implemented in 2027 or 2028. We will continue our active engagement in the AESO consultation process, which is now focused on implementation. We believe that the changes to the market provided by the REM, coupled with the anticipated load growth from the fully allocated 1.2 GW of data center system access granted by the AESO, will see Alberta's power supply and demand imbalance improve and lead to a recovery in the merchant power price in the province, benefiting our diversified legacy fleet.
The REM contemplates an increase in the provincial price cap to $1,500 per megawatt-hour and eventually to $1,000 per megawatt-hour, with additional administrative scarcity pricing during periods of tight system conditions.
The REM also creates a new ramping product to enhance system, reliability, which are dispatchable Fleet is well, positioned to serve and mitigates against any adverse impact from the adoption of locational marginal pricing for incumbent generators through the allocation of financial transmission lights.
The REM is expected to be implemented in 2027 or 2028 and we will continue our active engagement in the ASO consultation process, which is now focused on implementation.
John Kousinioris: The forward price has begun to reflect the changing supply and demand dynamic in the province, driven by electrification, data center load, and population increases, along with the slowdown in incremental new supply coming online, which makes our existing generating fleet increasingly valuable. There appears to be a reaction today to a reference to Project Greenlight's data center in service state being pushed out to 2030. Our understanding is that that is very much an outside date and that Kineticore and their customer are still driving to have the project in service in 2027 or 2028. It remains our view, based on the information that we have, that forward prices do not yet fully factor in the impact of the REM or 1.2 GW of data center load that will be coming online.
We believe that the changes to the market provided by the REM coupled with the anticipated load growth from the fully allocated. 1.2 gigawatts of data center system access. Granted by the iso will see Alberta's power supply and demand imbalance improve and lead to a recovery in the merchant power price in the province, benefiting our Diversified Legacy Fleet,
the forward price has begun to reflect the changing supply and demand dynamic in the province driven by electrification data center, load and population increases along with the slowdown in incremental, new Supply coming online which makes our existing generating Fleet increasingly valuable
There appears to be a reaction today to a reference to project. Greenlight's data center in service, date being pushed out to 2030.
Our understanding is that that is very much an outside date and that Kinetochore and their customer are still driving to have the project in service in 2027 or 2028.
John Kousinioris: The gradual increase in load we now expect will rebalance the current oversupply of generation in the province and drive opportunities for growth in the long term. TransAlta's dispatchable thermal and hydro fleet have existing capacity to provide reliability and serve the expected load growth. Before I turn the call over to Joel, I would like to offer a few words on my upcoming retirement. As we announced today, I will be retiring from TransAlta and its board effective 30 April 2026. It has been an honor to lead TransAlta and to work with such a committed and talented team. Together with our board, we have evolved our business and built a strong foundation for the future by increasing shareholder returns, delivering strong financial results, navigating regulatory change, diversifying our business, and positioning our fleet to meet the customer needs of the future.
It remains our view based on the information that we have. That forward prices. Do not yet fully factored in the impact of the rem or 1.2 gigawatts of data center load, that will be coming online.
The gradual increase in load, we now expect will rebalance the current oversupply of generation in the province and drive opportunities for growth in the long term.
Prenatal is dispatchable thermal and hydro Fleet have existing capacity to provide reliability and serve the expected load growth.
Before I turn the call over to Joel, I'd like to offer a few words on my upcoming retirement.
As we announced today, I will be retiring from transalta and its board effective April 30th 2026.
John Kousinioris: I fully support Joel as the next President and CEO of TransAlta. He's a proven leader and the right person to advance TransAlta's strategy. I look forward to working with him, management, and the board over the coming months to ensure a successful transition. I'll now pass the call over to Joel.
Joel Hunter: Thanks, John. Good morning, everyone. I'd like to start by offering my congratulations to Joel on his upcoming retirement and thank him for his leadership, guidance, and strategic vision for TransAlta, as well as his active support of my leadership. I look forward to working together to ensure a smooth transition and continued execution of our strategic priorities. We will announce the CFO successor in the coming months. Turning now to our Q3 results. I'll start with an overview of the period where our fleet demonstrated resilience in softer market conditions. During the quarter, we generated CAD 238 million of Adjusted EBITDA, which was CAD 77 million lower than the Q3 of 2024 due to lower Alberta and Mid-C power prices, subdued market volatility impacting energy marketing and trading results, and lower contract revenue from our Centralia facility.
It has been an honor to lead transalta and to work with such a committed and talented team together with our board. We have evolved our business and built a strong foundation for the future by increasing shareholder returns, delivering strong, financial results, navigating regulatory, change diversifying our business and positioning our Fleet to meet the customer needs of the future. I fully support Joel as the next president and CEO of transalta. He is a proven leader, and the right person to advance transalta strategy. I look forward to working with him management and the board, over the coming months to ensure a successful transition on El Paso, call over to Joel
Thanks John and good morning everyone. I'd like to start by offering my congratulations to John on his upcoming retirement and thank him for his leadership guidance and strategic vision for transalta, as well as his active support of my leadership. I look forward to working together to ensure a smooth transition and continue to execution of our strategic priorities, we will announce the CFO successor in the coming months.
Turning now to our third quarter results, I'll start with an overview of the period where our Fleet demonstrated resilience and softer market conditions.
Joel Hunter: Turning to our segmented results relative to the same period of 2024. Hydro segment Adjusted EBITDA decreased to CAD 73 million compared to CAD 89 million last year due to lower spot power prices in Alberta, as well as lower ancillary services revenue, which was impacted by lower availability from higher planned maintenance outages. Through optimization, we were able to reallocate these services to our gas fleet, maintaining our market share of the associated ancillary revenues. Environmental and tax attribute revenue to third parties was also lower than last year. The Wind and Solar segment produced Adjusted EBITDA of CAD 45 million, in line with Q3 2024.
During the quarter, we generated $238 million of adjusted EBITDA, which was $77 million lower than the third quarter of 2024 due to lower Alberta and mid-sea power prices, subdued market volatility, packing, energy marketing and trading results, and lower contract revenue from our centrally located facility.
Turning to our segmented results relative to the same period of 2024.
Hydro segment, adjusted e but a decrease to 73 million compared to 80 million 899 Million last year, due to lower spot power prices in Alberta as well as lower and silvery Services Revenue, which was impacted by lower availability from higher planned. Maintenance outages,
Through optimization, we're able to reallocate these services to our gas Fleet, maintaining our market share of the associated and silvery revenues environmental and tax attribute Revenue to third parties was also lower than last year.
Joel Hunter: In the gas segment, Adjusted EBITDA decreased to CAD 110 million from CAD 141 million in 2024, mostly due to lower realized power prices in Alberta, along with higher carbon pricing, partially offset by the addition of the Heartland assets, which increased contracted production along with incremental ancillary services revenue due to production optimization between the gas and hydro segments. The energy transition segment delivered Adjusted EBITDA of CAD 28 million, a CAD 6 million decrease year over year due to lower market prices, partially offset by lower purchase power costs and a higher volume of favorable hedge positions settled. Energy marketing Adjusted EBITDA decreased by CAD 25 million to CAD 17 million. Primarily due to comparatively subdued market volatility across North American natural gas and power markets, and lower realized civil trades in the quarter compared to last year.
in line with the third quarter of 2024,
In the gas segment. Adjusted I bet a decrease to 110 million from 141 million in 2024 mostly due to lower realized power prices in Alberta along with higher carbon pricing partially offset. By the addition of the Heartland assets, which increase contracted production, along with incremental and services Revenue, due to production, optimization between the gas and hydro segments.
The energy transition segment, delivered adjusted Eva of 28 million, a million dollar, decrease year-over-year, due to lower market prices, partially offset, by lower, purchase power costs and a higher volume of favorable hedge positions settled.
Joel Hunter: Corporate Adjusted EBITDA was in line with last year at CAD 35 million. As a reminder, our Adjusted EBITDA excludes the impact of ERP costs, as the integration is not reflective of ongoing operations or the performance of our operating assets. Overall, Free Cash Flow was CAD 105 million in Q3, which was CAD 26 million lower than the same period last year. Lower Adjusted EBITDA and higher net interest expense was partially offset by lower current income tax expense and lower distributions paid to non-controlling interests. Turning to the Alberta portfolio, the Q3 spot price averaged CAD 51 per MWh, which was lower than the average price of CAD 55 per MWh in 2024.
Energy marketing adjusted, EBA decreased by 25 million to 17 million primarily. Due to comparatively subdued Market volatility across, North American, natural gas, and power markets, and lower realized subtle trades in the quarter compared to last year.
In corporate and adjusted Evo was in line with last year at 35 million.
