TransAlta Corp. Q3 FY2025 earnings call

TransAlta delivered solid performance in the third quarter with adjusted EBITDA of $238 million, free cash flow of $105 million, and average fleet availability of 92.7%. The Alberta portfolio hedging strategy and active asset optimization generated realized prices well above spot prices. The company extended $2.1 billion in committed credit facilities, completed divestitures of Poplar Hill and Rainbow Lake facilities. Updates on Centralia project: engaged in commercial negotiations and expect to execute a definitive agreement before year-end. Progressed Alberta data center strategy with demand transmission service contract and Parkland County rezoning approval. AESO's REM design and Alberta TIER regulations updates were discussed, with minimal impact on business. John Kousinioris announced retirement effective April 30, 2026, supporting Joel Hunter as successor.

Hydro segment adjusted EBITDA decreased to $73 million compared to $89 million in 2024 due to lower spot power prices and ancillary services revenue. Wind and solar segment produced adjusted EBITDA of $45 million, in line with the third quarter of 2024. Gas segment adjusted EBITDA decreased to $110 million from $141 million in 2024, mostly due to lower realized power prices in Alberta and higher carbon pricing, partially offset by Heartland assets. Energy transition segment delivered adjusted EBITDA of $28 million, a $6 million decrease year-over-year. Energy marketing adjusted EBITDA decreased by $25 million to $17 million. Corporate adjusted EBITDA was in line with last year at $35 million.

TransAlta remains confident in achieving 2025 guidance range, tracking to the lower end of adjusted EBITDA range and midpoint of free cash flow. Full year spot price expected to average $46 per megawatt hour. Sensitivity of $1 per megawatt hour to have a $2 million impact on adjusted EBITDA for the balance of the year. Will provide 2026 outlook update on fourth quarter 2025 conference call.

Regulatory changes such as TIER regulations and federal policy changes affecting CER and carbon tax. Uncertainty around carbon pricing trajectory and federal policy impacts on projects like data centers and Centralia.

Q: Discussions on data center customers in Alberta, confidence in Greenlight project in 2027-2028.

A: John Kousinioris states they remain confident, work takes time, exclusive approach with customers, Phase 2 process is critical.

Q: Time line from MOU to binding agreement for data center, progress on coal-to-gas conversion.

A: John Kousinioris says they would move quickly, discussions with multiple parties, progress on coal-to-gas conversion with customer.

Q: Delay in Investor Day, expectations on CER and carbon tax.

A: John Kousinioris explains delay to ensure full clarity, ongoing discussions with federal government on CER, carbon tax scenarios modeled internally.

Q: Federal policy changes, CER and industrial carbon tax clarity.

A: John Kousinioris says ongoing discussions with federal government, internal modeling with various carbon price scenarios.

Q: Greenlight time line update, Centralia definitive agreement.

A: John Kousinioris states Greenlight still on track for 2027-2028, expect Centralia definitive agreement by year-end with detailed scope.

Q: Integration of Keephills and Sundance sites for data center, M&A opportunities.

A: John Kousinioris talks about rezoning and infrastructure, Joel Hunter mentions attractive risk-adjusted returns from Centralia and Phase 2 opportunities, active M&A on renewables and thermal.