Hello, this is the Chorus conference operator. Welcome to the TransAlta Corporation 2013 First Quarter Results Conference Call. As a reminder, all participants are in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. (Operator Instructions) At this time, I’d like to turn the conference over to Brent Ward, Director, Corporate Finance and Investor Relations. Please go ahead.

Thank you, and good afternoon, everyone. I’m Brent Ward, Director of Corporate Finance and Investor Relations. Thank you for joining us for TransAlta’s 2013 First Quarter Conference Call. With me today, are Dawn Farrell, President and Chief Executive Officer, Brett Gellner, Chief Financial Officer, John Kousinioris, Chief Legal and Compliance Officer, and Todd Stack, Vice President, and Treasurer. Earlier this morning, we released our first quarter results for your review. For those not on our webcast, the results are posted on our website under the Investors section, we will refer to the presentation during this call. All information provided during this conference call is subject to the forward-looking qualification, which is detailed in today’s news release and incorporated in full for the purposes of today’s call. The amounts referenced are in Canadian currency, unless otherwise stated. The non-IFRS terminology used, including comparable earnings, comparable EBITDA, comparable growth margin, funds from operations and free cash flow is reconciled in the MD&A. Per share figures for the first quarter 2013 are based on an average of 258 million shares outstanding compared to 225 million shares in the first quarter of 2012. Please note, the financial information has been rounded to the nearest whole number. On today’s call, Dawn, and Brett will provide an overview of our operational and financial performance for the first quarter, provide an update on recent events and activities, and before going to the Q&A, Dawn will provide commentary on our outlook for 2013. With that, let me turn the call over to Dawn.

Thanks, Brent, and welcome everyone. I am going to start with some highlights from the quarter. Overall I'm pleased with the quarter on a number of fronts. We were able to deliver comparable gross margin and EBITDA above the same period in 2012 despite the hedges rolling off at our Centralia plant. This is due to increased cash flow from new growth, lower operating MD&A costs and higher production at Alberta Coal and Centralia. As Brett will show later, all of our business units continue to perform well and contribute to overall gross margins. Our strategy of owning and operating a diversified fleet is paying off. This is demonstrated by the increase we realized in both renewables which represents 24% of our comparable gross margin and gas which represents 27% of our comparable gross margin. These two businesses more than offset the slight decline we found in the coal fleet. That will cover all the numbers in more detail. We also continue to deliver availability at 91.5% inline with our target and trading did deliver inline with our expectations. In the quarter, we commissioned New Richmond increasing our total net wind capacity to 1129 megawatt. TransAlta has continued to be the largest wind producer in Canada in generating approximately 18% of Canada’s total wind capacity with our next largest competitor contributing only 8%. We also increase the amount we hedged in Alberta since the last quarter, and are now 90% hedge for this year. And I will talk more about that later. During the quarter, we also made a strategic decision to send the operation and management control of the Highvale mine. We believe that our operational efficiency and addition synergies to begin by relying on our existing teams. Now we will take you through the accounting impact of this…

Good afternoon. This slide shows the generation segment delivered another steady quarter of comparable gross margin compared for the last year, a contribution from the generation segment was largely driven by the higher production, the lower unplanned outages and also some higher hydro margins. We also added Solomon, which although accounted for us as a lease is included in this chart. And it’s the primary reason the gas segment is higher year-over-year. \ We did have lower results from our wind business due to slightly lower wind resources but that was more than offset by the higher margins achieved from our hydro business. And finally, we started up our new Richmond facility in March, bringing a small contribution to this quarter and in Q2 we will see a full quarter contribution from this new asset. However, as many of you know the wind resource naturally tends to be lower in Q2 and Q3 than it is in Q1 and Q4 which is typical across Canada on the other hand our hydro levels tend to be higher in Q2 and Q3 providing a good hedge against the lower wind. The gross margins were further supported by the delivery of 17 million from the energy trading segment which was consisted till last year. Our comparable EBITDA was $267 million in the quarter up $15 million relative to Q1 2012, and FFO was $192 million up $3 million compared with the prior period. These results were achieved despite the lower contribution from our central office operations that hedges rolled out. We were able to offset this decline through the lower unplanned outages, lower OM&A costs and the addition of new assets. We also continue to see improvements in our OM&A and achieved $13 million decrease during the quarter compared to Q1 last year.…