As a reminder, our adjusted ebed excludes, the impact of Erp costs as the integration is not reflective of ongoing operations or the performance of our operating assets.
Overall free cash flow is 105 million in the third quarter which was 26 million lower than the same period last year.
Lower adjusted IBA and higher net. Interest expense was, partially offset, by lower current income tax expense, and lower distributions paid to non-controlling interests.
Joel Hunter: The decline year over year was primarily due to incremental generation from the addition of new gas and renewable supply in the province, as well as benign weather. Throughout the quarter, we deployed hedging strategies to enhance our portfolio margins and mitigate the impact of lower merchant power prices. We realized the benefit from approximately 2,500 GWh of hedges at an average price of CAD 66 per MWh, representing a 29% premium to the average spot price. In addition, our hydro fleet delivered an average realized merchant price of CAD 76 per MWh, a 49% premium to the average spot price. While the gas fleet realized an average merchant price of CAD 79 per MWh, a 55% premium to the average spot price.
Turning to the Alberta portfolio. The third quarter spot price, average 51 per megawatt hour, which was lower than the average price of $55 per megawatt hour in 2024. The decline year-over-year was primarily due to incremental generation from the addition of new gas and renewable Supply in the province, as well as benign weather.
Throughout the quarter, we deployed heading strategies to enhance our portfolio. Margins in MIT the impact of lower Merchant power prices. We realized the benefit from approximately 2500 gigawatt hours of Hedges, and an average price of 66 per megawatt hour representing a 29% premium to the average spot price
Joel Hunter: Our merchant wind fleet, which cannot be used as firm power for hedging activities, realized an average price of CAD 28 per MWh. We were also able to deliver additional ancillary volumes across the Alberta fleet. In the quarter, our average realized price for hydro ancillary service pricing settled at CAD 47 per MWh, an 8% discount to the average spot price. Due to the optimization of ancillary services to the gas segment from hydro during plant outages, the gas segment realized an average ancillary service price of CAD 41 per MWh.
In addition our Hydro Fleet delivered an average realized Merchant price of 76 per megawatt hour a 49% premium to the average spot price. While the gas Fleet realized an average Merchant price of $79 per megawatt hour at 55% premium to the average spot price.
Our Merchants wind fleet, which cannot be used as firm power for hedging activities, realized an average price of $8 per megawatt-hour.
We are also able to deliver additional and Survey volumes across the Alberta Fleet in the quarter. Our average realized price for hydro ancillary Service pricing settled at 47 per megawatt hour and 8% discount to the average spot price.
Joel Hunter: 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 purchased power when prices were below our variable cost of production, leading to an overall realized price per MWh produced of CAD 103, compared to CAD 90 per MWh in the same period last year. For the balance of the year, we have approximately 1,900 GWh of our Alberta generation hedged at an average price of CAD 72 per MWh, well above the current forward curve of CAD 57 per MWh. Going forward, we expect to continue to optimize our fleet and reduce production in low price, high supply hours by fulfilling our financial hedges and customer requirements with open market purchases.
Due to the optimization of ensuring services to the gas segment from Hydro during planned. Outages, the gas segment realized an average and silvery service price of 41 per megawatt hour.
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 $33 compared to $90 per megawatt hour in the same period last year.
For the balance of the year. We have approximately 19900 gigawatt hours of our Alberta generation hedged and an average price of $72 per megawatt hour. Well, above the current forward, curve of $57 per megawatt hour.
Joel Hunter: Looking at next year, our team has increased our hedge position to approximately 7,800 gigawatt hours at an average price of CAD 66 per megawatt hour, which remains well above current forward pricing levels. Based on our year-to-date results and balance of year expectations, we remain confident in our 2025 outlook. We are currently tracking towards the lower end of our Adjusted EBITDA range, largely due to the Alberta spot power price tracking to the lower end of the outlook range of CAD 40 to CAD 60 per megawatt hour. Currently, we expect the full year spot price to average CAD 46 per megawatt hour. In terms of sensitivity to the Alberta spot power price, CAD 1 per megawatt hour is expected to have a CAD 2 million impact to our Adjusted EBITDA for the balance of the year.
Going forward. We expect to continue to optimize our Fleet and reduce production in low price. High Supply hours by fulfilling our financial Hedges and customer requirements with open market purchases.
Looking at next year, our team has increased our hedge position to approximately 7,800 gigawatt hours, and an average price of $66 per megawatt hour which remains well above current forward pricing levels.
Based on our year-to-date results and balance of our expectations, we remain confident in our 2025 outlook. We are currently tracking towards the lower end of our adjusted EBITDA range, largely due to the Alberta spot power price, which is tracking to the lower end of the outlook range of $40 to $60 per megawatt-hour.
Currently, we expect the full year spot price to average 46 per megawatt hour.
Joel Hunter: Other factors influencing Adjusted EBITDA include lower wind resource and subdued market volatility. Free Cash Flow is tracking to the midpoint of the outlook range. As the aforementioned Adjusted EBITDA impacts are partially offset by lower expected current taxes and lower expected distributions to non-controlling interests. Consistent with the past year, we'll provide a fulsome 2026 outlook update on our Q4 2025 conference call in February. I will now turn the call back over to John.
In terms of sensitivity to the Alberta spot power price, $1. Per megawatt hour is expected to have a 2 million dollar impact to our adjusted. Eva for the balance of the Year, other factors influencing adjusted ibida include lower wind resource and subdued Market volatility.
Free cash flow is tracking to the midpoint of the Outlook range and is the affirmation as adjusted e. But it impacts our partially offset by lower expected, current taxes and lower expected. Distributions to non-controlling interests.
John Kousinioris: Thank you, Joel. We remain focused on the following priorities for 2025. First, delivering Adjusted EBITDA and Free Cash Flow within our 2025 guidance ranges. Second, improving our leading and lagging safety performance indicators while achieving strong fleet availability. Third, maximizing the value of our legacy thermal energy campuses by capturing the opportunity presented by securing a data center customer at Alberta Thermal, as well as advancing our coal to gas conversion at Centralia. Fourth, successfully pursuing any strategic M&A opportunities that may arise. Fifth, maintaining our financial strength and flexibility. Finally, successfully implementing the upgrade to our ERP system. I believe TransAlta offers a compelling investment opportunity. We're a safe and reliable operator with strong cash flows underpinned by our diversified hydro, wind, solar, and gas portfolio located across 3 countries and complemented by our leading asset optimization and energy marketing capabilities.
Consistent with the past year. We'll provide a full from 2026 Outlook update. On our fourth quarter, 2025 conference call in February. I will now turn the call back over to John
5.
First delivery adjusted EPA and free cash flow within our 2025 guidance. Ranges second. Improving our leading and lagging safety performance indicators. While achieving strong Fleet availability.
Third maximizing, the value of our Legacy thermal energy, campuses by capturing the opportunity, presented by securing a data center customer at Alberta thermal as well as advancing. Our call to gas conversion at some trail.
4 successful pursuing, any strategic m&a opportunities. That may arise fifth maintaining our financial strength and flexibility and finally successfully implementing the upgrade to our Erp system.
John Kousinioris: There is significant and growing value in our legacy thermal sites, which our team is actively working to repurpose to meet the growing need for reliable generation in the jurisdictions in which we operate. We also remain 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 target. We remain disciplined in our approach to growth, focused on delivering value to our shareholders as we work to diversify our portfolio within our core jurisdictions and increase the stability and contractiveness of our cash flows. Our company has a sound financial foundation. Our balance sheet is flexible. We have ample liquidity to pursue and deliver multiple growth opportunities, along with the ability to also return capital to our shareholders. Finally, most importantly, we have our people.
I believe transalta offers a compelling investment opportunity where a safe and reliable operator with strong cash. Flows underpinned by our Diversified Hydro wind solar and gas portfolio located across 3 countries and complemented by our leading asset optimization and energy marketing capabilities.
There is significant and growing value in our Legacy thermal sights which are team is actively working to repurpose to meet the growing need for Reliable generation. In the jurisdictions, in which we operate.
We also remain 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 target.
We remain disciplined in our approach to growth focused on delivering value to our shareholders. As we work to diversify our portfolio within our core jurisdictions and increase. The stability and contracted this of our cash flows. And our company has a sound financial Foundation
Our balance sheet is flexible, and we have ample liquidity to pursue and deliver multiple growth opportunities, along with the ability to also return capital to our shareholders.
John Kousinioris: Our people are our greatest asset, and I want to thank all our employees and contractors for their commitment in setting the company up for success in the remainder of 2025 and beyond. Thank you. I'll now turn the call over to Stephanie.
finally, and most importantly, we have our people
Stephanie Paris: Thank you, John. Lydia, would you please open the call for questions from the analysts?
