Ladies and gentlemen, thank you for standing by and welcome to the TransAlta Corporation Third Quarter 2020 Results Conference Call. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chiara Valentini, Managing Director, Investor Relations. Thank you. Please go ahead.

Thank you, Mariana, and good morning everyone and welcome to TransAlta's third quarter 2020 conference call. With me today are Dawn Farrell, President and Chief Executive Officer; Todd Stack, Chief Financial Officer; John Kousinioris, Chief Operating Officer; Brett Gellner, Chief Development Officer; and Kerry O'Reilly Wilks, Chief Legal, Regulatory and External Affairs Officer. Today's call is webcast and I invite those listening on the phone to view the supporting slides that are posted on websites. 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 statement qualification set out here on Slide 2, further details in our MD&A and incorporated in full for the purposes of today's call. All amounts referenced during the call are in Canadian currency, unless otherwise stated. The non-IFRS terminology used, including comparable EBITDA, funds from operations and free cash flow are also reconciled in the MD&A for your reference. On today's call, Dawn and Todd will provide an overview of the quarter's results, along with expectations for balance of the year. And after these prepared remarks, we will open the call for questions. With that, let me turn the call over to Dawn.

Good morning everyone and thanks for joining us on our third quarter call here in 2020. We have some great third quarter and year-to-date results to report. And as well, we have a number of very key and important updates and accomplishments on our strategy of becoming Canada's leading clean electricity provider. I'm going to start with our strategic updates and then I'm going to turn it over to Todd for the numbers. During the quarter, the Board and management of TransAlta made several key decisions that we announced this morning. They've included that we've determined we can now close the Alberta Highvale Mine effective December 31, 2021. This decision advances our goal of being off thermal coal in Canada by four years, originally 2025 but now by the end of 2021. All Alberta power plants will now run only on natural gas, starting January 1, 2022. Our only coal plant after the end of next year will be Centralia, which has a long-term contract supporting this cash flow, and we have a transition agreement on greenhouse gases in Washington State until the end of its life in 2025. In Q3, we also made the final investment decision on Sundance Unit 5 repowering. This 730-megawatt project is estimated to cost between CAD800 million and CAD825 million and will come online in Alberta in the fourth quarter of 2023. The team has advanced the project substantially throughout the year and we've received Board approval to build the project and I'm pleased to tell you today that we're on track. Our gas conversions are also on track with Sun 6 in its final stages of testing. Everything is proceeding extremely well. We'll be completely - we will complete the full commissioning by mid-November, in just a couple of weeks. The Q2 -…

Thanks Dawn, and good morning everyone. Before I jump into the details, I just wanted to echo your comment that our portfolio delivered great performance both in Q3 and on a year-to-date basis. The company is in a very strong financial position and we're on track to deliver free cash flow near the high end of our guidance range. Looking at Slide 13. The charts include several of our key metrics. For those listening, you may recall that last year in the third quarter, we received the residual PPA termination payment of CAD56 million that was awarded to us for the Sundance Units 3 to 6 arbitration. In order to provide a more accurate comparison of relative performance, the figures that I'm going to reference on our call will exclude the PPA termination payment. During the quarter, we generated incredibly strong EBITDA and free cash flow due to contributions from all our business segments and were indicative of the resilience of our operations, our hedging and energy-marketing capability and our portfolio diversification. EBITDA of CAD256 million in the quarter was up 3% versus 2019 at free cash flow was also very strong at CAD106 million. Year-to-date, we've generated CAD306 million of free cash flow, which is almost CAD50 million better than 2019 on a comparable basis. Free cash flow per share is at CAD1.11, which is a 22% increase over 2019s nine-month performance. All in all, a very strong performance from the business so far in 2020. On Slide 14, we've laid out our Q3 and year-to-date performance by segment. As you can see, we had strong performance across the fleet and total segment cash flows were in line with last year for the quarter and significantly ahead for year-to-date performance. This strong performance was primarily a result of the…

Thank you, Todd. Mariana, would you please open the call for questions from the analysts.

[Operator Instructions] Your first question comes from Maurice Choy with RBC Capital Markets. Your line is open.