Thanks Brent. I would like to end my formal remarks today with an update on some of the key objectives that we outlined at the beginning of the year followed by an update on growth. We have set a number of (inaudible) tracking well on all of them. In operations we are on track and continue to expect a full year food availability in the 89% to 90% range. We set a sustained capital spend target of $295 million to $335 million and we are tracking there. At Sundance A rebuild is well under way and our corporate city results are ahead of target. We are on track to deliver the full on OM&A savings we outlined in our plan to realign the organization and to find operational efficiencies from her IT investment. We’ve already achieved he target of growing our C&I business in Alberta to 500 megawatt that we set this target to 600 megawatt to achieve by year end. Let me conclude by providing an overview with a discussion on our growth activity that continue to drive significant amount of work for the company. As we are moving further into 2013 we are continuing to see and work on opportunities in all of our key markets both Greenfield and acquisitions. For Greenfield, our focus remains in Alberta and British Columbia and we see some interesting opportunities in Western Australia. In Alberta, there are more than 5200 megawatts of opportunities primarily driven by (inaudible). Our work with customers DCs (ph) its focusing on the versioning (inaudible) where we see about a 1000 megawatt of opportunities behind the fence. I did have the opportunity within the quarter to tour Western Australia operations, our team in that market continues to focus on growth opportunities for the Australian miners for developing large-scale…

We will answer your questions from the investment community first and then open the call up to the media. We will then respond to individual investors so please identify yourself when asking a question. We also ask that your limit your questions to one plus a follow-up before re-entering the queue so we keep things moving along. I will remind you that we do not provide guidance and that we will answer any model related questions offline after the call. Operator, we will now take questions, please?

Thank you. (Operator Instructions). The first question today comes from Linda Ezergailis of TD Securities. Please go ahead.

Can you provide us with some more color on the delay with the Puget Sound PPA situation, and also do you view that contract as largely a precedent for other contracts, or might they be structured differently, and what sort of other discussions are you having around Centralia contracting?

Overall, Puget went back to the regulator with concerns. They had a number of other regulatory files that they were trying to put together and get solved all at once. That’s now all been filed, and I think it’s in the normal regulatory process that you have in those jurisdictions where once they file their settlement, there is time for people to comment, and then of course the commission has to go in, consider those comments to make its final decision. So, it is much longer than we ever expected or anticipated, because I think we got caught up in a process there, but at the same time the filing that Puget has filed gives us a lot of comfort in terms of that contract overall. So, I think the process now is just a matter of us waiting the time for the commission to get a comment, make its final decisions, and as far as I know and we’ve been told that that decision can be no later than the end of June. So, that’s good news for us. But once that contract gets signed, I think it does open up sort of the baseline set of conditions for contracting going forward. It is nice that prices are lifting a little bit in that market, because I think it will help people see that some of the pricing that they saw in the spot market in the last three years is not sustainable until the end of 2025. So our team continues to have discussions there, but for sure I think the market is waiting to see those contracts close, but it’s certainly been the basis of the discussions we are having down there.

This is a follow up, recently the Alberta Energy minister Ken Hughes has asked the renewable power industry to present proposals that could increase the use of renewable power in the province. Is TransAlta participating in that discussion, and do you view that as all very preliminary or do you think that this could potentially have some implications on market structure in the medium to long term?

As you know, the Alberta market structure has been running for a long time, and there are a lot of implications to it. So, any of the proposals would ever have any impact on the market would take a long time to sort through and figure out. Being Canada’s largest renewables operator, we definitely are participating in that process, and we would be working closely with the government both to see what the concerns are and to see what the opportunities might be. But it’s really early, early days in terms of all the implications that would have to go into that kind of work to see how that would work with the Alberta market.

And are there generally all the stake holders on board or what would be the divergence of opinions or your perception at this point?

I haven’t spent 10 minutes thinking about this. Honestly, if I would be speculating and that wouldn’t be a good thing. So, I think as the process goes on, we will for sure have views, but at this point, it is pretty early days in terms of that announcement. I think he just started thinking about that last week, and I think as you know, all of that is in response to people worrying about the bitumen bubble and trying to think about greening Alberta.

The next question is from Juan Plessis of Canaccord Genuity. Please go ahead.

You mentioned your desire to grow via acquisitions. Can you talk a little bit about the potential acquisition size you’d consider in the near term and what markets you are seeing the best opportunities?

