First Quarter 2026 Results and Conference Call

Good morning. My name is Shannon, and I will be your conference operator today. At this time, I would like to welcome everyone to Transalto Corporation First Quarter 2026 Results Conference Call. Our lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1-1 on your telephone keypad. If you would like to withdraw your question, please press the star followed by 1-1 again. Thank you. Ms. Parrish, you may begin your conference.

Thank you, Shannon. Good morning, everyone. My name is Stephanie Parrish, and I am the Vice President of Investor Relations and Corporate Strategy of Transalta. Welcome to Transalta's first quarter 2026 conference call. With me today are Joel Hunter, President and Chief Executive Officer, Mike Politesky, EVP Finance and Chief Financial Officer, Chris Fralick, EVP Generation, and Nancy Brennan, EVP Legal and External Affairs. Today's call is being webcast, and I invite those listening on the phone lines to view the supporting slides that are posted on our website. A replay of the call will be made 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 set out here on slide 2, detailed further in our MD&A, and incorporated in full for the purposes of today's call. All amounts referenced are in Canadian dollars unless noted otherwise. The non-IFRS terminology used, including adjusted EBITDA and free cash flow, are reconciled in the MD&A for your reference. On today's call, Joel will provide an overview of Transalta's quarterly results. After these remarks, we will open the call for questions. With that, I will turn the call over to Joel.

Thanks, Stephanie. Good morning, everyone, and thank you for joining our first quarter conference call. Trans Delta delivered solid operational performance during the first quarter of 2026. During the quarter we delivered adjusted EBITDA of $204 million, free cash flow of $102 million or 34 cents per share, and average fleet availability of 93.8%. While our Alberta merchant portfolio was impacted by softer than expected prices, our hedging strategy and active asset optimization generated realized prices that were well above spot prices during the quarter. We remain confident in achieving our 2026 guidance range. In the quarter, we advanced our data centre strategy in Alberta and coal to gas conversion at Centralia, hosted our investor day, providing an overview of our strategy and context on the current and future operating environment, and we closed the acquisition of Far North Power Corporation, adding contracted generation in our core market of Ontario. In connection with our fourth quarter and year-end 2025 results, we announced an MOU with CPP Investments in Brookfield for data Centre Development in Alberta, with Transelta as the exclusive power and site provider. We continue to be actively engaged with our counterparties. We are making progress towards definitive agreements. Last month, the ASO released an updated draft process for Phase 2A of their large load integration. It is important to note that this is draft which does not represent final outcomes and will continue to evolve as discussions progress. Transelta continues to participate in the ASO's large load integration working group. We look forward hearing additional details as they finalize the process in the coming months. In March, the U.S. Department of Energy issued another temporary order requiring Centrale Unit 2 to remain available for operation if needed for a 90-day period ending on June 14th. Transelta is adhering to the order and recently submitted its request for reimbursement to the FERC for costs related to the initial order. Progress continues with the conversion, and I'm pleased to report that our timeline for a final investment decision in the first quarter of 2027 remains on schedule. In the quarter, we achieved adjusted EBITDA of $204 million, a decrease of $66 million compared to the first quarter of 2025. This was primarily due to the reduction of generation at Centralia, lower Alberta power and hedge prices, as well as reduced market volatility, which affected energy marketing performance. Hydro segment adjusted EBITDA was $35 million, Down $12 million compared to the first quarter of 2025 due to lower Alberta spot and hedge power prices, lower ancillary prices, reduced merchant volumes, and fewer emissions credit sales to third parties. The wind and solar segment reported an adjusted EBIT of $95 million, a 7% decrease compared to the first quarter of 2025, mainly due to lower wind resource and availability in eastern Canada. Within the gas segment, adjusted EBIT was $93 million, $11 million lower than the first quarter 2025, primarily due to lower Alberta spot and hedge power prices and the retirement of the ADA co-generation facility. These impacts were partially mitigated by higher realized prices on Ontario and the acquisition of Far North power. The energy transition segment experienced a year-over-year decrease in adjusted EBITDA of $36 million. Adjusted EBITDA is anticipated to remain neutral or slightly negative within the segment, primarily due to ongoing expenses associated with retired units in both Alberta and Washington State. These costs are partially mitigated through revenues from by-product sales. Energy marketing adjusted EBITDA decreased by $4 million to $17 million, primarily due to higher incentive costs and associated with higher unrealized market-to-market gains. And corporate costs of $37 million were 10% lower when compared to the first quarter of 2025. In the first quarter, free cash flow totaled $102 million, driven by reduced net interest expense and increased realized foreign exchange gains from operating activities. Overall, despite low Alberta spot power prices, we are pleased with our first quarter operational performance across all of our business segments and remain confident in our ability to meet our 2026 guidance range. Turning to the Alberta portfolio, spot prices averaged $32 per megawatt hour in the first quarter, which was notably lower than the average price of $40 per megawatt hour in the first quarter of 2025. The decline year-over-year was primarily due to a mild winter and addition of new gas generation in the market. The gas fleet exceeded merchant market pricing by realizing an average price of $48 per megawatt hour, a 50% premium to the average spot price of $32 per megawatt hour. The hydro fleet also continued to capture merchant upside, delivering an average realized price of $46 per megawatt hour, a 44% premium to the average spot price. The merchant wind fleet realized an average price of $20 per megawatt hour, which was impacted by increased intermittent wind and solar generation in the overall Alberta merchant power market. Although weather conditions during the quarter were generally mild, contributing to lower average power prices, we enhanced our margins by meeting portions of our higher price hedge commitments through power purchases when market prices were below our variable production costs. We benefited from approximately 2,400 gigawatt hours of hedges, an average price of $66 per megawatt hour, $34 per megawatt hour higher than the average spot price. During the quarter, we delivered approximately 1,000 gigawatt hours of ancillary service volumes at a modest 9% discount to the average spot price. Through effective fleet optimization and meeting hedge obligations with purchase power, we consistently addressed the ASOS demand for reliability products. Looking at the balance of the year, we have approximately 6,900 gigawatt hours of Alberta generation hedged at an average price of $64 per megawatt hour, well above the current forward curve of $41 per megawatt hour. Going forward, we'll continue to optimize our fleet and reduce production in low price, high supply hours by fulfilling our financial hedges and customer requirements with open market purchases. For 2027, we currently have approximately 5,500 gigawatt hours hedged at an average price of $65 per megawatt hour, well above current forward pricing levels. As discussed at Investor Day on March 23rd, we continue to expect the anticipated increase in load will rebalance the current oversupply of Generation Alberta later this decade and drive opportunities for growth in the long term. Last month we announced the addition of two new executives to our leadership team. I'm pleased to welcome Mike Politesky to Transelta as he takes on the role of Executive Vice President and Chief Financial Officer. Mike brings over 25 years of experience in the energy sector. Over the course of his career, he has played a significant role in large-scale transactions and business transformation and brings deep experience in investor relations, governance, and capital allocation. His established reputation as a strong, collaborative leader will be important as we pursue our strategic objectives. I'm also pleased to welcome Grant Arnold as their Executive Vice President, Growth, and Chief Commercial Officer. Grant brings over 30 years of leadership, commercial, and technical experience in the power generation and energy sector. He has contributed and led prior companies through significant growth, expanding their operating and development portfolios across North America. I'm confident that Mike and Grant will strengthen TransAlta's high-caliber leadership team, where together we will execute our strategy focused on discipline growth and operational excellence. I'll now turn the call over to Mike to offer a few words as he steps into the role.

