Thank you for standing by. This is the Chorus Call conference operator. Welcome to the TransAlta Corporation 2015 First Quarter Results Conference Call and webcast. 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, Mr. Ward.

Thank you very much. Good morning, everyone, and welcome to the TransAlta first quarter 2015 conference call. My name is Brent Ward, Director of Corporate Finance and Investor Relations. With me today are Dawn Farrell, President and Chief Executive Officer; Donald Tremblay, Chief Financial Officer; John Kousinioris, Chief Legal and Compliance Officer; and Todd Stack, Vice President and Treasurer. The call today is webcast. For anyone listening on the phone lines, please review our supporting slides, which can be found on our website under Powering Investors. A replay of the call will be available later today and the transcript will be posted to our website shortly thereafter. All information provided during this conference call is subject to the forward-looking statement qualification, which is detailed in our MD&A 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 gross margin, comparable EBITDA, funds from operations, free cash flow and comparable earnings are reconciled in the MD&A. On today’s call, Dawn and Donald will review our first quarter operational and financial performance, as well as our progress on executing our strategic and financial objectives in the context of our first quarter 2015 results. They will also report on how we are tracking to our outlook for 2015. After these prepared remarks, we will open the call to your questions.

Thanks, Brent, and welcome, everyone. Today on our call, I’ll give you my perspective on our first quarter performance and discuss our progress on executing our 2015 business plan. And Donald is going to review the first quarter financial results and he’ll update you on our financing plans. And I’m going end our call today by giving you my outlook on the market and some insight on what’s happening here in Alberta with air emission regulation. We do know from a number of you that you want some additional color on a couple of things. So we are going to talk today about the recent drop down of our Australian portfolio to TransAlta renewable and how this benefits TransAlta shareholders. We’ll also give you some of our views on the impact of the recent outage events at Keephills 1 and Sundance Unit 4 and talk about how these events don’t change our views on our ability to maintain the improved availability we thought we’ve been achieving our Canadian coal. And then lastly, our views on power prices in the Pacific Northwest and Alberta are accepting that people are quite interested in, so we’ll give you a perspective on what we think they’ll look like over the next couple of years and how they are impacting our business. Many of you are also aware that discussions are taking place in Alberta on air emissions and have been actually for a number of years. We’ve been trying to align local emission regulations with the Federal rules, where we are in sort of, what I would call, the third inning of these discussions and I certainly, I’m not prepared or can’t give you any conclusions. That would be very premature given the number actors in that movie, but I will, however, give you…

Thanks Dawn. As we mentioned earlier, EBITDA for the quarter is in line with our expectation at $275 million. EBITDA of $310 million last year was fueled by high power price and the volatility resulting from extreme weather condition in Eastern and North America. All of our operating business delivered results in line with power use and this was accomplished during a period of much lower price in Alberta and Pacific Northwest. Canadian Coal delivered $95 million of EBITDA consistent with the same period last year. Generation what slightly lower than last year due to the unplanned outage we mentioned earlier at Sundance and Keephills. Power price in Alberta during the first quarter were 50% of last year pricing. About 80% of our coal generation in Alberta is soldthrough the AlbertaPPA and it is not significantly impacted by the price volatility. Another portion of our coal generation is still under one to three-year short-term sale arrangement to commercial and industrial customer in the province. Even though they are shorter in duration, these contracts reduced our exposure to volatile wholesale power markets in the province. Finally, for the last bunch [ph] of our coal generation, we enter to financial contract to reduce our exposure to fluctuating power prices. Normally, these financial contracts do not extend more than one year. This contracting strategy paid off well in Q1 of 2015 as lower price in Alberta didn’t materially impact our result at Canadian Coal. U.S. coal generated $23 million of EBITDA in the quarter, an increase of $6 million over last year, also in a much lower price environment. Power price averaged $18 per megawatt hour in the Pacific Northwest this quarter compared to $44 per megawatt hour last year. Lower price levels during the quarter allowed us to supply our contract obligation…