Well, let me give you some comments, and then I’ll turn it to Brett because he is in charge of our M&A for the company as well as all the work he does as a CFO, but there’s lots of different portfolios out there today. You know primarily wind assets, we do see gas projects from time to time, but less often than we see wind. A lot of the acquisitions that we see are in the U.S. markets, very little in Canada, and from time to time, we are seeing a few things in Australia that could potentially make sense. I’d say, most of the assets we are seeing are fully contracted. There is certainly a lot of competition for them. You see competition from pretty well everybody who is looking for long term contracts, so the challenge that we have is to make sure that, if we are going to undertake a set of assets that there is – we have a way to add value because we don’t want to just pay a premium and have no returns, but I’ll turn it to Brett to give you some color.

We are seeing all sizes anywhere from single wind farms or gas plant opportunities and to larger packages, and some of the larger packages may have a component of existing operations, but also some green fields which is a nice mix in that, you know you can fund the green fields over time, and it just adds cash flow later on. The bigger ones clearly, you know, we have to think through how those get funded, but each one is quite different. Some might have already put some project financing on them, so the equity component might be manageable, but we are going to stay within our return hurdles and also within our investment grade parameters. So, it's not always the size thing, it’s really how we look at those things and then does it fit in and is it something we are able to go after by ourselves or should we team up with somebody or more than one person to go after.

Thanks very much, it's very helpful. And Dawn, you made a comment this afternoon at your AGM that you are looking at unlocking the value of your renewable assets. Just wonder if you can give us a bit of color what type of things you are considering to unlock that value?

Well, as you know, there is a range of possibilities from just marketing heavily, so that investors actually really see the contracted assets that are in our portfolio and really the valuation to go along with those all the way through to looking at are there potential vehicles where we could expose that value. So, I mean, we are 25% renewables. Most of our renewables are covered by long-term contracts. We have seen some good valuations there, so it’s along that range of potential ideas.

The next question is from Ben Pham of BMO Capital Markets. Please go ahead.

Okay, thanks very much. Just wanted to go back to your comment about partnering on the green energy side with somebody, and I think initially when you signed an agreement with mid-American to look at gas-fired opportunities, I think there was a notion that you could consider having green energy to that agreement, I mean any sort of update there?

Oh yeah, mid-Am would definitely, if we found an opportunity and it was something they were interested in, they would definitely come in as a partner. They are not always the best partner on acquisitions, so there are things that we are seeing where you know there are other financial players that may have a different return expectation in Mid-Am. So, we would be better off to partner with somebody else, but in our Australian operations and in our -- anything that we are doing in wind, they have definitely indicated that they would be interested if we wanted them to come in.

Can I check to seek partnership with CKI? Just wondering if we could get a quick update on that partnership and what have you learnt or gained over time and how do you see that relationship evolving on a go forward basis?

They are great financially. We love working with CKI. We have that existing set of assets that we partner on. And I think we have a good strong working relationship with them. So to the extent, that they have assets in Hong Kong and whatever is that. And they have operating (inaudible) They are very open to that and (inaudible) that partnership has worked really well. I think if we wanted to add (inaudible) partnership or grow that partnership, they’d definitely be keen. They have the same kind of profile as we do in terms of, the kind of assets that we look at.

Next question is from Paul Lechem of CIBC. Just go ahead.

You mentioned for Q1 that margins were impacted by higher (inaudible) penalties. I was just wondering which units those penalties were attached to. Is it just on some for that you are paying penalties (inaudible). Is that correct?

Yes, Paul, you are correct. It was mainly our (inaudible) planned outage and as you know once you cut the labour and everything, all the resources in place even though (inaudible), I mean clearly it does if we do have some unplanned, during that period it has that impact. But foreword would have been the main one. And you are correct on K1. We did take a bit of a provision, 15%. So, just a little bit there on K1 but (inaudible).

So, there were no other units that had a material impact on the penalties?

No, that's correct and anticipating our unit once planned out it should be completed very soon.

On the high (inaudible) mine, you taken control of now, do you have any sense of what the rationalization, what the costs (inaudible) going forward you mentioned that maybe some of you got any quantify those numbers at all?

I think its early days there. The key thing there (inaudible) I don’t think we are prepared at this point to put a number on it. But as I think we will go through the year, I think we’ll have a better sense of it.

Okay, under your previous contract, how much were you paying for the operations?

Yeah, we don’t disclose that level of detail on that. But I would say probably in the first year what it will cost is not what we were paying will be above the same. There is no real difference there. It will be over time that we can add the efficiency.

Last question, if I can stick with him, Bret can you remind (inaudible) can you just remind me of what debt covenance you have. Have you disclosed (inaudible) what they are?