My first question is on, I guess the guidance, you obviously had a very strong Q3 results. Yet also reaffirm your guidance for this year. Can you discuss as Q3 was in line or better than your expectations? And depending on that response are there any things that you're keeping a close eye on for Q4 that motivated you to reconfirm your guidance range?

Yes, Maurice I think, clearly our guidance range for free cash flow was 3.25 to 3.75 and sitting at 3.06 we're very bullish on coming in at the high end of that that program. We do still have a significant amount of capital, a sustaining capital Sundance 6 turnaround and conversion is still ongoing, there's still money to be spent in Q4 on that. So we do have a high capital spend that's something that's definitely laying into our forecast for the balance of the year. And on top of that, we did have some - you saw our sustaining capital guidance go down, a lot of that is just shifting. When we move the K2 and K3 conversions slightly next year delayed them by a month or two each, it moved a bit of the capital into 2021. So that was part of the reason for the - not just reducing and rationalizing sustainable capital, it was a bit of a timing delay on those as well. So I think capital we're paying attention to. As I mentioned, we're highly hedged in the Alberta market, but really looking for opportunities to generate some, some upside potential in the Alberta business.

And my final question is about, I guess, capital allocation and opportunities, particularly given that you have $2.7 billion, could be sounds like, you're also going to be able to introduce some drop downs in the coming months. You introduced an extra E to ESG. And Slide 10 has a number of attractive opportunities for you to improve your ESG profile. I wonder if you could discuss broadly the costs or returns potential partners, some of these opportunities and if there's a preference for contractors versus merchant growth?

I just want to touch on liquidity there for. Maurice you mentioned, the 2.7 billion, which we do, keep in mind, we do have the $400 million bond maturity coming up here in November. So I don't want to think we'll be at 2.7 at the end of the year. And we are looking for the Skookumchuck project to complete, which will also be a capital expenditure in the balance of Q4 here.

So, Maurice, I'm going start and then I'm going to let John and Brett also chime in here because I think it's an important question. So the reason I'm going to give any extra E, I'm going to give that credit to Max and will again, over at ARC Financial, he's written a number of papers on that. And I spoke to him last night and said, I'm stealing your idea, which I wanted to do. Because I do think it's important, as people reinvest cash into the future that's coming, which there's a lot of talk about this net zero by 2050. It is important that there is economic cash flows, to be reinvested into that future. And it is just not enough money available in the world, to not do that in a very sustainable and economic way. We would all else being equal this team tends to go after contracted assets. We're very bullish on Sun 5, mostly because we also have a good hedge there with Shell. So we tend to always favor that overall. And so what I'll do is I'll maybe turn to Brett, on, on how he's thinking - how he's seeing returns on the growth side and then, John, any comments that you would have?

Yes, thanks. Yes, we're seeing a number of opportunities out there, especially as people focus on the ESG has gone pointed on the customer side, so not just here in Alberta and Rest of Canada, but the United States in terms of looking for renewable projects. And so we do see good opportunities. Now, again, we're going to continue to be disciplined, like we've been in the past, we're not going to chase slow returns. And the contracted tenure tends to range, between that 7 and 15 to 20 year period. So again, is there a portion of merchant or post PPA risks that we have to factor in? We do. But we then factor that into the return expectations of the project. I think if you're looking at Cogen projects, generally those are well contracted. There might be a component of merchant associated, but as you know, they have steam and electricity components to them. So generally, that's how we approached those projects. And again, we like those kind of projects because of our position. You know, the bigger projects that are further out like Brazil, clearly, we'll be looking to contract up to initiate those, those are big, big projects, but we think very important projects. So it's a mix, but I, you know, echo what Dawn says, generally, we're focused on contracted type projects.

Yes, I don't really have a lot more to add to that, Maurice but one thing I would say is, we've been talking about partners, we're not against bringing other partners into our projects, we tend to do it alone. But when I think of partners, I think of our customers as being partners. And the one area that we didn't talk too much about is just the potential growth that we're seeing in Western Australia, our relationship with BHP. We do see them as a partner in our ability to do a bit of solar for them and potentially work to renew some gaps and steamers for them. It's very, very important to us as we move forward. So when we think of growth, we do think of it in terms of partnerships with our customers.