Our people are our greatest asset and I want to thank all our employees and contractors for their commitment. In setting the company up for success in the remainder of 2025, and Beyond. Thank you. And I'll now turn the call over to Stephanie.
Operator: Our first question coming from the line of Robert Hope with Scotiabank. Your line is now open.
Thank you, John. Olivia, would you please open the call for questions from the analyst?
As a reminder, to ask a question, you will need to press star 1 1 1 on your telephone, and wait for your name to be announced to. We draw a question. Simply press star111. Again, please stand by, while we come Pollock.
Robert Hope: Good morning, everyone, and congrats to John and Joel on the announcements.
My first question comes from the line of Robert Hope with Scotiabank. Your line is now open.
John Kousinioris: Thanks, Robert.
Robert Hope: Maybe, Excellent. Okay. Maybe, on the data center front, it appears that discussions are going slower than anticipated, regarding customers for the data centers in Alberta. Can you maybe add a little bit color of what is driving this, as well as has your confidence in securing a project increased or decreased since the Q2 call?
Uh, morning everyone and congrats to, uh, John Joel on the announcements.
Thanks Robert. Maybe
John Kousinioris: Robert, we remain confident in our ability to progress the data center opportunity that we have here in the province. Look, it's a big initiative both for our prospective customers and for our company. It takes time to make sure that all of the details that we need to work with, and frankly, there's multiple parties involved in bringing it forward. It just takes time to do all of that. Phase II of the ISO process and the Government of Alberta process in terms of Large Load Integration is also critically important. That's taking a little bit of time to sort out because at least from our own perspective, it isn't just about the initial 230 megawatts that we've got.
Excellent. Okay. Maybe uh, on the data center front. So it appears that discussions are going slower than anticipated, uh, regarding customers for the data centers in Alberta. Can you maybe add a little bit of color of what is driving this as well as has your confidence in securing a project increased or decreased since the Q2 call.
John Kousinioris: It's about how we're thinking about phasing, you know, a real data center opportunity for the province and for our company. All of this takes time, but we're tracking, and we remain the confidence that we had, you know, last quarter and in other earlier times of the year to move it forward. It is very much a key priority for our company.
Um Robert, we we remain confident in our ability to progress the data center opportunity that we have here in the province. Um look it's a it's a big initiative both for our prospective customers. And for our company, it takes time to make sure that all of the details that we need to work with. And, and frankly, there's multiple parties involved in bringing it forward. It just takes time to do all of that, um, Phase 2 of the iso process and the government of Alberta process in terms of large load, integration is also critically important. That's taking a little bit of time, uh, to sort out because at least from our own perspective, it isn't just about the initial 230, megawatts, that, that we've got. It's about how we're thinking about phasing, um, you know, a real data center opportunity for the province. Uh, and for our company, all of this takes time but we're tracking
Robert Hope: I appreciate that. Are you in discussions to serve other data center customers in Alberta on a shorter term basis? You did mention Greenlight, you do have confidence that it could be in service in 2027, 2028. What gives you that confidence, and could you be supplying power to them in that timeframe as well?
Um, and and we Remain the confidence that we had, um, you know, last quarter and and another earlier times of the year to move it forward, it's a, it it is very much a key priority for our company.
John Kousinioris: All of the discussions that we're having, all of the work that we're doing are really around a single opportunity. You know, we've taken, at least from a TransAlta perspective, an exclusive approach with those prospective customers. That's the way we're looking at it. It's also our expectation that once we're able to announce our MOU and begin moving forward, that we'll be able to start seeing load come into our sites, you know, gradually and probably a bit more earlier than probably what Kineticore is currently anticipating that they would have coming in. Hopefully, that gives you a little bit of color.
Appreciate that. And then are you in discussions to serve other data center customers in Alberta in on a shorter term basis? You did mention green light, you do have confidence that it could be in service in 2728. Uh, you know, what? Gives you that confidence, and could you be supplying power to them in that time frame as well?
Robert Hope: Yeah. Thank you.
Announced, uh, our mou and begin moving forward that we'll be able to start seeing load, come into our sites, you know, gradually, and probably a bit more more, um, earlier than probably what kinetochore is currently anticipating that, that they would have coming in. So, um, hopefully that gives you a little bit of code.
Operator: Thank you. Our next question coming from the line of Mark Jarvi with CIBC. Your line is now open.
Yeah, thank you.
Mark Jarvi: Yeah. Thanks. Good morning, everyone, and congrats Joel and John. Not to get too far ahead of ourselves, but once you do have the MOU in place, then what? What would be the sort of timeline when you think you can get to a binding agreement? Given the fact it's taken a bit longer to get to the MOU, does that shorten the window from MOU to final agreement?
Thank you. Our next question, coming from the line of March sharply with CIBC your line is now open.
John Kousinioris: Mark, good morning. Look, we would want to go pretty quickly, I would think, we've already begun kind of getting our team ready and getting internally ready to kind of get to definitive documentations pretty quickly to move that forward. I can't give you sort of a specific timeline on that when that would occur, but certainly, you know, I'd be pushing our team to try to get it done as soon as possible. I think one of the key elements of the MOU is to have enough sort of specificity in that and an understanding of the arrangements between ourselves and our customers in order to permit that to kind of make the definitive documentation a bit easier to proceed.
Yeah. Thanks. Good morning everyone. And congrats. Joel and John, um, to get too far ahead of ourselves. But once you do have the mou in place, then what what would be the sort of timeline when you think you can get to a binding agreement? And given the fact, it's taken a bit longer to get to the mou. Does that shorten the window from moyou to final agreement?
um,
Mark, good morning. Um, look.
We would want to go pretty quickly. I would think and we've already begun kind of getting our team ready and getting eternally, ready to kind of get to definitive. Documentation is pretty quickly, uh, to move that forward. I can't give you sort of a specific timeline on that, uh, when that would occur. But, but certainly, um, you know, I'd be pushing our team to try to get it done as soon as possible. I think, 1 of the key elements of the mou is to have enough sort of specificity in that, and an understanding of the arrangements between ourselves and our customers in order.
John Kousinioris: I think it's gonna happen in. Like, I think it'll actually be quicker than certainly it's taken to get the MOU done, is what I would say.
Mark Jarvi: Okay. You continue to use the word counterparties in the plural. Can you elaborate on what that means? Is that on the funding side for the customer? Is it a sort of joint venture on the data center? Anything you can shed on that and the fact that it is multiple customers, how has that sort of affected the timelines to reach MOU?
Order to permit that to kind of make the definitive documentation of it easier to proceed. But I think it's going to happen in a way that I think it'll actually be quicker than, certainly, it's taken to get the MOU done is what I would say.
John Kousinioris: Yeah. We do, we are working with more than one customer who are working together to see the opportunity come through. That's been the case throughout, candidly, our engagement. Given where we are in the process and how we're working through it, there isn't a lot more that I can give you, Mark. I wish I could, but I can't.
Okay, and then you continue to use the word counter parties and the plural. Um, can you elaborate just, um, what that means is, is that on the funding side, for the customer is, is it a joint venture on the data center and you can shed on that? And the fact that it is multiple customers. Um, how has that sort of affected the timeline to reach you?
Yeah, we do. We are working with, um, uh, uh, uh,
Mark Jarvi: Okay. On the last call, you indicated that you took the view that your underutilized coal to gas conversion units sort of are akin to incremental generation, when you think about phase 2, and you're trying to have those conversations with the ASO and the government. How have those progressed, and are you getting traction with that concept?
More than 1 customer who are working together to see the opportunity uh come through. And that's and that's been the case throughout candidly uh our engagement and and given where we are in the process and how we're working through it. There is a lot more that I can give you Mark. I wish I could but I, but I can't.
John Kousinioris: Yeah. I'm glad you asked about that. We have had discussions on phase II. Joel and I and Nancy have spent a fair bit of time, and Blaine's been involved in that as well as we move forward. I mean, I'll give you a bit of a sense on our company's position. You know, our sense is it's being well-received by the government would be that, you know, just to give you a bit of a sense is, 1, we don't think that co-location is necessary. We think that it would be better if there isn't a need to co-locate the data center with the generation going forward. That would be number 1.
Okay, and then, on the last call you indicated that you took the view that you're under lot underutilized, quote of gas conversion units sort of are akin to incremental Generations. Um, when you think about Phase 2 and we're trying to have those conversations with the ASO and the government, how have those progress and are you getting traction with that concept?