We don’t disclose our covenance on our credit facilities but (inaudible) we are, I think we let that closely but nothing (inaudible)

If you don’t give the numbers out clearly, then what is the metrics that you track here for them?

I mean typical ones are semi cash flow type metrics, (inaudible) type metrics that they look at.

The next question is from Andrew Kuski of Credit Suisse. Please go ahead.

Just a question about your assumptions for power pricing in the west coast, and in the pac north west. Do you see any kind of impact from (inaudible) coming online later in the year. Is that really in your estimates and assumptions for that marketplace?

No at this stage, we don’t see any material impact to and have not seen much in the forward curve driven by, as you know the driven by the gas prices, Andrew, and in the screen here, the water level. Water levels are at about 95% whereas the last couple of years they have been in that 130% to 140%. And we have seen an improvement here, and we are seeing as you are seeing, an improvement in the outside. But at this stage, nothing material you’ll see some pick up in flowka markets within California but, and we’ll trade in some of those markets but that's about it.

I guess there is a question on the sustainability of the drip. You obviously have quite a big take up on the drip at this stage. And with the decline in the share pricing, you create a bit of a conundrum that (inaudible) on a per share basis as you go through this downturn in the market. How do you think about the sustainability of just to take up at a beyond a 70% level worth to work out another year or two?

I kind of went through this previously in the Investor Day, we put that on, we knew the other program, the incremental program, premium drip program to help fund some of the capital that we undertook. K3, it's a good example of New Richmond and to help the balance sheet to some extent. So we see it as a tool lender , but we are very mindful of the delusion. We have both programs and we can scale back. Those programs, especially the premium programs quite easy to scale back. You know, I am not going to tell you here today that is coming of next week or anything, but we are mindful of it's certainly adding some benefits of lowered interest costs. But we also need to how to incrementally (inaudible) otherwise we will not continue with it. So, it's a tool we use and it's one we can manage very quickly.

Next question is from Jeremy Rosenfeld of Desjardins Capital Markets. Just go ahead.

Just a first question on contracting strategy overall. So you put some new contracts into place the quarter. I'm just curious, how do you sort of reconcile the desire to increase hedges especially in the North West market with recognizing that the prices are still relatively low and likely to rise in the future, and how quickly you want to put on more hedges there?

That's a good question. So we manage our portfolio as a whole. When we look at our contracted levels, that's for the company overall. And that's taking into consideration of (inaudible) all our long term contracts and then we add Alberta and pac North West (inaudible) together. So what we do is we ask our team to look at that level of contracts keeping both markets in mind. So it's safe to higher prices in Alberta that can contract out Alberta and leave pac north west open. (inaudible) same prices are rising in the pac north west, you can start to take some of it off the table. In that market, you might have gotten 130 one year, 95 the next, and 130 next year. So if you start to see the prices rising, you might want to get a few contracts off the table. So, we look at it as a whole. So if we, we like some of the prices we’ve seen in Alberta this year, and some of those forward prices are going into next year, so we have the ability to (inaudible) between Alberta and the pac north west.

Okay Great. And then, none of you can add (inaudible) in terms of the timing of the contracts that you’ve put into place, are they more sort of back ended with the additional capacities that's going to be added towards the end of the year? Any Alberta markets specifically here?

No, we don’t really disclose that level of detail, but our portfolios do consider how much, they do consider when opening seasons and merchant windows unit come on which will show next year.

The next question that I had relates to the overall growth and presumably if you are looking at sort of adding fully contracted cash flows into the mix, what kind of return expectations would you have for those types of projects, let’s say?

We calculate what we said to the market before is that our overall average project (inaudible) in the 10% range. (inaudible) the more contracted and the more stable the assets are and will increase (inaudible). We are not looking to add merchants, so for the most part, we are in that range of 8% to 10%, but 10% being the average for that portfolio.

Those are deadlines. The jobs that we look at separately and analyze the risk and worth located

And the competitive mix of the projects. Some particular projects for whatever reason, there is not much competition, and sometimes get a higher return for a lower level of risk..

Next question is from Robert Kwan of RBC. Please go ahead.

Just had a question on (inaudible) now decreases 6% to 8%. Just wanting to know why a change in the last couple of months from the previous (inaudible) decline of 9 to 11?

Yes, it's just , as we made our truce through some further negotiations around the coal, that's what allowed us to do that. It's also a function of how much coal moved and so on. So, we factor that all in Robert, and just try to update it as new information comes through or we negotiated some new arrangements.