Your next question comes from Rob Hope with Scotiabank. Your line is open.

Just a clarification on Maurice's question. The MD&A says the midpoint of free cash flow guidance, I think you highlighted the upper end just want to confirm that?

Yes, I do see between the midpoint and the upper end and I'm actually seeing towards closer towards the high end now.

Yes, and I just think - just add one thing, we do have two big outages next year, again, with K2 and K3. And there's always an opportunity to potentially, especially with COVID, the team may want to do a little more pre-buying in Q4 and spend a little more capital just to make sure that everything that we need is ready to go. So I think the team on is looking at a little bit of flexibility on the capital side there as we go into Q4.

And actually, that's a good segue to the capital side. So with the headland financing, which arguably would be more than the market would have anticipated maybe even yourselves, the pioneer sale and potential future drop downs, you look a little over capitalized here. So how do you think about investing in future projects versus some capital drag in the near term here versus share buybacks?

Yes, it's a good question. I mean, for sure, TransAlta is really, you know, going to - is really got some great opportunities ahead of it here. And our investment path at TransAlta is really well known. I mean, you know, what we're doing on K2 and K3, I think, what we're doing on Sundance unit 5. So really, the team as it looks at, there's a couple of considerations on that. If you look at the, the way the company is set up, I mean, we are fundamentally going to be a gas and renewables company by the end of next year. And if you look at the kinds of projects that we look at, some of them fit, we see very clearly projects that we look at that fit very well into RW and some other projects potentially fit into TransAlta because we have tax benefits and other things in TransAlta as well that we want to use up. So we'll be looking at that. But broadly with the amount of capital that we've brought in, it does, you know, it means that we'll have to consider more carefully our capital allocation relative to dividend growth at TransAlta and share buybacks. So I think you're on the right track in terms of thinking about that, Rob.

And then just one final one, just layering on some hedges, good to see the additional disclosure on the hedges in the early part of 2021. But hedging does kind of fall off and the balance of the year, you know, is that just a view that you want to see the forward curve kind of move up in the balance of the year to reflect what your view of the fundamental power price should be?

Yes, it's kind of two things that go along. I'll set it up and people can add here. So first of all, it is Alberta and frankly, hedges - the liquidity of hedging in Alberta only really opens up a quarter maybe according to half ahead of a quarter. So when you see them dropping off, it’s because really the liquidity in the three quarters after the first quarter is pretty low. And there's not a lot of transactions that take place there. That's number one. And then number two, absolutely, for sure. We think as price formation goes through the year, there's more opportunity. So our team is very good at figuring out when to take some hedges off the table. I don't know. Anybody wants?

No, I mean, I think that's why we've seen liquidity sort of recover. To be constructive d for Q1, which is why we're layering the hedges that are now I think Dawn were around 45% hedge for Q1 of next year. And we are noticing that liquidity for the second quarter is beginning to ramp up as well. And we're just being pretty disciplined from a price perspective, it's quite a big change is happening in the market next year. And there's, you know, there's no point from our perspective, given where we think fundamentals are Todd touched on all the things that he thinks will impact the market next year to rush ahead and hedge a position at prices that we don't think would be appropriate.

Your next question comes from Mark Jarvi with CIBC Capital Markets. Your line is open.

Just with Keephills one in Sundance [indiscernible] D rate, how much of those units have to run to actually breakeven, you know, current fuel costs and power prices. Like is it essentially a qualify mothball or do you actually think those units will be quite active?

Yes, I mean, frankly, we don't really break it down unit by unit, we run it as a portfolio. So it's really the optionality of those units in the portfolio. So as the asset optimizers look at how to set up for the various weeks, days, hours, they'll have different strategies in terms of whether or not they'll have those units on or off on standby but currently, they've determined that having them in that state on gas is beneficial to the portfolio.

Okay. And then let me just talk about power price hedges and whatnot, what's the current perspective, you can talk about your gas transportation, the way you guys on any fuel cost hedges for next year.