Thanks, Joel. I've been impressed by what TransAlta has built, an operationally strong business with a clear strategy and meaningful opportunity set ahead i'm grateful for the warm welcome i've received externally as well as inside the organization and i'm looking forward to working with all of you as we deliver on our strategy my focus will be straightforward i plan to continue to strengthen our financial position and support the execution of our strategic priorities we will operate with excellence grow with discipline and maximize value for our shareholders, all while ensuring we maintain our financial strength and flexibility through disciplined costs and capital management. I'll now turn the call back over to Joel.

Thanks Mike. For 2026 we remain focused on the following priorities. Improving our leading and lagging safety performance indicators while achieving strong fleet availability. Delivering adjusted EBITDA and free cash flow within our 2026 guidance ranges. maximizing the value of our legacy thermal sites by advancing our alberta data center project as well as advancing our coal to gas conversion at centralia toward a final investment decision pursuing strategic m a opportunities and enhancing our financial strength and flexibility through discipline capital allocation and cost control stepping in as ceo i believe transalta offers a compelling investment opportunity we operate a safe and reliable fleet that generates strong and consistent cash flows. That strength is grounded in a diversified portfolio of hydro, wind, solar and thermal assets across three countries and is enhanced by our industry-leading asset optimization and energy marketing capabilities. Our legacy thermal sites continue to represent considerable increasing value. We are proactively pursuing repurposing opportunities at these facilities to address the growing demand for dependable power in our operating markets. Concurrently, we maintain a leadership position across multiple technologies, consistently prioritizing responsible and reliable generation we are disciplined in how we grow our priority is creating value for our shareholders as we diversify our portfolio within our core geographies and continue to increase the stability and contracted nature of our cash flows this strategy is supported by a strong financial foundation we have a flexible balance sheet and ample liquidity giving us the ability to pursue and deliver multiple growth opportunities while continuing to return capital to shareholders and finally and most importantly we have our people everything we achieve is powered by the dedication and expertise of our employees and contractors i want to thank them for their commitment and for positioning transalta for continued success in 2026 and beyond thank you and i'll now turn the call backwards stephanie