John Kousinioris: We absolutely believe that underutilized generation, like our coal-to-gas conversion units, would be akin to incremental supply and be able to meet the need for data centers coming into the jurisdiction as a bridge to new generation that would be built into the 2030s to be able to meet that going forward. Because it isn't just about reliability, sustainability and cost. Speed matters. Those units are the right units that we need. It's particularly so given the challenges associated with the supply chain. I think the practical reality is that getting a turbine, for example, or transformers is many years out. I think they have a pretty critical role to get us from kind of where we are today to where we envision the market going.
Yeah, um, I'm I'm glad, um, you asked about that. So we have had discussions on, uh, Phase 2. Uh, um, Joel and I, and Nancy have spent a fair bit of time in Blaine's been involved in that, uh, as well as we move forward. I mean, I I'll give you a bit of a sense on our company's position which you know our senses is being well received by. Um the government would be that you know we don't just to give you a bit of a sense is 1. Um we don't think that co-location is necessary. We think that it would be better, if there is an a need to co-locate the data center with the Generation. Um, going forward. That would be, uh, number 1. We absolutely believe that underutilized generation like our call to gas units. Uh, would be Akin, um, to incremental Supply and be able to meet the needs for data centers coming in to the jurisdiction. Um,
John Kousinioris: That's been what we've been advocating for. I do think the government understands that position and candidly believes it has some merit.
As a bridge to, you know, new generation, that would be built into the 2030s to be able to meet that, uh, going forward. Um, because it isn't just about reliability. Um, you know, sustainability and cost speed matters and and and those units are, um, the right units that we need. And, and it's particularly, so, given the challenges associated with the supply chain. I mean, I think the Practical reality is that, you know, getting a turbine for example, or Transformers as many years out. So, I think they have a pretty critical role to get us from kind of where we are today, to where we envisioned, um, uh, the market going. And
Mark Jarvi: Just to follow up on that, John. When you talk about potentially a bridge, are you saying some of the energy-only megawatts would be something that could be viewed as a, you know, there for a couple of three to five years until new megawatts come in? Or potentially as quote-unquote, permanent supply in the eyes of phase II process?
And uh and and so that's that's been what we've been advocating for. And uh, I I I do think uh, the government understands that position and um, candidly believes it has some Merit
John Kousinioris: Yeah. I am not sure that we are not thinking of it necessarily as permanent supply. For example, if we have a unit and it has a 20% capacity factor, there is a lot of, you know, horsepower left in that particular unit to run and be able to, you know, supply incremental data center needs over a period of time. When we look at, you know, Keephills Unit 2, Keephills Unit 3, the Sheerness facilities that we have, Sundance Unit 6, and our ability to, you know, potentially bring something new to the market in the fullness of time, into the 2030s, we absolutely see a bridging role during phase II to get that there.
so just to follow up on that John, when you talk about potentially a bridge, are you saying some of the underutilized megawatts would be something that could be viewed as a you know there for a couple 3 to 5 years until new magazines come in or or potentially as quote unquote permanent Supply in the eyes of phase 2 persons
20% capacity Factor. There is a lot of you know horsepower left in that particular unit to run and be able to you know, Supply incremental data center needs over a period of time. And so when we look at you know,
Mark Jarvi: Understood. Okay. Thanks, everyone.
T pills 2, Ki pills 3. Um, the sheer Nest facilities that we have, um, sun 6, uh, and our ability to, you know, potentially bring something new to the market in the fullness of time, uh, into the 2030s, we absolutely see a bridging role, uh, during uh, Phase 2 to get that there.
John Kousinioris: Thank you.
Operator: Thank you. Our next question coming from the line of Benjamin Pham with BMO Capital Markets.
Understood. Okay, thanks everyone.
Thank you.
Thank you.
Benjamin Pham: Hi. Thanks. Good morning. I wanted to just touch base on the delay of your Investor Day. I can understand the reasons for it. I'm wondering when you did set the Investor Day you go back, was your priorities to get the MOUs on both of these projects? I vaguely recall it was more related to updating your long-term strategic cap allocation process. Has that changed as time has progressed?
Our next question, coming from the line of Benjamin fam. With DMO Capital markets, your line is now open.
Hi, thanks. Good morning. I wanted to uh, to touch base on the the delay. If you're investigating, I can understand.
The reasons for it.
I'm I'm wondering when when you did set the investors a, you go back.
Was was your priorities to to get the mous on both of these these projects. I I think I recall it was was more related to updating your your long term strategic.
John Kousinioris: Ben, we set the date, expecting that, you know, we would have had a bit more certainty or the ability to provide a little bit more clarity around both the data center strategy that we have going, some of the other initiatives that we're working on, plus Centralia. It's taken us a little bit more time to land those things.
I'll help out patient process or is that has that changed to as time has progressed
No, um, been we we set the date. Um, expecting that, you know, we would have had
John Kousinioris: You know, we could have had the Investor Day, but the way we like to think of it wouldn't have been the Investor Day that we would have wanted to have to permit all of our investors and the investment community generally to understand, you know, the impact of these projects on the company and be able to have all of the building blocks that are necessary to be able to understand kind of fully the go-forward strategy of the company. It's really as simple as that. We had picked a date. We thought that prospectively that would be something that we would be comfortable to be able to meet. We're still working through everything and retain our confidence level.
John Kousinioris: We just wanna make sure we have a good Investor Day and one that will be helpful to our investors. That's what we've decided to do.
Benjamin Pham: Okay. Got it. Your comments on the connection at Q and updates, I mean, those in service dates you mentioned are always kind of conservative, and they move around. Does that warrant then perhaps for your projects to look at some outside dates just given that progress is a bit slower on some of your developments?
A bit more certainty or or the ability to provide a little bit uh more clarity around both the data center strategy that we have going. Um some of the other initiatives that we're working on plus and trailer it's taken us a little bit more time to land those things. So you know we could have had uh the investor day. But but the way we like to think of it, it wouldn't have been the investor day that we would have wanted to have to permit all of our investors and the investment Community generally to understand, you know, the impact of these projects on the company and be able to have all of the building block blocks that are necessary to be able to understand kind of fully the go, forward strategy of the company. So that it's, it's it's really as simple as that. So we had picked a date. Um, we thought that prospectively, uh, that that would be something that we would be comfortable to be able to meet. Um, we're still working through everything and retain our confidence level. We just want to make sure we have a good investor day and 1 that will be helpful to our investors. So that's what we've decided to do.
John Kousinioris: Yeah. No, I think, I think we feel pretty comfortable about where we are, because what we're looking. Remember, it's gonna be a grid connected opportunity, and then we will be effectively covering the generation needs that the entity has. We feel very comfortable about our ability from a power perspective to meet the needs of the supply that we have for our customers. Like, I think we're in good shape there. I think from our perspective, you know, the timeline is gonna be driven more by the time it takes to actually build out the data centers and get that infrastructure in place. I think there's a substation we need to put in place, that's something that we're pretty comfortable from a supply chain and from a timeline perspective to get it done.
Okay. Got it. Um, and uh, your comments on the, the connection, uh, q and an update. I mean, those those in service dates you mentioned are always tend to be conservative and they move around. Uh does that warrant then perhaps for for your projects to to look at look at some outside dates, just giving that that progress is a bit slower and some of the developments
John Kousinioris: We're not, you know, I can tell you that TransAlta today isn't concerned about the kind of timing perspective from our data center opportunity.
Yeah. No I think I think we feel pretty comfortable about where we are um, because what what what we're looking remember, it's going to be a a grid connected opportunity and then we will be um effectively covering the generation needs uh that the entity has. So we feel very comfortable about our ability from a power perspective to meet the needs of the supply that we have for our customers. Like I think we're in good shape there. I think from our perspective, um you know the timeline is going to be driven more by the time it takes to actually build out the data centers and get that infrastructure in place. I think there's a substation we need to put in place but that's something that we're pretty comfortable from a supply chain and from a timeline perspective to get it done. So we're we're not
Benjamin Pham: Okay. Just maybe just a stat for me, if I may. The 3,000 acres, I mean, I think that's a massive amount of megawatts you can directly add onto that acreage.
You know, I can tell you that Trends Delta today isn't concerned about the, the kind of timing perspective from our data center opportunity.
Okay, and just maybe just a step for me. If I met the the 3
Acres. I mean, I think that's, you know, massive amount of of megawatts, you can
John Kousinioris: It is. I agree. It's like we see it as a significant opportunity. We're grateful for the engagement that we've received from Parkland County, who also see the opportunity for the county to have a real hub for data centers just west of the city of Edmonton there. All the work that we're doing, as I mentioned earlier in the call, isn't just for the 230, it's as we envision kind of the broader campus that we hope to develop over time.