So in terms of next year, I think we are pretty much entirely hedged for the first quarter and then drops off a bit, I think four quarters - two to four are at about a 60% hedge level, their mark, and then, you know, in terms of prices, I would say that our prices sort of for the first quarter would be in a roughly in that 290 range and then for the balance of the year, they're kind of bouncing around that kind of 250, 260 range.

And then maybe sort of a broader question. With the repowering you're doing - couple of power timer, repowerings, made the cascade plant coming in, they're all quite efficient, low emissions intensity, no chance that there actually won't be a lot of carbon tax revenue generated from the proper fuel fleet in Alberta. Can you [indiscernible] revisit the tier scheme and the best gas standard, or do you think the standard was set up by committees decisions, and they're just, your views on any of the changes and what people are doing impacts how the tiers set up?

I don't know. That's a big question. I mean, that's a big policy question between the Alberta government and the federal government. And I think as we go forward over the next decade, and environmental policy changes around the tier, the carbon pricing the clean fuel standard, I think there's a lot of moving parts in there. And, you know, effectively we, we continue to like to have a portfolio rather than a single plant investment or a single strategy, because we do think that, on average, our portfolio will perform. And I think, Brett, there's some nuances to in terms of the - the peakers they call the gas peakers have the ability to run more than just regular peakers in that.

I mean, there's a few things. Clearly if it does change, which again would be speculation on our part because that's - everybody is impacted by that. And, anybody's still on solar, co-firing gas and coal would be impacted more than what our units would be impacted by but it would impact all gas units in the province. In terms of gas plant any new peaker is limited because they can't meet the 0.37 to only running I believe it's 30% in a year. So new peaker are challenging to going forward so our converted - boiler converted units are really like peakers. And they'll operate accordingly. Some of them will run more baseload and mid-marathon others, but certainly echoes - again, back to the points we made that it's a fleet. It's a diversified fleet, and we kind of are managing it in that way Mark.

Last one, any updated discussion with your partners, [indiscernible]?

No, updates. There's also a new role right now and no change there.

Your next question comes from Ben Pham with BMO. Your line is open.

I wanted to follow up on some of the reporting questions, and you're expected to pin down your entire Alberta portfolio and where that's going and the transition. Could you comment on your decision to not move to retirement, but it can take a while but just wanted to walk through the process with you. And then on the D rating, I would assume there's still optionality to move up to pass the - assuming if you can procure gas from pipe. Is that correct?

Okay, so I want you to start over again, we're not quite sure what the question. You're breaking up. Sorry.

I have a bit on your first question. So please try that again for us.

So there's the - there was a thought of repowering, two coal units at one point in time. And you, you move with one and you were trying to figure out the - what do you do the second, there's a bunch of EBITDA scenarios you provided. So I was curious more what led you to one? And then the second question I wasn't sure if you heard that, which was just you've opted to D rate. And I'm wondering - I think there's products options for you to move that capacity higher, assuming you get to, you can get more gas to the facilities.

All right. Okay. So let's, I want to be crystal clear on the second question and the first question. So first of all, on the second question, we’re reading those units not because of gas supply, but because of the ability of those units to just run on gas physically, because they haven't been converted to gas. Next year, we'll do additional studies for K - for Sundance unit four and for K1, to determine if they are candidates for gas conversion, simple boiler conversions, we don't see them needed in that capacity fully in 2022 but they may be needed in 2023, 2024. So we'll do those studies next year, there's some optionality there. In terms of the second, it will also be looked at. And hopefully to be looked at in terms of the second repowering, there is definitely a potential for a second repowering in our fleet. These are very, very attractive, repairing as you’ve seen from us. What we want to do, though, is also very much assess climate change policy around that second repowering, because if we get much more aggressive climate targets, there's a very good chance that a second repowering would also have to have some sort of carbon capture and storage associated with it. And it goes back to our comments around green firms power. We just think it's going to get as you go through the decade, there'll be a requirement, we think for more and more cleaner power, which can be achieved by blending some hydrogen in at the plants, by CCS. So when we look at our second repowering, we're very much thinking about how do you - how do you make those megawatt hours less greenhouse gas intensive. So it's definitely not off the table, it is off the table for 2025. We originally I think I thought maybe by 2025, we'd have a second repowering. So for sure we slipped out of that 2025 period, probably in 26, 27 in there. We'll make those - we'll do that analysis all of next year. But we'll be doing that analysis also thinking very carefully about how to ensure that we can meet environmental standards going forward over the next 20 years. Does that make sense?

