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 transalta Corporation third quarter, 2025 conference call
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After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 1 on your top 1, key pad,
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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 office. This is 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.
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 mdna and Incorporated in full for the purposes of today's call.
All amounts reference are in Canadian dollars, unless otherwise noted.
The non-ifrs terminology used, including adjusted ibida and free cash flow are reconciled in the mdna for your reference.
On today's call John and Joel will provide an overview of transits 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 Q3 2025 TransAlta Corp Earnings 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 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.
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.
During the quarter, we delivered adjusted even do of 238 million free cash flow of 105 million or 35 cents per share, an average Fleet availability of 92.7%.
And expectations for the fourth quarter, we remain confident in achieving our 2025 guidance range. We're tracking to the lower end of the adjusted e 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
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.
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 30th 2029 and our bilateral, credit facilities of 240, million were extended by 1 year to June 3020 27th.
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.
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. 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.
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 ASO'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 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.
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 province.
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 contemplates, an increase in the provincial price cap to 1,500 per megawatt hour. And eventually to 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 lines.
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.
We believe that the changes to the market provided by the REM couple 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 that 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 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. The fleet has 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.
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.
During the quarter, we generated 238 million of adjusted ibida, which was 77 million lower than the third quarter of 2024 due to lower Alberta and mid-sea power prices, subdued Market volatility and packing, energy marketing, and trading results, and lower contract revenue from our centrally 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.
The wind and solar segment produced an adjusted EBITDA of $45 million, in line with the third quarter of 2024.
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, A6 million dollar, decrease year-over-year, due to lower market prices, our offset, by lower purchase power costs and a higher volume of favorable hedge positions settled.
Energy marketing adjusted Eva 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 adjusted, Evo was in line with last year at 35 million
As a reminder, our adjusted EV bet 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 ibida 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 third quarter spot price average 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 hedging strategies to enhance our portfolio margins and mitigate the impact of lower Merchant power prices. We realized the benefit from approximately 2500 gigawatt hours of Hedges and an average price of 666 per megawatt hour representing a 29% premium to the average spot price
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 $88 per megawatt hour.
We were also able to deliver additional and Sir 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.
Do the optimization of ensuring services to the gas segment from Hydro during planned outages, the gas segment realized an average and slow rate 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 $103 compared to $90 per megawatt hour in the same period last year.
For the balance of the year. We have approximately 1900 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,
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 is increased. Our hedge position to approximately 7,800 gigawatt hours at an average price of 66 per megawatt hour, which means well above current forward pricing levels.
Based on our year-to-date results and balance of your expectations. We remain confident in our 2025 Outlook. We are currently tracking towards the lower end of our adjusted. Eva range largely due to the Alberta spot power price tracking to the lower. End of the Outlook range of 40 to 60 dollars per megawatt hour.
Currently, we expect the full year spot price to average $46 per megawatt hour.
In terms of sensitivity to the Alberta spot power price, $1, per megawatt hour is expected to have a 2A 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 adjusted, but it impacts our partially offset by lower expected, current taxes and lower expected. Distributions to non-controlling interests.
Consistent with the past year, we will provide a full wholesome 2026 Outlook update on our fourth quarter, 2025 conference call in February. I will now turn the call back over to John
Thank you, Joel. We remain focused on the following priorities for 2025.
Ators 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 Sentria.
Fourth successfully 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.
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 at Cross 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 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.
finally, and most importantly, we have our people
Our people are our greatest assets 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.
Thank you. John Livia, 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 try a question, simply press star111. Again, please stand by, while we come Pollock.
not first question, coming from the line of Robert Hulk with Scotia Bank kilan is now open
Uh, morning everyone and congrats to, uh, John Joel on the announcements.
Thanks Robert. Maybe
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 of the color of what is driving this as well as has your confidence in securing a project increased or decreased since the Q2 call?
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, 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.
I 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?
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 color.
Yep, thank you.
Thank you. Our next question, coming from the line of March sharply with CIBC your line is now open.
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 to permit that to, to kind of make the definitive documentation of it easier to proceed. But, but I think it's going to happen in, uh, like I think it'll actually be quicker than certainly, it's taken to get the mou
Is what I would say.
Okay, and then you continue to use the word counterparties and the plural. Um, can you elaborate just kind of what that means is, is that on the funding side for the customer is, is it a sort of 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 timelines to Regional use?
Yeah, we do. We do we are working with um, uh uh.