So just to be clear, the most recent contracts that you have added since then have been at higher prices?

When I talk about renegotiating, (inaudible) it's our full delivery costs. So both the commodity and the rail, and as we you know, negotiate some of those and finalize some levels, we update and reflect.

Coming back to a question on your answer earlier around the acquisition market and you talked about your returns but given that you’ve mentioned that competition is quite fierce for highly contracted assets, just wondering outsiders say the Alberta market, mainly Ontario, what type of things you think you can bring to the table, that can allow you to achieve the healthier returns despite all that competition and there was a comment around mid-American having some different return expectations. Just want to know if you can give some color around that as well.

Yeah well, I mean certainly as assets comes to table what you see is we are always in aggressive competition as the front end package are coming. And I have seen at time before where you have to just keep through the profile because sometimes by just the end of the process a lot of people have fallen away because they have taken a step off the table so that helpful. We do find sometimes that there are projects that people may or may not want because they don’t like, lets say the pension fund, they may not like the operating risk where we understand all your operating risk so that helps them. I think the key thing is there are other partners that have more return expectations to meet a partner who is an operator. Sometimes they might be a better partner for us than MidAm would be because MidAm is both a strategic and an operator. So they may have it. And they can bet on these partners. So I think each situation depending on the size of the competition for it brings a different set of conditions and we look at all of those. We are not seeing things that we’ve sailed through, its died down and take this one on because we think we can recover the returns on it, we will let a lot of things pass and go by. I am also pretty optimistic in terms of some of the things that I have seen but they think that we can add value to that would help us get the return that we need.

And without obviously getting into specific packages that may be we’ve already traded, have you gotten deep enough into the process in final rounds that you feel that’s the types of returns that things are transacting at your closing. Its just a function of coming up with the right situation versus the returns you are looking for.

We don’t want to comment on individual processes Robert. But I would say that it really depends, if its one asset highly contracted, that’s going to be highly competitive as you can imagine. If its few more assets with a mix of things like Dawn talked about with Greenfield and development risks associated with them or it’s a newer asset with not a lot of history. We might get more comfortable than that spend somebody else. And then when we are in Australia again it’s a different picture because we can bring our operating experience behind the fence to bear there, where others may not bring that and so price is not always the factor at hand, they also want to make sure whoever the (inaudible) is lining up with the party that Ken has proven himself to run operations. So each one is different so I don’t want to generalize about any one situation. All we are saying is there is quite a bit we are looking at and we think we can compete for some of them.

I think Robert if you are asking how we got deep in that. Assets are returning and returns are there.

Next question is from Charles Fishman of Morningstar. Please go ahead.

Slide 9, on the Alberta power market outlook. The way I understand it is that the downward trend in the latter part of the this year is more of a supply as have in the natural gas based on your comments and the bullet points. And that’s specifically I guess the return is on four as what drives that. But if we go into 2014, are you seeing any other supply additions and we back to just a natural gas driven market at that point.

Alberta is not really a natural gas driven market so Alberta has two major impact on it about 50% at times its driven by gas and the other 50% of the time its by outages. And how they potentially stack up on each other. So I don’t think through the decade you will ever see Alberta be driven by natural gas. It’s a long wait away from there. We do see that past 2014 that it is a big power plant coming on I think in 2015 which will affect supply and demand but in Alberta if you grow by 2% year-over-year 200 megawatt if you grow by 300 and there is a huge difference over 3 years. You are either at 900 megawatts or 600. So that can make a huge difference to how the market trade.

On the demand side, when you said 2% to 3% growth, what time frame were you looking out when you let that growth?

Alberta has been growing at 2% to 3% for a long time and its forecasted to continue to grow there. In actually 3% range because it’s a pretty hefty economy so it grows at 2% when things are a little slow here and it goes at the 2 plus percent when things are more normal, which is way faster than most economy. So like I say its about a 10000 megawatt market. So 2% is 200 megawatt 3% is 3. Now that’s a whole year.

This concludes the analyst Q&A portion of todays call. We will now take questions for members of the media. (Operator Instructions) There are no questions from the media at this time. I will turn the call back over to Mr. Brent Ward for our closing remarks.

Thank you for joining us today for Q1 if there is any follow-up calls we are available after and tomorrow. So thank you very much.

Ladies and gentlemen, this concludes today’s conference call. You may now disconnect your lines. Thank you for participating. And have a pleasant day.