Okay so and you can see a good first quarter behind us and just given the hedging that we’ve got ahead of us. We’re feeling good about the next three quarters. So, let’s – I just want to pause for a minute and talk about some pricing and what we’re seeing in both of our markets, both the Pacific Northwest and Alberta. So in the Pacific Northwest, we’re seeing downside – unfortunately, we’re seeing downside pressure in pricing because of low gas prices. The snow packet is low this year and it is drier than usual so far. You know in that market, you can have a very wet spring and that can turn that around, but so far that hasn’t happened. So normally that would have us very optimistic around an uplift in prices in this summer. Our plants will of course be ready to capture those returns if we do really see a big price uplift. But over the longer term that market really does rely on gas pricing to set the marginal cost of power in the market. So as long as gas prices remain lower than expected, we don’t expect to see much of an increase in pricing at least over the next year or two. There have been some demand pickup in the region for the first time in 2008 and certainly we’re hearing about that as we’re in the region. But also as many of you know who follow that market, there has been a lot of additions of renewable assets and at this point the renewable assets themselves are offsetting any impacts that you would get from demand. So for now, we see pricing slot a little bit of upside here in this summer, but not a lot of growth from that at…

Thank you, Dawn. So we’ll begin the Q&A format. With questions from the investment. First, we open up the call to the media. And just before we go to that section I just like to remind folks that for any detailed analytical model-related questions my team and I are available after the call for any follow-up questions you may have. Operator we’ll now take the questions.

Thank you. Ladies and gentlemen, we’ll now begin the analyst question-and-answer session. [Operator Instructions] Thank you. Our first question is from Linda Ezergailis from TD Securities. Please go ahead.

Thank you. I am just wondering for Keephills 1, the Force Majeure, can you give us a sense when within Q2 that should be up and running.

Yes, Linda, it’s John Kousinioris. We’ve updated that information. Sorry Linda, its John Kousinioris responding to your question. We, just as a matter of policy avoid providing sort of specific dates. It’s something that we’re very mindful given that the regulations and requirements that we have for disclosing it. I know that the outage graph that the ISO provides clearly has that updated information and you know it will be coming back sometime in Q2. So we apologize that we can’t be more specific.

Okay, thank you. And can you provide any color on seasonality of any sort of other planned outages there in the year?

It’s all in the ISO

Okay.

So we have like, we have two more outage...

Yes,

…that we reported to you and they are all like included in the ISO cycle

That’s right.

Okay that’s very helpful. And maybe just a follow up question on your leverage target. It looks like several of them might be slipping a little bit into 2016, given that the US dollar strength hasn’t helped your leverage metric. Can you give us an updated view on your discussions with the rating agencies and if they are giving you any kind of forbearance with respect to currency fluctuations and what they are doing to your metrics?

So we like – we were very transparent with them, like what matter the most is like how much better we actually like reducing and our plan this year is 300 million to 500 million of actual reduction. Clearly when you look at the face of the balance sheet it doesn’t necessarily show up because like there are some of our assets like our – are also gaining in value and that is not reflected there and they understand this and we believe that they will gave us some credit.

At the end of the year for that.

That is very helpful, thank you.

The next question is from Mathew Akman from Scotia Bank. Please go ahead.

Thank you very much. Donald with your debt targets, what is the sort of rough potential timing for the next drop down to RMW announcement? Would it be this year or early 2016?

Like – our target is to, like we still have $300 to $500 million debt reduction to do in 2015 and this has brought down our policies, we also have like 76% ownership in terms of renewable, so that’s also part of the equation. And we’re targeting between $300 million to $500 million this year. So like that...

Okay.

Does that help?

Thank you.

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

Thank you. Good afternoon, I guess question is for Dawn, and it's just as you're having conversations with customers and prospective customers for return power over the next few years especially for the PPA is for a lot, and you are looking to build some gas generation in Alberta. What are those conversations like as far as customers desires to have say power from coal, power from gas, or renewables or just a general level of in difference that is one for power and they’re not really concerned on the source?