Directly add onto that that acreage.
Maurice Choy: Okay. Thank you. Congrats to both of you, John and Joel.
Um, it's it. It is so, I agree. It's uh, it's, uh, it's, um, like we see it as a significant opportunity and look, and we're grateful for the engagement that we've received from Parkland County, who also, see the opportunity for the county to have a, a real Hub, uh, for data centers, just west of the city of Edmonton there. So, all the work that we're doing, as I mentioned earlier, in the call isn't just for the 230, uh, it's, it's as we envision kind of the the broader campus, uh, um, that we hope to develop over time.
John Kousinioris: Thanks, Ben.
Joel Hunter: Thanks, Ben.
Operator: Thank you. Our next question coming from the line of Maurice Choy with RBC Capital Markets. Your line is now open.
Okay, thank you. And then that grabs it to both of you, John. Thanks, Ben. Thanks Ben.
Our next question.
Coming from the lineup.
Maurice Choy: Thank you. Good morning, everyone. You touched on planning with your customers for phases beyond 230 MW, and you also spoke about AESO phase II being critically important. If you think ahead between now and sometime in Q1 when you have your Investor Day, I guess looking at the other way, what would be the top reason that could derail your timeline to be even later?
RBC Capital markets, you'll let us know. Open
Thank you and good morning everyone. Um,
With your customers for phases beyond 230 megawatts.
And you also spoke about Asos Phase 2, being critically important.
if you think ahead between now and sometime in q1, when you have your investor day,
I guess looking at the other way, what would be the top reason that could derail your timeline to be even later?
John Kousinioris: Yeah, it's difficult to be speculating. I mean, I think all I can say is, look, all we can tell our investors is we continue to work, I would say, doggedly to set up our facility and the permitting around the opportunity that we have. We don't see, how can I put it, issues that could arise from a TransAlta perspective, from a timing perspective to get there. We're working with our customers because they in turn have knock-on effects that they need to deal with to be able to land all of that and to be able to understand better kind of what the future pathways are. We have confidence in phase II.
Yeah, I
look, I
it it's it's difficult to be speculated. I mean, I think all all I can say is um and look all we can tell our investors is we continue to work, I would say doggedly to set up um our facility and um um the permitting around the opportunity that we have. So we don't see how can I put it. Um,
John Kousinioris: We believe the government and the ISO is committed to the development of a data center industry, here in the province of Alberta. It is a priority. You know, our team is met with very senior people in the government, and there's nothing I have heard that would suggest that that isn't a case. There isn't, you know, there isn't particularly a derailer that I would see in us moving through, to be honest.
Issues that could arise from our transalta perspective, from a timing perspective to get there. Um, we're working with our customers because they, in turn have knock-on effects that they need to deal with to be able to land all of that and to be able to understand better kind of what the future pathways are. So we have confidence in Phase 2. Um we believe the government and the iso is committed to the development of a data center industry. Um, here in the province of Alberta, it is a priority. Um, you know, our team is now a very senior people in the government and weep, there's nothing I have heard that would suggest that that isn't a case. So there isn't, you know, there isn't particularly a a
Maurice Choy: Maybe just a quick follow-up to that. Is there any regulation or policy, federal or provincial, that you see as absolutely necessary for clarity for this MOU and definitive agreement to go forward?
Derailleur that I would see in us, moving through, to be honest.
Maybe just a quick follow up to that. Is there any regulation?
Or policy federal or provincial.
John Kousinioris: It would be helpful from our perspective to have a bit of a sense on where phase II is going to be landing so that we can plan around that because I think we will be able to meet within that. It is just important to be able to get that done. The other area, we've talked about this before, is the Clean Electricity Regulations remain a bit of a challenge for us. We are working hard to ensure that we have maximum optionality to be able to fit within those regulations as they currently exist to ensure that we can meet the promise of the opportunity that we see through the data centre work.
That you need ECS. Absolutely necessary for clarity for this mou and definitive agreement to to go forward.
John Kousinioris: You know, when our team is thinking about things, it's more the CER, to be honest, that we think about long term as being something that we need to manage around. You know, phase 2 is more of a clarity point that we think will be constructive. Hopefully, that gives you a sense, Maurice.
Maurice Choy: It does. Maybe that's exactly where I'm going to finish off with on the federal policy side. Obviously, the Canadian federal budget came out earlier this week. Doesn't feel like we got much clarity on both the CER and/or the industrial carbon tax heading into 2030 or post 2030. I know that the Alberta government's frozen the carbon tax at CAD 95 per ton, what can you share in terms of your expectations of both how the CER and industrial carbon tax will be through 2030 and beyond?
It it it would be helpful uh, from our perspective. Um, to kind of have a bit of a sense on where Phase 2 is going to be landing so that we can plan around that, um, because I think we will be able to meet within that. It's just, it's, it's important to be able to get that done the other area. And and look, we've talked about this before, is the clean electricity regulations, remain a bit of a challenge, uh, for us. We're working hard to ensure that we have maximum optionality to be able to, you know, fit within, um, those regulations as they currently exist, um, to ensure that we can meet the promise of the opportunity that we see through the data center work. You know, when, when our team is thinking about things, it's more the ceer, to be honest. That we that we think about long term as, as being something that we need to manage around. Um, you know, Phase 2 is more of a Clarity point that that we think will be constructed. Hopefully that gives you a sense for us.
No, it does, and maybe that's exactly what I'm going to finish off with on the federal policy side. So, obviously,
The Canadian federal budget came out earlier this week doesn't doesn't feel like we got much Clarity on both the CR and or the industrial carbon tax heading into 2030 or post 2030. Um,
John Kousinioris: Look, we, I'd be speculating. I can tell you that like when we do our internal modeling, we have a number of scenarios that we run, you know, as we assess our fleet, and it's everything from the carbon price staying at 95 to the carbon price continuing on its, you know, anticipated trajectory towards 2030. What I can tell you is our engagement on the CER with the federal government continues. You know, our team was in conversations relating to that, I think it was last week, in Ottawa, and I'm actually in discussions on it again, later today. It's an ongoing process of discussion that we have.
I know that the Alberta government's Frozen, the carbon tax unified also return. Uh but what can you share in terms of your expectations of both? How to see our and and Industrial carbon tax will be through 2030 and Beyond.
look, we we, um,
um,
Maurice Choy: Quick follow-up then. Who underwrites that risk of federal policy changes? Is that your data center customer or is that you, or is that still under negotiation?
I'd be speculating. I I, I can tell you that. What like when we do our internal modeling, we have a number of scenarios that we run, um, you know, as we assess our Fleet and it's everything from the carbon price, staying at 95 to the carbon price continuing on its, you know, anticipated trajectory towards 2030. What I can tell you is our engagement, um, on the CEO with the federal government continues, um, you know, our team was in conversations relating to that. I think it was last week, uh, in Ottawa and I'm, and I'm actually in discussions on it again, uh, later today. So it's an ongoing, uh, process of discussion that we have
John Kousinioris: You know, that's something that, you know, we're working through with the customers. It's not something that I can give sort of specific details on that. I think that what we try to do in mapping out the opportunity that we have is to ensure that it's robust and candidly insulated from kind of regulatory uncertainty, to be honest, Maurice. Like, that's actually what we're trying to do. In part, when you hear the company talking about being more contracted and how we're, you know, diversifying, in part, it is driven to sort of insulate the company from any kind of regulatory shifts or repercussions that take place. That's actually the approach our team is taking with respect to the data center file. Candidly, it's a similar approach in Centralia, I would say.
Quick follow up then who who underwrites that risk uh of federal policy changes, is that your data is in a customer? Or would that be you or is that still on the negotiation?
So,
um,
you know, that's something that
You know, we're working through with the customers. It's not something that I can give sort of specific details on that. I think that what we try to do in mapping out
John Kousinioris: You know, Blaine and his team are working on that. It's the same thing there. It's a real focus for us.
Maurice Choy: Perfect. My congrats to John and Joel, to both of you, and hope to connect with you Investor Day.
How we're, you know, diversifying imparted is driven to sort of insulate, the company from any kind of regulatory shifts or repercussions that take place. And, and and that's actually the approach our team. Uh, is taking with respect to the data center file candidly. It's a similar approach since Australia. I would say, you know, Blaine and his team are working on that. It's, it's the same thing there it's, it's a real Focus for us.
John Kousinioris: Great. Thanks a lot, Maurice.
Perfect and my congrats to John Joe people of you for and hope to connect with them yesterday.
Operator: Thank you. Our next question coming from the line of John Mould with TD Cowen. Your line is now open.