Yes, absolutely. And maybe just on a topic of crystal clear - maybe a question on the free cash flow guidance Todd, I just, I just want to make sure I got that messaging, right. So your formal guidance is still the midpoint in your MD&A package, and so you're sticking with that, but you're just saying that it looks like there is a possibility to succeed or be at the higher end. And if you do hit the midpoint don't penalize us for it, are you actually saying ignored MD&A and our new guidance? Is that up and just I just wanted to make sure I understood really your positioning on that?

Yes. I definitely see it moving above the midpoint and we are planning and driving the business to deliver towards the high end of that goal.

Your next question comes from Andrew Kuske with Credit Suisse. Your line is open.

I guess, 20 years ago we started the PPAs and there were some uncertainty going into it. Now we're finishing them and there's uncertainty as they finish. So I guess just in that context, you talked a little bit about the lack of liquidity in the hedging market. But ideally, as things stabilize and we've got a better view on bidding behavior, what level of hedging do you think you want to have in the Alberta market specifically for your portfolio? And then how does that triangulate with these credit rating metrics?

Yes. So Andrew, I think that's an important question. And I do think, I've been predicting and it will take some time to see if I actually can be right about this. But as the PPAs roll off and as people in Alberta are completely unhedged in a spot market, I do think there is going to be a whole bunch more contracts than vehicles for hedging that are going to emerge. And we do - we've got a team of people working very closely with customers to see what can be done there as well because I think the PPAs have muted - provided a sort of muting to the market. And once it is a full spot market for sure financial contracts should emerge and there should be - there should over time be a much more transparent signal in terms of what some of the pricing might look like. So for example, even today we're talking to some customers about even three and seven year hedges that kind of thing. Now early, early days, people really need to see what the market looks like. They need to assess the risk of it. But as you know in all markets, that should emerge. In terms of the - our hedge values, it completely depends. So, if we're sitting in a market where it pays nothing for us to hedge because prices are low or prices are weak, we're not going to hedge up then. And if prices get really spicy for whatever reason, we'll probably hedge up more at that point. So our hedge volumes will move sort of from year-to-year. We will disclose where we're at and what our thoughts are, as we're going into the market. We'll probably get a lot better at that, as we go through 2020 and see how the market shapes up and see how some of these customer discussions emerge. But I think it will start to look very much like some of the things you see in other commodity markets, where there'll be times when it does not pay off to continue to hedge. We can't blindly set a level on hedge is another way to say it. We'll have to really be on top of it with our asset optimization - optimizer. Does that make sense? Am I being clear?

And maybe a follow-up to it is do you anticipate evolution to your financial reporting and just a change to that given the fact that you've got a marketing group now? But you're really operating the PPAs, marketing group does some other things on optimization basis. But as you go into full energy-only market, the functions kind of changed? And should the reporting change around that too?

Yes. So there's - I mean, we've - for the last 10 years we've reported on fuel type because fuel type tended to have different levels of capital. Coal was a big capital user and it made some sense for the market to see, especially as we were growing the portfolio with more gas and renewables, you could start to see that just the shape of the way the company reinvested capital was changing. There is an argument and we'll be doing the work on it for having sort of the more of an Alberta portfolio because we do operate it as a portfolio and we have to think about in terms of what the asset optimizers do and how we manage those units here. And frankly, we make electricity and electricity is electricity no matter how it's made. So we are thinking about that. We haven't made any decisions on that at all. But certainly you may expect to see something as we go through next year.

Your next question comes from John Mould with TD Securities. Your line is open.

I'd just like to start with great results for energy marketing in the context of California volatility. But I'd like to focus on opportunities to potentially provide firm supply in the Pacific Northwest. You'll have one operating unit at Centralia through 2025. And just in the context of some of the other coal retirements coming in that region, what opportunities could you have to provide from supply in that market, whether it's a potential gas conversion in Centralia or other investments there?