I don’t think we’ve ever had a customer say I don’t want to buy power from – I want to buy a power from resource. It generically sold – it comes out of the portfolio. Their number one concern is that you’ve got a way to provide a good value for the hedges that they want and some optionality. But no I just really can say – occasionally we tried to sell the green – we tried to – we want to buy some green because we have someone as you know in our wind and hydro and we can’t find – we don’t find that people go from that. Now remember, TransAlta tends to focus or does focused on kind of the larger commercial and industrial customers. And some of them will do some green investments as part of their strategy. So, when it comes to pricing, they tend to – they just tend to want to buy from the portfolio.

And just as a follow-up whatever, any changes in customer behavior and nonetheless while this clearly power prices have come off quite a bit in Alberta. And then you have – you have a very divided viewers where they settle in – which is predicated per NOL in economic development in Alberta, but I won’t get into that. I am just sort of curious, has there been any meaningful change in this customer behavior and how they're thinking about the market?

Well, I’ve been in the - venture commodity cycle for 30 years right and I’m astonished but when prices are raised into the top and they are going high and higher that – when people tend to hedge in. And when prices are at the very bottom and there is a logic everything that’s when they tend to stay open. And you would think it would be the opposite. You would think that – that customers would look for longer term contracting when prices are low and they stay up when the prices are low and they stay up when the prices are high, in fact they don’t. So I think we’re seeing exactly the behavior we normally see uncertainty keeps people from having even though, if you just did some variable cost calculations for power. Power prices are trading very low today, so it should be creating more incentive for people to hedge but, we’re not seeing that trend so far.

Okay. That’s very helpful, thank you.

The next question is from Robert Kwan from RBC Capital Markets. Please go ahead.

Donald on the environmental side, on the fourth quarter call it sounded like you were optimistic based on some of the discussions you were having with the government that they were spending lot more time with the file and may be better understanding the points you were trying to make, since that time – obviously you don’t want to get into specifics but any directional changes, if any based on your more recent discussions with them?

sense:

Okay, and I guess there has been some news report that seemed to indicate things spiraling maybe away on carbon bad for coal powered to try to facilitate continued oil production do you think really what surfacing the press is just half pace at this point now?

What I would never try to second guess what surfacing there. I think just what I know is that to the extent that, I just think the value proposition of bringing together sort of the green house gases with the local air emissions into a comprehensive framework will make sense. And I think there is more work to do to get back that sort of pragmatic policy into place and I think there’ll be lots of noise around that kind of thing. But I’m just going to work on what I know how to work on.

Sure, okay. I guess just last question, if you think about the growth combination of the presentation you’ve made on this call. And then you also at the AGM, you highlighted the Cogen Australia when the acquisitions and then grid connected gas they shared his centrally. But also you had mentioned some seven, what do you think you're kind of the best opportunities over the course of the next year. And what are the chances that we might see something come to future in the next 12 months.

Well, I think the best opportunities are always – if you can make it come together in my view, co-generation and particularly if you can do co-generation with some additional generation, that can be sold in the market. In my view for always clear winter because they are usually associated with the long-term customer they’re usually associated with incremental growth of the margins, because usually there is a mine or an oil sands project that’s being built. Similar just when you look at Solomon, for example, FMG was building a 150 megaton iron ore facility they needed generation then they needed gas and they needed unload stuff at the port all of those things needed power. So, in my book, if we can get something there or if there is – we know some tough possibilities there maybe some opportunities on the gas price generations for utilities that need gas, take Centralia, for example, there are utilities in that region that will have to buy into a new gas plant later in the decade. So my view is anything that requires incremental growth in the economy always kind of is my first choice. I would stay on the replacement of the coal strategy to the extent that we can make economic peakers [ph] out of our co-plant. It’s the way to extend the life and you saw us do that in one, you saw us do that with vendor and we'd, like to do that with. I believe we’ve got some time on this spot, but you kind of take a fully depreciated asset and that low cost, we put a little bit of capital into it and you run it for 10 more years. I think they always are good projects. And Sundance 1 is a good project, but it’s more problematic because of such a huge amount of capital. And to me I like to play on the safer side of the equation, so I think I gain that one you really got convince some customers that have a long-term power arrangement with a lower cost and lower risk investment for them and staying on this spot market. So it would be in their place.