Great. Thanks a lot, Maurice.
John Mould: Hi. Good morning, everybody. Maybe, at the risk of going too in the weeds here, just trying to read the tea leaves a little more on these AESO in-service dates. You know, the Keephills load IFCs, as reported by AESO, are 100 MW by January 2027 and then another 116 midyear. Like, how should investors view, you know, the timelines for your projects as provided, you know, by AESO's data? Are those timelines by which the load could actually be online or more of a timeline for those to be ready, you know, to connect to the grid from an AESO perspective? Just help us understand that aspect.
Our next question, coming from the line of John mouldwood City. Colin your line is now open.
Hi uh good morning everybody. Maybe uh at the risk of going to In The Weeds here just trying to leave read the tea leaves a little more on these uh ASO inservice States. So you know the key pills load ifc's is reported by ASO or 100 megawatts by January 2027 and then another 115 mid year like how should investors View?
You know, the timelines for your projects as provided. You know, by Asos data are are those timelines by which the load could actually be online or or more of a timeline?
John Kousinioris: Yeah, I mean, those dates are oriented to when we think that we would begin to, it's tied to when the connection to the grid would occur and when the load would start ramping up. They're not not linked, John, if you see what I'm saying. They're tied. We do see a gradual feathering in of load over time and, you know, we would see, you know, the work that we're looking at doing, I mentioned the substation earlier, it would be a complete facility to be able to kind of accommodate the full ramping up of the generation over time. Remember, the AESO requires the load, I think, to be in place, I think it's the first of December 2028, right?
For those to be ready, you know, to connect to the grid from an ASO perspective, just help us understand that aspect.
Yeah. I mean those those dates are um, oriented to when we think that we would begin to be get like, it's tied to when the connection to the grid would occur and when the load would start ramping up. So so they're not, uh, they're not not linked John. If you see what I'm saying? Um, they're tied. So we do see a gradual, um, Feathering in of, load over time. And, and, you know, we would see, you know, the work that we're looking at. Doing I mentioned the substation earlier. Um, it it would be a complete
Um, facility to be able to kind of accommodate the full ramping up of the generation over time.
John Kousinioris: That's what our current expectations are.
John Mould: Okay. just like to clarify your comments on phase II. You know, do you or your customer needs clarity on any aspects of phase II, even if it's just, like, early details on bring your own power or allocations in order to finalize an agreement, in order to be able to have, you know, line of sight on some of that aspirational, maybe it's not aspirational, just the potential multistage development that you referenced in your news release? You know, what timeline are you hoping for more, you know, clarity to the market on the key aspects of phase II?
And remember the, the the iso requires the, um, the load, I think to be in place, I think it's the first of December of 28, right? So so that's that's what our current, that's what our current expectations are.
Okay.
And then, just like to clarify your comments on on Phase 2, you know, do you or your customer?
need Clarity on any aspects of of phase 2, even if it's just like early
John Kousinioris: On the last point, it's pretty clear to us that the AESO and the government are aware of the fact that having certainty sooner rather than later would be, you know, positive. I can't give you a specific date on when we would get that, but I know that they're trying to move at an appropriate pace to be able to give us that level of clarity. I'd say the number one thing, at least from my own perspective, on phase 2, is just getting a better understanding of what that bringing incremental power is all about and what role our legacy facilities, where we do have capacity, can bring in that context. That's probably the number one thing just from a planning perspective for us going forward.
Details on, bring your own power or allocations in order to finalize an agreement. In order to be able to have, you know, line of sight on some of that aspirational. Maybe it's not aspirational, just the potential multi-stage development, uh, uh, that you referenced in in your news release. And you know what timeline, are you hoping for more, you know, Clarity uh, to the market on the kiosks of of phase 2?
John Kousinioris: We're working to develop optionality so we can deal with that whichever way it goes. That's something that we continue to work on, certainly we'd be able to provide more clarity on it at our Investor Day.
John Mould: Okay. Thanks for that. Maybe just one last one on just your hedging and, you know, midterm pricing. I'm wondering what kind of interest you're seeing from C&I customers around signing, you know, mid to long-term deals, just given the potential for, you know, the power pricing environment to normalize, you know, considerably over the next few years. You know, from your side, how you're balancing the potential for that increased appetite with, you know, your aspirations on supplying large loads.
On on the last Point. Um it's pretty clear to us that the ASO and the government are aware of the fact that um having certainty sooner rather than later would be, you know, positive. So I can't give you a specific date on when we would get that. But I know that they're they're trying to move at an appropriate Pace to be able to give us that level of of clarity. I'd say the number 1 thing, at least for my own perspective on Phase 2 is just getting a better understanding of what that bringing bringing incremental power is all about and what role our Legacy facilities, where we do have capacity can bring in that context. That's probably the number 1 thing, just from a planning perspective for us, uh, going forward. And, and we're working to develop optionality. So we can deal with that. Whichever way it goes. So that's, that's something that we continue to work on and and certainly we'd be able to provide more clarity on at our investor then.
okay, thanks for that and maybe just 1 last 1 on
Just your hedging and and you know midterm pricing, I'm wondering what kind of Interest you're seeing from cni customers around signing. You need to to long-term deals. Just given the potential for, you know, the power pricing environment to to normalize, you know, considerably.
John Kousinioris: Yeah. look, I might start and then get Blaine to kind of chime in, 'cause his it's his team that kind of oversees all of that work. I'd say Blaine, you can correct me, but I'd say it's been pretty steady. Like, I'd say the C&I demand that we have, and I think we're actually the largest C&I player now in the province of Alberta. The C&I book that we have from a renewal perspective in incremental business, it's kinda continues as business as usual. We continue to see our customers roll over. I think the average tenor Blaine is roughly in that 3-year kinda range.
Over the next few years and then, you know, from your side how you're balancing the potential for that increased appetite with you know your aspirations on on supplying large loaves.
John Kousinioris: We have seen some of the recontracting prices come down a little bit, I would say, Blaine, and Blaine will be able to provide more color as they rolled off, 'cause some of them were done when we had higher power prices, and it kind of takes time for that to roll off. We're seeing that. Those prices are still constructive from our perspective. You know, when you're looking at kind of 2028 or late 2027, 2028, which is when we would expect to see kind of a forward curve in the merchant market to tighten up, you know, I don't think that's impacting a lot of the 1-year, 2-year, even 3-year renewals, Blaine, right now in terms of moving the needle. I mean, I don't know what your perspectives are.
Actually the largest cni player now in the province of Alberta. Um, the cni, um, the book that we have from a renewal perspective, an incremental B business, it's kind of continues as business as usual, we continue to see um our customers roll over, I think the average tenor Lane is roughly in that 3 year uh kind of range. Um we have seen some of the recontracting prices come down a little bit. I would say Blaine and and Blaine will be able to provide more more color as they rolled off because some of them were done when we have higher power prices and it kind of takes time for that to roll off and and so we're seeing that. But those prices are still constructive uh, from our perspective. You know, when you're looking at kind of 2028 or late 2728, which is when we would expect to see.
Blain van Melle: John, that's exactly right. The business, the C&I business hasn't really faltered even through the lower prices that we have right now. The recontracting remains very robust. We continue to extract some good premiums over the financial market. I would expect as we move forward here and as some of this load does start to materialize, already reflected in the forward price, that contracting levels will ramp up a little bit as the customers start to need to plan for those power needs in later 2027, 2028, and 2029.
John Kousinioris: Yeah.
Kind of the forward curve in the merchants Market to tighten up. Um, you know, we're not, I don't think that's impacting. A lot of the 1 year, 2 year, even 3 year renewals Blaine right now in terms of moving the needle, I mean, I don't know what you're expecting, are John. That's, that's exactly right. The uh, the business and the cni business hasn't really bothered even through the lower prices that we have right now. The recontracting remains very robust. Um, we continue to extract some, some good premiums over the the, the financial market. And uh I'm going to expect as we move forward here and as some of this load does start to materialize already reflected in the forward price that that Contracting levels will ramp up a little bit as the customers start to need to plan for those power needs in later 2027 2028 2029. Yeah.
John Mould: Okay. Thank you very much for all that color. I will leave it there. Congratulations to both Joel and John on the announcements.
John Kousinioris: Thanks so much, John.
Blain van Melle: Thanks, John.
Okay. Uh, thank you very much for all that. Uh, color. I will leave it there. Uh, congratulations, uh, to both, uh, Joel and John on the announcements.
Operator: Thank you. Our next question coming from the line of Julien Dumoulin-Smith with Jefferies. Your line is now open.
Thanks so much John. Thanks John.