thank you joel shannon would you please open the call for questions from the analyst

thank you as a reminder to ask a question please press star one one on your telephone and wait for your name to be announced to withdraw your question please press star one one again please stand by while we compile the q a roster our first question comes from the line of robert hope with scotia bank your line is now open uh morning everyone um maybe to start off

with um and i know it's early days but can you give us uh any sense or color on how the brookfield mou for the data center in alberta is progressing whether that be for the initial or the uh

subsequent phases yeah Robert Joel here you know we made significant progress as we announced back at the end of February signing the MOU with Brookfield and CPPI I would say to you that this wasn't your kind of boilerplate MOU is quite comprehensive including reaching agreement on a lot of the commercial terms we are now in the process of the definitive agreements and that remains very active between ourselves cppi and brookfield i can't give you a definitive timeline on that other than it is progressing as planned and it is a very collaborative effort between both ourselves

and brookfield and cppi all right appreciate that uh and then maybe moving over to the mna market it is highlighted as a you know a strategic opportunity for 2026 um can you comment on you know how the market is progressing whether you're seeing a good amount of deal flows and kind of what opportunities look uh the best at this moment yeah rob i would say that there is

certainly a lot of uh deal flow um we are constantly looking at opportunities uh really within our core geographies when we look at to canada for example um you know most recently just announced the acquisition obviously far north uh power corporation but we're seeing opportunities here and in the U.S., in particular in the WEC. And it's across all technologies, whether it's thermal, wind, solar. It is quite competitive. So we have to remain very disciplined in how we approach M&A. And, you know, we kind of look at it through the lens. It has to be accretive to our, you know, cash flow per share. It can't harm the balance sheet. So we have to, you know, preserve our balance sheet strength going forward. So it has to be in strategy. and it has to be highly contracted. One of our objectives here is we look at M&A or any capital allocation that we're doing, Rob, that we want to increase our contractiveness over time. So it is critically important that when we look at opportunities that it comes with a strong contract profile or at least a pathway to re-contracting in the future. So I would say to you overall, it's a very robust market. It is very competitive and we just remain very disciplined in how we approach these M&A opportunities. Appreciate the color. Thanks, Rob.

Our next question comes from the line of Mark Jarvie with CIDC. Your line is now open.

Joel, just with the additions to the management team, is there anything else you'd like to add to the team? And I guess below Mike and the additions there, is there sort of a filling out of the bench that is required over the next couple of quarters?

Yeah, Mark, I would say that we've really landed our management team here with the addition of Mike and Grant. We also have on our senior management team here, Chris Fralick and Nancy Brennan are here with me today, along with Jane Fedoritz, who's our head of our chief administrative officer, and Mark Flickinger, who's our head of major construction projects. So we have the right team in place. And what we see below the team at our vice president level is very strong, a very deep bench here that really kind of excites me as we look to execute on our strategy here going forward. So very comfortable where we're at, Mark, here with our executive team, along with the rest of our employees, whether it's from VPs right down to people in the field, wherever, it's a very, very strong team of people that we have in our organization. And it goes to my closing remarks that if it wasn't for our people, we wouldn't be able to execute day-to-day safely and efficiently with our operations or execute on their strategy.

Okay, and then with them settling in their seats, does that potentially push out any sort of M&A timelines out of a few more quarters? And then just curious on how Mike and Grant coming in the fold in the midst of the data center definitive agreements coming together, whether or not they see something or terms or anything like that that could potentially just push out the timelines before you get to definitive agreements just given the fact they've just come on board with the company.

Yeah, Mark. So to answer your first question with respect to M&A, no, it's actually very active. Again, we have a strong team that actually reports into Grant that with respect to M&A and kind of corporate development, that they're very active right now. So that's certainly not going to slow down things at all as it relates to M&A. And similarly, with the data center file as well, that the teams are really responsible for delivering that report into Grant. So Grant, even though he starts today, is actively engaged with the team here. And we certainly don't see any slowdown here with that, given the progress that we have made to date, both with the MOU, with CPPI and Brookfield. It certainly helps having two kind of executives like Mike and Grant to come in and offer their views and things and really support where we need to go with executing on these major initiatives, but it's certainly not slowing us down.