More than 1 customer where 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 isn't a lot more that I can give you Mark. I wish I could. But I but but I can't
Okay, and then, on the last call, you indicated that you took the view that you're underutilized, quote, "gas conversion units" sort of are akin to incremental generations. Um, when you think about Phase 2 and you're trying to have those conversations with the ASO and the government, how have those progressed? Are you getting traction with that concept?
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.
This is 1. Um, we don't think that collocation is necessary. We think that it would be better, you know. There isn't 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 need for data centers coming into the jurisdiction. Um,
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, 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 the customers,
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 megawatts come in or or potentially as quote unquote permanent Supply in the eyes of phase 2 process.
when we look at, you know,
T pills too. T pills 3. Um the sheerness 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.
Understood. Okay, thanks everyone.
Thank you.
Thank you.
Our next question, coming from the lineup. 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.
How how application process or is that has that changed to as time has progressed?
No. Um, been we we said the date. Um, expecting that, you know, we would have had
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.
Okay, got it. Um, and uh, your comments on the, the connection and Q and that updates. I mean those those in service dates you mentioned are always kind and conservative, and they move around.
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 somebody developments.
Yeah. No I think I think we feel pretty comfortable about where we are um because what what what we're looking remember is 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
You know, I can tell you that Trends also today isn't concerned about the, the kind of timing perspective from our data center opportunity.
Okay, and just met just a step for me. If I met the the 3
Acres. I mean I think that's you know, massive amount of megawatts, you can.
Theoretically, add on to that that acreage.
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.
Okay.
Thank you and I think that's it, above you.
Go, thanks, Ben. Thanks Ben.
Thank you.
Our next question, coming from the line of Morris Joy with RBC Capital Markets, you let us know, open.
Thank you and good morning everyone. Um,
You touched on planning with your customers for phases Beyond 230 megawatts. And you also spoke about Asos face to being critically important,
Now, and 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?
Yeah, I
look, I
it's it's difficult to be speculating. 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,
Issues that could arise from a 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 here in the province of Alberta; it is a priority. Um, you know, our team has now very senior people in the government, and there's nothing I have heard that would suggest that that isn't the case. So there isn't, you know, there isn't particularly a 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?
That you need ECS. Absolutely necessary for clarity for this mou and definitive agreement to to go forward.
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 C 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,
I know that the Alberta government's Frozen, the carbon tax. I mean, if I also returned 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,
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 C 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
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
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.
Perfect. And my congrats to John Joe people who have you for and hope to connect with the investing.
Great. Thanks a lot, Maurice.
Our next question, coming from the line of John mold with CD. 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 read the tea leaves a little more on these uh, ASO inservice dates. 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?
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.
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 his 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
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?
More, you know, Clarity, uh, to the market on the kiosks of of phase 2.
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 that
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, you need to to long-term deals. Just given the potential for, you know, the power pricing environment to, to normalize, you know, considerably 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.
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 had 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 202728, which is when we would expect to see 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 would 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 and 2029. Yeah.
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.
Thanks so much John. Thanks John.
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,
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 there's still an 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
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 the bottlenecking, 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.
Got it. So there is some focus on a potential for a bit of devotion that can be expressed in easier terms, but that doesn't seem to be too substantive. Despite this statement technically on the website, from what you understand about the practicalities of the transmission, it 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
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 uh around their opportunity and kindly be would be doing exactly the same thing. So, so like I think I can tell you for our company's perspective, we continue to operate and and and envision things being business, as usual.
Kennedy 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.
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, visioning 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
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.
Excellent, guys. I appreciate the time. And again, congrats to both of you. All the best, and thanks, Julian. Thanks, Julian.
Thank you.
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 uh even fiber and water licenses.
And maybe how that might compare to your Cenis site, or perhaps give a competitive advantage over some others.
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
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
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
Or even compared to m&a opportunities, that you might be looking down in the US.
Yeah, I would say Pat when we look at centria again you know, 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 a fraction of 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 a 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 underpinned. By, you know, long-term contract. This is kind of how we want it. You know, position ourselves going forward. The in increased 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 adjusted rate to return.
and and maybe on the m&a side Joel, I think we've seen a bit of a, um,
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 these 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 a good. 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 uh we'd 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.
Okay, that's great. I appreciate the color and, uh, yeah, I look forward to more details in the new year. Thanks.
Thanks Pat. Thank you, Pat.
Thank you. There are no further questions 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.
conference call, thank you for participating and you may now disconnect