Julien Dumoulin-Smith: Hey, good morning, team. John, it's been a real pleasure over the years. Joel, congrats. It's been a pleasure to get to know you more recently, big and exciting shoes to fill here, given the data center opportunity. Back to the opportunity at hand here. Speaking of which, I just wanna understand a little bit more about the Greenlight situation and what got posted by AESO here. In as much as you all articulate clear confidence that there's still an ability to have that project in service by 2027 or 2028, what was the purpose of this AESO update that was posted? I just wanna understand what exactly transpired, if there doesn't seem to be necessarily a push in timeline from your perspective.
Hey, good morning team. Uh John it's been a real pleasure. Over the years, Joel, congrats. It's been a pleasure to get to know you more recently and big and exciting shoes to fill here given the data center opportunity.
um,
Julien Dumoulin-Smith: Just to clarify that, 'cause clearly the market's pretty perturbed out there about this timeline issue.
John Kousinioris: Yeah. Look, we know that this came out, when was it? Yesterday, when the updated date was, I think, identified from people. I mean, I think that's a question fundamentally for Connecticut, I think more than TransAlta. I can tell you, look, we've been in discussions with Connecticut and certainly have a view on what's going on from a governmental perspective. Based on those discussions, they're still driving for 2027, 2028. Not just them, but actually their customer too, is what our understanding is. I know that this is not a secret particularly.
But but back to the opportunity to hand here. I speaking of which um I just want to understand a little bit more about the green light situation and what got posted by ASO here um in as much as you all are articulate clear confidence that they're still in ability to have that project in service by 27 or 28. What was the purpose of this? ASO update that was posted I just want to understand what exactly is transpired. If there doesn't seem to be necessarily a push in timeline from your perspective just to clarify that because clearly the Market's pretty pretty perturbed out there about this timeline issue.
Yeah, um, and look, um, we know that this came out when was it yesterday? When, when the updated, um, uh, date was I think identified from people? I mean, I, I think that's a question fundamentally. Um, um, for for, for kinetochore. I think more than more than transalta. But I can tell you, look, we we've been in discussions, um, with kinetochore and, and
John Kousinioris: In the area where they're proposing to kind of set everything up, they're working to make sure that there are no restrictions from a transmission perspective. I think one of the things that they're looking at from a worst case scenario is if they need to do a bit of debottlenecking, what does that look like? I don't think that that's what they're driving at, and certainly not as, you know, the load would sort of be ramping in. Everything we have heard, based on our engagements, is we're still tracking and they're still tracking, more importantly, forget about us, to that 2027, 2028. Hopefully that gives you a little bit of color.
Julien Dumoulin-Smith: Got it. There is some focus on a potential for a bit of debottlenecking, to use your terms, but that doesn't seem to be too substantive despite the statement technically on the website. From what you understand on the practicalities of the transmission, seems like it's a fairly minor issue.
Certainly, uh, have a view on what's going on from, uh, governmental perspective. Um, based on those discussions, they're still driving for 2728, not just them, but actually, their customer too, is what our understanding is. I know that, um, they have a bit of a, in in the area where, um, and, and this is not a, a secret, particularly in the area where they're proposing to kind of set everything up. Um, they're they're working to make sure that there are no restrictions from a transmission perspective. And and I think 1 of the things that they're looking at from our worst case scenarios. If they needed to do a bit of debottlenecking, what does that look like? But I don't think that that's what they're driving at and certainly not as you know the load would sort of be be ramping in. So everything we have heard um based on our engagements is we're still tracking and they're still tracking more importantly, forget about us to that 2728. So hopefully that gives you a little bit of color.
John Kousinioris: Based on my understanding that 2030 date, you know, I don't know how to describe it. It's almost like a worst case kind of scenario in terms of where they are. It's sort of an outside kind of date. Look, the idea through phase one is that you would have had this thing done by the end of 2028. It's pretty clear that they've had some discussions to make sure that they've had, you know, full optionality around their opportunity. Candidly, we would be doing exactly the same thing. I think I can tell you from our company's perspective, we continue to operate and envision things being business as usual.
Got it. So there is some there is some focus on a potential for a bit of devotion that can easier terms but that doesn't seem to be too substantive despite the the the statement technically on the website from what you understand on the practicalities of the transmission seems like it's a fairly minor issue.
Based on my understanding that that 2030 date, you know, I don't know how to describe it. It was almost like a worst case kind of scenario in terms of where they are. It's it's sort of an outside uh kind of date and and and look um
Julien Dumoulin-Smith: Excellent. All right. Thank you for the clarification there. I appreciate it. Just a quick follow-up there, just on Centralia. I know that's been a bit of an ongoing question here, but you talk about end of the year here. What should we expect specifically by the end of the year in terms of the scope of that opportunity and what are you tracking as it stands here today for what that should look like here, both customer scope of conversion, et cetera?
The idea through Phase 1 is that you would have had this thing done by the end of 2028. So like it's pretty clear that they've had some discussions to make sure that they've had, you know, full optionality around their opportunity, and kindly be would be doing exactly the same thing. So I think I can tell you that from our company's perspective, we continue to operate and envision things being business as usual.
John Kousinioris: We would expect by the end of the year, based on the work that we've done and how things are progressing with our teams. I can tell you, our customer has been outstanding to work with. They've been a great partner to us in envisioning the opportunity we have for us to provide the reliability services to them. We would see a definitive agreement. That definitive agreement would be an omnibus agreement that would deal with the work that we would need to convert the facility from coal to natural gas. It would set out the revenue streams, you know, revenue tenor. It doesn't contemplate that more agreements would be required. It would be the agreement.
I appreciate it and just a quick follow-up there. Just on centria. I know that's been a little bit of an ongoing question here, but you talk about the end of the year here. What should we expect specifically by the end of the year in terms of the scope of that opportunity and and what what are you tracking as it? As far as it stands here today for what that should look like here. Both customer scope of of of conversion Etc.
John Kousinioris: We have done a reasonable amount of work, you know, engineering, costing, that I do expect we'd be able to share with the market on kind of what the scope of the work would be around Centralia in order to be able to get the work that we need done there, which is not just the coal to gas conversion, but also a little bit of life extension, you know, given that we've harvested the facility a little bit and even some controls work that we need to be able to do. It would be, I don't know. Blaine and his team are working on this one as well, a comprehensive arrangement, Blaine, I would say. I don't know if you want to add anything.
We, um, we would expect we would, we would expect, uh, by the end of the year based on the work that we've done and how, um, things are progressing with our teams. And, and I can tell you, our customer has been outstanding to work with. They've been, they've been, um, a great partner to us in in, um, envisioning the opportunity we have for us to provide the reliability services to them. So, we would see a definitive agreement that definitive agreement would be an Omnibus, um, agreement that would deal with the work that we would need to convert the facility from coal to natural gas. It would set out, um, the revenue streams that we would, you know, Revenue tenor. It's, it's a it, it doesn't contemplate that more agreements would be required. It would be the agreement. Um, and we have done, uh, a reasonable amount of work, you know, engineering costing, uh, that I do expect. We'd be able to share, uh, with the market on kind of what what the scope of the work would be around centria. Um, in order to be able to get
Blain van Melle: No, I think that's right, John. Like you said, we hope here, in the next 6 weeks leading up to Christmas, that we'll have something to announce.
John Kousinioris: Be able to announce.
Blain van Melle: Yeah. It would be like a true definitive agreement that spells out all the work that needs to happen over the next year as we approach bringing that facility back online on natural gas.
John Kousinioris: That's right.
Julien Dumoulin-Smith: Excellent, guys. Appreciate the time. Again, congrats to both of you. All the best.
The work that we need done there, which is not just the cult of gas conversion, but also a little bit of Life Extension. Um, you know, given that we've harvested the facility a little bit and, and even some controls work that we need to be able to do. So it, it, it would be, um, I don't know. I blame in a seemer working on this 1 as well. A comprehensive Arrangement plan, I would say, I don't know if you want to add anything. No, I think that's right. John, and like you said, we hope here in the next 6 weeks, we'd have to Christmas that we'll have something to, to, to announce people to announce. And it would be um, like a true definitive agreement that spells out all the work that needs to happen over the next year as we approach. Uh as we approach bringing that facility back online on that desk. That's right.
John Kousinioris: Thanks, Julien.
Blain van Melle: Thanks, Julien.
Operator: Thank you. Our next question coming from the line of Patrick Kenny with National Bank Financial. Your line is now open.
Excellent, guys. Appreciate the time. And again, congrats to both of you all the best and and thanks Julian. Thanks Julian.
Thank you.