That’s great. Thank you very much Dawn.

The next question is from Charles Fishman from Morningstar. Please go ahead.

Thank you. Really collapse of the iron ore pricing, has that changed your view of the potential development in Western Australia at all?

Well, it’s certainly, it hasn’t changed our view on the investment that we’ve made there because the guys that have their minds in the ground or the guys that can really make sure that they’re selling into the markets that’s there. And when we made those investments we were – we did a really, really tough economic study to make sure that we were dealing with low cost miners that would be their despite what was going on with commodity prices. But certainly if commodity prices stay where they are today, what it means is that future mines will have difficulty getting off the ground and the next cycle of mines will be further out. So we don’t expect to see a lot of growth coming our way from new mines although there is some incremental needs that you could see – we could potentially see may be another 6,000 at that side of the Port Hedland in that 2018, 2019 period. But that would be taking up sort of a little bit of incremental growth not in new mine. We don’t see new mines until much later in the decade or early in the next decade.

So, really at this point is that second South Hedland that's maybe gets pushed off. [Indiscernible]

Yes, I mean there is a couple of units there now. We've told the market that we want to get those finished and they are underpinned by the current contracts. We've actually been surprised though by the interest – there still continues to be interest in that unit. There is nothing where there is just a number of incoming calls on that. So I don’t want to make a guess there. But I think that’s still within reach we’ll know more later on this year on that.

Okay, thank you.

The next question is from Mitchel Moss from Lord Abbett please go ahead.

Hi, how many megawatts are under those financial contracts for 2015 as you mentioned are above Alberta prices.

So if you go through the presentation slide I'm flipping the page here, sorry. I am sorry, there’s no slide number, but there’s page with hedge that we have in place. You will see that like this year we have like 88% and financial contracts are very small fraction of those hedge in 2015 and the average price is also there. So I would like to you to go through that page that we have in a deck.

Okay, it's slide 11 I guess.

I’m sorry there’s no slide number on my book. Sorry.

Okay. So I guess if I think about that, affectively though that means that in 2015 by being – by hedging in 2014 or 2015. that means that there is sort of downside for those megawatts going into 2016 because if they’re not going to be you know there is – going to be opened or they're going to be hedged at a lower price going into 2016, so that means – that there is just downside for those. Is that how I can think about that.

Exactly, so if you look at that seems slide like full 2016 like our contract or hedge portfolio is that 82%. So that clearly have an impact, but at the same time we’re also working to mitigate this by reducing our costs and basically – so our plan is to basically keep our – like our business at the same level.

Yes, so – we talked at our earlier at our Annual General Meeting and I think we’ve told the market before we started our cost structure work last year and we started low price for the company and we’ve been working in that structure and you’ve seen a number of cost initiatives come through. So, we already anticipated what we’re seeing there and as Donald said, our job is to keep the company – growing despite what’s going on in the pricing in 2015 and 2016.

The fee challenge in the Alberta market is like there is not much liquidity for the past one year, so hedging or entering into financial contract past 12 months is a bit more challenging because of liquidity. So that’s why like we’ll limit ourselves to 12 months.

And looking at the renewables portfolio, for the assets step have a PPA backed to TransAlta. Can we expect any type of new – like external PPAs for those, for that capacity rather than just an intra-company type of a hedge? Did you see that happening any times soon like in the next year?