That's a good question. So, what we know about that region is that, there will be a number of RFPs in the region for the next five years from a number of the players looking for a way to replace all of the coal that's being shut down. And we know that those RFPs will start with looking for more green and accepting more intermittent power. And of course, there's opportunities there with our land with solar and potentially some interesting opportunities on wind. But we know that the region is very, very nervous about, as they go forward and all the coal shuts down, what are they going to do about firm supply. We also know because, we've worked very closely with the environmentalists in that region that they do see some sort of gas transition at least till 2040 because, frankly nobody can conceptualize even though, we're all trying to do it desperately, nobody can conceptualize yet, how to get the kind of supply that you need to create green baseload. It's just not feasible yet. So we've been encouraged by the local customers and local utilities there to think about how to submit into those RFPs and it could even be something frankly where we provide operating reserve or something like that. So, at this point, it looks like the RFPs in that area will be green to start with in the 2020, 2021, 2022 time frame. And then they'll be focusing on how to get some baseload. So, we continue to look at it and it could be even - you think could it be a coal-to-gas conversion which is actually pretty big in that region. It takes a lot of gas and that region doesn't have as much gas as you think but it might be putting a peaking unit back in - remember we've got that BHP plant there that we pretty well sold everything out of. But putting a small LM6000 in there might win a competition if we can get it amortized to 2040. So, those are the kinds of things that are going on. Very, very early days on that, but something the team will be looking at as we go forward.

And then, maybe just circling back on sheerness and the dual fuel plans there and maybe to ask Mark's question in a different way. Will you be able to provide any color on just the future coal versus gas fueling there and how carbon emissions and broader ESG considerations feed into the thinking of the owners regarding the future of coal at that - of those units? Or how you think about TA Cogen stake in sheerness?

Yes. John, it's John. With respect to sort of TA, I'll try to answer your question in reverse. With respect to TA Cogen's interest in the sheerness facilities, we haven't had any discussions in terms of changing the ownership that we have there with our partners CKI. So, right now, we - the status quo is effectively what we're seeing there. In terms of dual fuel, I think all I can say is that, I think the folks at Heartland are pretty much focused on trying to increase and really transition towards a gas-fired facility there. That will be their focus. Will we see some dual fuel burning over the course of 2021? I do expect that. But as time goes by, our expectation would be, is that, it would be predominantly run on natural gas.

And then, maybe just lastly on Brazeau. You've talked before the ability pump storage just to be clear. You've talked before about the ability to maybe build that in stages. I'm just wondering, how much of that project output would need to be contracted before you really felt like you could start to move forward with that? And maybe, how its ancillary value to the broader market kind of plays into that need to contract up the facility before deciding to move ahead?

Yes. I mean, I think you got to get it contracted into that 70%, 80% range to take a risk on that size of investment for us. Now, potentially if we could - if we had a partner that maybe could take more merchant risk than we could, you can change some of that. But for sure, as you look at sort of the ESG world of investing, and you look at some of the demands to reduce carbon, there is a lot of companies now that have to really focus on their scope two emissions, which is the emissions that come from their power supply. And you can see some opportunities, it's actually very, a very interesting project because most it's less about the power hedging, it's more about the environmental permits that come out of it, and the rex and really figuring out how to attract capital into that side of it. So as we do more work on that, we'll talk about that, but it's actually heading the greenhouse gas side of that more than the power side.

Your next question comes from Julien Dumoulin-Smith with Bank of America. Your line is open.

It’s Dariusz Lozny on for Julien. Just wanted to ask one quick question on the RNW side, and has to do with your re-contracting efforts. It sounds like there was some progress made in Southern Cross in the last quarter. And I was wondering, as we kind of look ahead to Sarnia in that contract, what the next milestones that we should watch for would be as far as that recontracting?

Dariusz thanks for the question. And you're right, we're pretty excited about the extension of the contract at Southern Cross, and that extends the life by 15 years there. With respect to Sarnia, I think the next milestone for us would be - and I think we've been pretty transparent about it. It's just all the contracting efforts that we have with the customers there that are behind the fence, our senses, if they're advancing well, our facility does a good job in serving their needs. And we're presently expecting and hopeful that those arrangements would be finalized pretty much across the board in the first half of next year.