Patrick Kenny: Thank you. Good morning, everyone. Yeah, congrats, John and Joel. Just maybe back on the rezoning at Sundance and Keephills, just given the close proximity of the two sites. Wondering if you could just speak to, you know, how you might be thinking about integrating these two assets, for a larger scale customer, just in terms of, you know, sharing generation, transmission, even fiber and water licenses. Maybe how that might compare to your Sheerness site or perhaps give a competitive advantage over some other phase 2 proponents.
Our next question, coming from the line of Patrick Kenney with National Bank Financial you, let us know when
Thank you. Good morning everyone. And uh, yeah, congrats Jon and Joel. Um, just maybe back on the rezoning at Sundance. And keep Hills just giving the uh, the close proximity of the 2 sites wondering. If you could just speak to, you know, how you might be thinking about integrating these 2 assets um for a larger scale customer just in terms of
You know sharing generation, transmission, even fiber and water licenses.
and maybe how that might compare to your Cenis site or perhaps give a competitive advantage over some others.
John Kousinioris: I would say thank you, Patrick, and good morning. You know, what we did is 3,000 acres is a significant amount of land and you know this, our mine is quite comprehensive up there, and it actually ranges on both sides of the highway. Keephills is on the south side of the highway, which goes east, west there. The Sundance facility is on the north side of the highway. What we did is we took kind of a comprehensive approach from a rezoning perspective to be able to, you know, be able to flex up from a scale perspective. Our initial view is that the site, from a locational perspective, would be proximate to our Keephills facility.
Other phase 2 proponents.
Yeah, I would say thank you Patrick and, uh, good morning. Um, you know what, we, what we did is, um, so 3,00 acres is a significant amount of land. And, and, you know this, um, our mind is quite comprehensive up there, and it, it actually ranges on both sides of the highway and, and keep Hills is on the south side of the highway, which goes east west there. The Sundance facility is on the north side of the highway. And so what we did is we we took kind of a, a comprehensive approach from a, a rezoning perspective to be able to
John Kousinioris: In fact, I'm just going through my memory, located immediately south of our Keephills facility, and that would be where we would be looking to build out the data center and the substation to deal with that. I think over time, as we look to optionality and opportunity around Sundance, there is opportunity for us to do that as well. Right now it's more around Keephills. We've got the water access that we need. We've got existing infrastructure that we need. The fiber is close at hand. We're not, we're not really seeing any impediments, but getting the rezoning done was critically important.
You know, be able to flex up from a scale perspective. Our initial view is that the site from a location of perspective would be proximate to um our key pills facility. Um in fact I'm just going through my memory located south of our immediately, south of our key pills uh facility and that would be. Um where would be, we would be looking to build out, um, the data center and the substation to deal with that. I think over time as we look to optionality and opportunity around. Sundance, uh, there is opportunity for us to do that as well. But right now, it's more around Keith Hills. We've got the water, uh, access that we need. We've got existing infrastructure that we need the fiber
John Kousinioris: As I mentioned earlier, it was a really great process, a lot of engagement from our side and great receptivity from the folks in Parkland County, which we're grateful to as they kind of see the vision of what this can provide for us.
Patrick Kenny: Okay. I guess, you know, with all these irons in the fire and, Joel, I'm sure you know, at Investor Day, you'll be outlining a funding plan. you know, assuming the Centralia economics on the conversion come in as expected, perhaps you could talk to how the returns might rank here just in terms of, you know, Centralia versus supporting phase II load growth in Alberta, or even compared to M&A opportunities that you might be looking down in the US.
Is closed, uh, at hand. So we're not we're not really seeing any impediments but getting the resoning done was was critically important. And as I mentioned earlier, um, was a really great process. Uh, a lot of Engagement from our side and um, and great receptivity from the folks in Parkland County which were were grateful to. As they as they kind of see the vision of what this can provide this
Um, perhaps you could talk about how the returns might rank here. Just in terms of, um, Centria versus supporting Phase 2 load growth in Alberta.
Joel Hunter: Yeah. I would say, Pat, when we look at Centralia, again, you know, typical with any kind of legacy asset that you can extend the life of with, you know, I would say capital spending that's a fraction of what it would cost for a new build, that it would offer, you know, attractive risk-adjusted returns for us. This is where we'll provide, you know, more detail to you and the investor community at our upcoming Investor Day once we have definitive agreements in place, so we can talk about what that would look like from a, as John mentioned, a cost perspective, what kind of the build multiple would be for that. You know, again, consistent with our strategy, you know, this would be really attractive risk-adjusted returns for us underpinned by, you know, long-term contract.
Um, or even compared to m&a opportunities that you might be looking down uh, in the US.
Joel Hunter: This is kind of how we want to, you know, position ourselves going forward to increase, sorry, the contractiveness of our portfolio. Similarly, with, you know, any opportunities that we see in phase II, these would be underpinned again by long-term contracts, with hopefully a very attractive risk-adjusted rates of return.
John Kousinioris: Maybe on the M&A side, Joel, I think we've seen a bit of a, not compression, I can't think of the right word, but kind of a realignment. I mean, maybe talk a little bit about.
Yeah, I would say Pat when we look at centria again you know a typical with any kind of Legacy asset that you can extend the life of with, uh, you know, I would say Capital spending that's approximately what it would cost for new build that it would offer, you know, attractive risk, adjusted returns for us, but this is where we'll provide, you know, more detail to you and the investor community at our upcoming investor day. Once we have definitive agreements in place so we can talk about what that would look like from a is, John mentioned the cost perspective. Um, what kind of the build multiple would be for that? But, you know, again, consistent with our strategy, you know, this would be, uh, really attractive risk adjusted returns for us under pin by, you know, long-term contract. This is kind of how we want to, you know, position ourselves going forward, the Inc, increase increase, increase story. They contracted us of our portfolio and similarly with, um, you know, any opportunities that we see in Phase 2. Um, these would be underpin again by long-term contracts, uh, with, uh, I hopefully a very attractive risk adjustment rate to return.
and and maybe on the m&a side Joel, I think we've seen a bit of a, um,
Joel Hunter: Yeah
John Kousinioris: the renewable and gas kind of
Joel Hunter: Yeah
John Kousinioris: opportunities that we're looking at.
Joel Hunter: Yeah
John Kousinioris: We haven't talked about it much on the call, but we are actively looking at a number of acquisition opportunities.
Joel Hunter: Good, yeah, good point, John. There are a lot of opportunities out there, Pat, that we're looking at, both on the renewable side and on the thermal side. I would say that we're seeing really a convergence in multiples, if you will, where on thermal generation, depending on the location, depending on the contract profile, et cetera, that multiples are converging up toward the, probably the lower end of where we are seeing for renewables. Again, consistent with our strategy, remain technology agnostic, remain focused on our three geographies for M&A opportunities, but it is very robust out there right now. For us, it's just remaining really disciplined in how we allocate our capital here going forward.
John Kousinioris: Yeah. Very, very return-focused, I would say.
Joel Hunter: Yeah.
John Kousinioris: Yeah.
Patrick Kenny: Okay. That's great. I appreciate the color and, yeah, look forward to more details in the new year. Thanks.
Not compression. I can't think of the right word, but kind of a realignment, I mean, maybe talk a little bit about the renewable and gas kind of opportunities are looking at because we haven't talked about it much on the call but we are actively looking at a number of acquisition opportunities. Yeah, there's you could yeah good point John there are a lot of opportunities out there Pat um that we're looking at um both on the renewable side and on the thermal side I would say that we're seeing really a convergence in in in multiples if you will where on thermal generation depending on the location depending on the contract profile Etc that multiples are converging up uh toward the probably the lower end of where we are seeing for Renewables. Uh so again consistent with our strategy remain technology, agnostic remain focused in our 3 geographies for uh m&a opportunities. But it is very robust out there right now. Uh for us it's just remaining really disciplined in how we allocate our Capital here going forward. Yeah. Very, very return focused. I would say yeah. Yeah.
Joel Hunter: Thanks, Pat.
John Kousinioris: Thanks, Pat.
Okay, that's great. I appreciate the color and, uh, yeah, I look forward to more details in the new year. Thanks.
Operator: Thank you. There are no further questions in the queue at this time. I would now like to turn the call back over to Stephanie for any closing remarks.
Thanks Matt. Thanks bye.
Stephanie Paris: Thank you, everyone. That concludes our call for today. If you have any further questions, please contact the TransAlta Investor Relations team.
Thank you. And there are no further questions. Thank you at this time. I would now like to turn the call back over to Stephanie for any closing remarks.
Thank you, everyone. That concludes our call for today. If you have any further questions, please contact the transalta, investor relations team.
Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.
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