So the only renewable asset that we have at PPA and Alberta is our hydro, which is about like 900 megawatts like total capacities. That contract is expiring in 2020. Clearly, those hydro assets are on – financial asset that would be drop down into front of renewable at some point in the future. And clearly if we do this we will have to provide renewable with an extended contract either like to an intra-company contract or in the event that we’re able to basically sign a long-term contract with the third-party, or like that contract will also be transferred.

I think just going to that – yes, for the assets that are already there, the wind asset.

Yes.

I think that would be difficult contract to ride and we can do because we have our trading group and we can optimize those assets within the portfolio. So TransAlta can handle the risk more easily the wind and renewable. So, I wouldn't expect to see a third-party contractor there.

Okay. And finally, I just want to make sure I understand your plan around meeting one proposal you've made around one million is to reduce generation in the off-peak hours, is that correct? Is that what I heard?

Yes, well, I think there is a number of different ways that you can approach bringing together greenhouse gases not starts, but one of a simple way to do that is thinking about how to reduce emissions overall in the air shed and you can do that too, what is called environmental dispatch? And so that's a proposal that we're thinking about.

Okay. And so, you don’t really have the timing on when this wind capsules might change or when this could reach a resolution?

No, there’s a lot of moving parts, there’s a lot of stakeholders in this conversation and its – we’re complex sector. So to get all the parts of that right would take quite a while. But we do think we have a solution that’s lower cost and just putting technology and place in the plan.

Okay, thank you.

[Operator Instructions] The next question is from Ben Pham from BMO Capital Markets. Please, go ahead.

Okay. Thank you and good morning or good afternoon everybody. And I just wanted to just touch based on the hydro life expansion, just some disclosure in the MD&A and this one, where are you with that program. And in terms of the capacity that you're looking to extend in ways and just what remaining CapEx you have for that expansion overall?

So I don’t have the exact capacity with me, but like that the contributions of program that we initiated a year-ago. So the plan is to basically we have like we have professional assets [ph] not everywhere, the game plan is to maintain that perpetuity with those assets. So there is some capital that is required year to maintain this.

And that program is really over kind of seven years to ten years. So there is some years where we’ll do little bit more and some where we’ll do little bit less. And it’s really based on sort of the timing of it certainly needs to be – it needs to be done. So we’ll tell you about it as we go, but it’s not huge amounts of capital.

And there’s no significant capital this year in our life expansion CapEx.

Okay. And maybe I can follow-up on that’s you are staking at seven-year to ten-year timeframe and when you think about dropping down those assets to RNW and if you were to do a little bit earlier than that time frame. Would RNW take on that CapEx cost? I mean how would, that kind of work out there?

Yes, we would have to forecast that CapEx cost and it would have to be accommodated in that structure.

That will all part of an evaluation that will be made at that time.

Yes, it will be price evaluation work. So I don’t think the life extension work would significantly impact any of our, anything that we’re trying to do on TransAlta Renewables, it wouldn’t get in the way of that.

Okay. That's what I wanted to check.

Yes.

And just one follow-up on the financing plan. I just wanted to check. You guys talked about preferred shares as well as plant for this year, should we still think just the net difference need to finance.

Like that’s always part of our plan, but that challenge we’re facing with pressure going to be there like a bit more expensive. And we see like a bit of a delta between like the price of ours versus others. So that’s why like you we’re pushing back on this and the success that we have in our first drop down give us a bit of flexibility, so we’re basically building on this.

Okay.

So like it’s still part of our plan, but curiously like the pricing is very effective, so that’s why we’re pushing it a little bit further this year.

Okay, very good. That’s it my questions, thank you.

This concludes the analyst Chorus question-and-answer portion of today’s call. We will now take questions from members of the media. [Operator Instructions] There will be a brief pause while we compile the question and answer roster. There are no more questions at this time, I will now hand the call back over to Brent Ward for closing comments.

Thank you everyone for joining us on our first quarter call. And with that we will conclude it. Thank you and have a great day.

This concludes today’s conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.