You are polishing the final guide for TRANSALTA CORP before sharing it with retail investors.

        CURRENT GUIDE:
        TransAlta Corp.'s latest Annual Report (Form 40-F) for the fiscal year ended December 31, 2025, offers a comprehensive look at its performance and strategic direction. Filed with the SEC on February 26, 2026, this summary distills critical insights from the Management Discussion and Analysis (MD&A) section, providing investors with a clear understanding of the company's operations, financial health, and future prospects.

TRANSALTA CORP Annual Report - Fiscal Year 2025 Review

Company Overview and Strategic Focus (Business Overview)

TransAlta stands as a leading Canadian power generator, boasting a diversified portfolio of hydro, wind, solar, battery storage, and thermal assets across Canada, the US, and Western Australia. The company is a major producer of wind and thermal power in Canada and Alberta's largest hydroelectric power producer. TransAlta strategically balances long-term contracted assets, which provide stable revenue, with merchant facilities that sell power into open markets. Its Energy Marketing segment actively manages power sales, natural gas supplies, and energy trading to optimize returns. The company's strategy centers on decarbonization, expanding its renewable energy footprint, and enhancing asset flexibility.

TransAlta shares trade on the New York Stock Exchange under the ticker symbol TAC. All financial figures are reported in Canadian dollars (CAD) unless otherwise specified and prepared under International Financial Reporting Standards (IFRS). As of December 31, 2025, approximately 296.7 million common shares were outstanding.

Financial Integrity and Controls

TransAlta prioritizes robust financial governance to ensure reliable and accurate reporting:

• Effective Internal Controls: As of December 31, 2025, both the CEO and CFO affirmed the effectiveness of the company's disclosure controls and procedures. Management also concluded that internal controls over financial reporting were effective, a finding independently confirmed by their auditors, Ernst & Young. This provides confidence in the integrity of TransAlta's financial information.
• Auditor Oversight: In 2025, TransAlta paid Ernst & Young $5.1 million CAD for audit services, a slight decrease from $5.4 million CAD in 2024. Core audit fees marginally increased to $4.70 million from $4.64 million, but a significant reduction in tax-related services (from $356,391 to $6,200) and other non-audit fees highlights a focused approach to external audit engagement.
• Ethical Governance: The company upholds strict codes of conduct for all personnel, reporting no exceptions in 2025, which reinforces a strong ethical culture.
• Expert Financial Oversight: The Audit, Finance and Risk Committee (AFRC) includes experienced professionals, with four designated "audit committee financial experts," ensuring rigorous oversight of financial reporting and risk management.

Capital Allocation and Shareholder Returns

TransAlta's capital allocation strategy balances growth investments with direct returns to shareholders:

• Share Buyback Program (NCIB): In 2025, TransAlta renewed its Normal Course Issuer Bid (NCIB), repurchasing and cancelling approximately 1.9 million common shares at an average price of $12.42 per share, totaling $24 million CAD. This action reduces outstanding shares, potentially enhancing per-share value for remaining investors.
• Dividend Policy: The company maintained its stable quarterly dividend throughout 2025, demonstrating its commitment to consistent shareholder returns, supported by predictable cash flows from its contracted assets.
• Investment in Growth: TransAlta directed a significant portion of capital towards strategic growth projects, including the Centralia conversion, data center initiatives, and renewable energy investments, aiming to expand capacity and decarbonize its portfolio.

Future Outlook (Guidance, Strategy)

TransAlta's forward-looking strategy emphasizes decarbonization, expanding its clean energy portfolio, and seizing new market opportunities. These plans depend on various assumptions, including stable regulatory environments, power prices, and economic conditions.

Key Growth Opportunities:

• Data Centre Power Solutions: TransAlta made a significant strategic pivot by partnering with Canada Pension Plan Investments and Brookfield to develop data centers at its Keephills site in Alberta. As the exclusive site and power provider, TransAlta begins with a long-term power agreement for approximately 230 megawatts (MW), with substantial potential to scale up to 1 gigawatt (GW). This initiative represents a major new revenue stream and diversifies the company into high-growth sectors.
• Ontario Market Expansion: The early 2026 acquisition of Far North Power for $95 million CAD added 310 MW of natural gas-fired capacity, boosting TransAlta's total Ontario capacity to 1,384 MW. This acquisition strengthens its position in a critical market and enhances portfolio flexibility.
• Renewable Energy Development: A strategic investment in Nova Clean Energy in early 2025 highlights TransAlta's commitment to accelerating its renewable energy development pipeline, aligning with its decarbonization goals.