Your next question comes from Dan Healing with the Canadian Press. Your line is open.

Dawn already take a step forward - step back and just kind of go through the strategic rationale for moving up the coal retirements. Is it related to the Brookfield investment of yours?

No, not at all. I mean, I think it's really related to kind of overall the economics of producing power in Alberta on coal with the carbon tax. If you look at Alberta, we've currently got a $30 carbon tax and be $40 by next year, $50 the year after. Coal plants get less economic, and they're less flexible in a merchant market. So when you were doing a conversion right now to gas that plant, when it comes back will be highly flexible. And will be highly flexible and will be much easier to run in a market that has more volatility. John, do you want to add something?

Yes, I mean, the only thing is you have to remember is when the climate leadership plan came in from the previous government, and even with the federal government, you know, 2029 was the date that they set for the coal fired generation to end, so really it resulted in the company just refocusing the way it would run this portfolio.

Right.

And I also had a question about what the impact on employees will be, as you close down that coal mine and elsewhere in the operation?

That is the bittersweet sad part of this story. At the height of TransAlta, we had 1500 people working out there. By the end of next year, we'll have 40 or 50 working on reclamation, now they'll have good reclamation jobs for about 20 years, which is great. But it is - those people have given their heart and soul to this company. They are some of the best families in the province and our number one thing is to make sure that they continue to work with us till the end of next year. Having family members to work in that business, I do know that having this certainty is actually helpful to them because they can make plans. But we'll be working really hard to make sure they all continue to work all through next year, and we'll be throwing them a party for all the work they did for the last 50 years for this province.

Your next question comes from Naji Baydoun with Industrial Alliance. Your line is open.

Just a couple of questions, just going back to the Centralia assets. Now that you won't have any coal fired facilities in Canada as of 2022 just wondering if you can give us your latest thoughts on Centralia? And I guess the question is, what would it take to completely remove all coal from your portfolio?

Well, I mean, we'd have to probably sell Centralia to a private buyer. But the interesting thing about Centralia is we have a 360 megawatt hedge on that plant. That's very strong, and it helps create the cash flows till the end of 2025. And as well, when we negotiated that contract, so if you have to go back to 2011, we worked with the governor in 2011. And we basically made an agreement that if they would get us some hedges that we would guarantee that we would shut the plant down at the end of its life. So we guaranteed that we'd shut unit one down at the end of this year, which we are doing, and that we shut unit 2 down at the end of 2025. And in return, we don't have an environmental liability for that because of the work we did with the state there. So I mean, it's really a net present value discussion. But in the meantime, cash flows are strong in that plant and we can use them to reinvest in our green strategy and having cash to reinvest is an important part of our EESG how we're visualizing that.

And I guess a more of a broader question was related to RNW as more of your assets are converted to gas? Does that change at all your drop down strategy for trends renewables? Would you be looking to have a move more of your contracted assets into RNW and sort of keeping the majority of merchant exposure would then TransAlta Corp, like is there a minimum contracted profile that you'd like to maintain at the TA level?

That's a tough question to answer. Because when you - there is a number of benefits that work in both portfolios. So there is - we'll look at a project and, it might have certain tax attributes that work better in TransAlta and another project that has the same sort of green attributes might work better in RNW. So as we now have brought the strategy is pretty close together. And we're really aiming at that ESG world. We will have to do a little bit more work I think to show investors what are investment policy is for both companies. We need a bit more time to do that. But clearly, as we look at a number of portfolios that are coming up for sale in the market, or looking at developing different projects, there are projects that work for both portfolios, and we'll want to make sure we allocate the capital to the right project in the right portfolio to get all the economic benefits that we can. Again, EESG, economic, ESG and so, we're really looking at how to put that - wrap that around both companies together.

There are no further questions at this time. I will now turn the call back over to the presenters.

Great. Thank you everyone. That concludes our call for today. If you have any further questions, please don’t hesitate to reach out for the Investor Relations team here at TransAlta.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.