Asset Transformation and Optimization:

• Centralia Coal-to-Gas Conversion: Converting Centralia Unit 2 in the US from coal to natural gas is a cornerstone of TransAlta's decarbonization efforts. This US$600 million project, backed by a long-term agreement with Puget Sound Energy (PSE), targets natural gas operation by late-2028 and will extend its operational life until 2044, significantly reducing emissions.
• Strategic Mothballing: To optimize operations amid market conditions, TransAlta temporarily took offline (mothballed) Sundance Unit 6 in April 2025 and Sheerness Unit 1 in April 2026. This move provides operational flexibility, allowing these coal units to be reactivated if market conditions improve or new contracts are secured, while managing current costs and reducing excess capacity.
• Portfolio Streamlining: In 2025, the company divested its Poplar Hill facility and its interest in Rainbow Lake, streamlining its asset base and redeploying capital towards strategic growth areas.

Revenue Certainty and Contract Management:

• Long-Term Wind Contracts: Successful renegotiation of contracts for three Ontario wind facilities (Melancthon 1 & 2, and Wolfe Island) extends revenue certainty for these assets until 2031 and 2034, respectively. These agreements provide stable, predictable cash flows, underpinning financial stability.

Leadership Transition:

• Planned CEO Succession: John Kousinioris will retire as CEO on April 30, 2026. Joel Hunter, current Executive Vice President, Finance and Chief Financial Officer, will assume the role. Mr. Kousinioris will serve as an advisor for a transitional period, ensuring a smooth leadership handover.

Competitive Position

TransAlta operates in a competitive and evolving energy market, leveraging its strengths to maintain a leading position:

• Diversified Asset Portfolio: Its broad mix of hydro, wind, solar, battery storage, and thermal assets across Canada, the US, and Western Australia provides resilience against market fluctuations and regulatory changes, setting it apart from less diversified peers.
• Market Leadership: TransAlta is a major producer of wind and thermal power in Canada and Alberta's largest hydroelectric power producer, demonstrating significant market presence and operational scale in key regions.
• Strategic Flexibility: The company strategically balances long-term contracted assets, which offer stable, predictable cash flows, with merchant facilities that capitalize on favorable open market conditions. This dual approach provides both stability and upside potential.
• Decarbonization and Renewable Growth: Its strategic focus on decarbonization and aggressive growth in renewable energy positions TransAlta favorably in the global shift towards cleaner energy, attracting environmentally conscious investors and aligning with future energy policies.
• Energy Marketing Expertise: The Energy Marketing segment actively manages power sales, natural gas supplies, and energy trading, optimizing returns and providing a competitive edge in managing market risks and opportunities.
• Operational Excellence: TransAlta's focus on enhancing asset flexibility and operational efficiency helps it compete effectively on cost and reliability.

Despite intense competition and technological disruption, TransAlta's strategic investments in clean energy, asset optimization, and market diversification aim to strengthen its long-term competitive standing.

Key Risk Factors

Investing in TransAlta, like any company, involves inherent risks that could impact its financial performance and strategic execution. Key risks include:

• Market and Commodity Price Volatility: Fluctuations in electricity and natural gas prices, and overall supply and demand dynamics in energy markets.
• Regulatory and Policy Changes: Evolving government policies, particularly concerning carbon pricing, renewable energy incentives, and environmental regulations across Canada, the US, and Australia. This also includes potential environmental liabilities and challenges in achieving ESG targets.
• Operational and Project Execution Risks: Unplanned outages, equipment failures, efficiency reductions, or disruptions in transmission/distribution. Risks also arise from developing new projects, including delays, cost overruns, technological challenges, and securing necessary capital.
• Contractual and Counterparty Risks: Challenges in securing new power purchase agreements at favorable terms upon contract expiry, and the risk that counterparties may not fulfill their obligations.
• Economic and Financial Risks: Broader economic downturns, rising interest rates, inflation, foreign exchange rate fluctuations, and access to capital. This also covers risks from long-term gas transportation commitments that may not be fully utilized.
• Climate and Environmental Risks: Increased frequency and severity of extreme weather events, and the broader impacts of climate change on operations and demand.
• Cybersecurity and IT Risks: Threats to information technology systems, data integrity, and internal controls from cyberattacks.
• Supply Chain and Labor Risks: Disruptions in material availability, increased costs, and challenges in attracting or retaining skilled labor, including potential labor relations issues.
• Competition and Technological Disruption: Intense competition within the power generation industry and the emergence of new technologies affecting electricity generation, demand, distribution, or storage.
• Asset Valuation and Impairment: The risk of asset writedowns or impairments if their carrying value exceeds their recoverable amount.
• Legal, Regulatory, and Reputational Risks: Exposure to legal disputes, regulatory proceedings, and events that could damage the company's reputation.
• Key Personnel Reliance: The potential impact of losing key executives or employees on strategic execution and operations.

Investors should review the comprehensive "Risk Management" section in the full 40-F report for a detailed understanding of these factors.