That's good to hear. And the last question for me is just, you brought up the draft of Phase 2A. Just curious in terms of your updated discussions around some bridging solutions. We heard one of your peers talk about the view that they think there's still excess supply from supply in the market with the existing generation and can avoid costly, great upgrade charges. Just where are you in the conversations around maybe being able to use your fleet a bit more in terms of going beyond the 1.2 gigawatts in Phase 1?

Yeah, Mark, certainly there's active dialogue between ourselves, the ASO, and the government, and nothing has changed from what we highlighted in Investor Day on March 23rd. As we look at our coal and gas units here in Alberta, which is roughly 2.7 gigawatts of installed capacity that last year ran at around a 20% capacity factor. So we point to those units to say there is surplus capacity there that could be used as, you know, I call it like almost like a bridge, if you will, for phase two to new generation in the future. I think that's acknowledged that, you know, all levels that there is a spare capacity. And I think, you know, what we're trying to get to here is a win-win situation where we can bring in a data center customer, meet their needs by using a portion of that surplus capacity that's there with our coal to gas units, at the same time, ensuring reliability and affordability for the grid here in Alberta. So very active dialogue. And we know that the ASO wants to get it right. We understand that. And, you know, there are concerned about reliability in the province, but they also are, you know, they see the real opportunity here for data centers to come to the province. So active dialogue, as you can well imagine here, and we remain optimistic, you know, using our coal to gas fleet here going forward beyond phase one.

Would there be an expectation that you'd make some other commitments if you're going to use the existing generation to facilitate incremental load, whether it's a commitment to bring on new generation down the road, dispatch conditions on the existing fleet? Would there be sort of something, I'm not saying concession per se, but some sort of measures you think they'd be required to facilitate more usage of the existing assets?

I would just say to you, Mark, that those are things that we do when we do have discussions that we do bring up here. We're trying to find a solution here where we see that there's, again, this surplus capacity and how best to utilize it, but to ensure that we improve the reliability, if you will, of the grid. I think it's safe to say, though, that, you know, especially with the MOU between Alberta and the federal government and CER going away, that when we think about data centers here in Alberta, this is a long-term investment opportunity for both the data centers and for ourselves. And so when I look at our existing fleet, they're not going to be around forever. So if we can get data centers here in Alberta, then, you know, in all likelihood, you know, we would look to deploy more capital in the province to support the needs of that of that load longer term. So, again, we remain encouraged by, you know, again, what we're seeing from a policy standpoint. We remain encouraged with our discussions with our customers here that, you know, we're taking a very long term view. And, you know, ultimately, if we get to a point where we are building, you know, new facilities here, it would be underpinned, obviously, by a long-term contract with our customers if we got to that point.

Okay. Makes sense. Thanks for the time this morning.

Our next question comes from the line of Benjamin Pham with BMO. Your line is now open.

Hey, Martin. First off, congratulations to Mike and Grant on their appointments. I wanted to go back to the timing of the Alberta MOU. I wanted to clarify to you, is TransAlta still sticking with that expectation for definite agreements by end of year?

Yes, Ben, that's what we're working toward. Again, things are well advanced, and as I mentioned earlier, Ben, the MOU was a large part of that. There was a lot of work behind that that really started last year and ended with us signing the MOU at the end of February. We are now, again, working toward various definitive agreements, and our expectation is it's going to be in year. This can't give you a definitive time around that, but it's certainly something that is a top priority for us, and I believe for our counterparties as well.

Okay, sounds good. And then I wanted to ask you next on your MD&A package. You've broken up your development pipeline between mid-stage and early-stage. I can see the mid-stage one includes mostly the Centralia conversion. I think that's what's in there. Can you unpack the thermal more for us? There's about 1.9 gigawatts. Is that mostly the Alberta redevelopment sites in there?

There is that there. We highlighted three sites in Alberta here with KeyPills 1, Sun 5, and Flippy. That's part of it. And we are, you know, exploring opportunities south of the border as well in Wyoming and Arizona. Again, early days on that, but our corporate development team is looking for thermal opportunities there that would be considered greenfield. So, you know, the key here is with the team, and we talked about this last year when we outsourced really our renewables development to NovaClean, that the focus internally here for our team at TransAlt has been more on thermal here in Alberta and south of the border. And we have some opportunities as well in Western Australia that we're looking at.

Okay, very good. Thank you.

Thanks, Ben.

As a reminder, to ask a question at this time, please press star 11 on your touchstone telephone. Our next question comes from the line of Maurice Choi with RBC Capital Markets. Your line is now open.

Thank you and good morning, everyone. If I could just start with something that, Joel, you mentioned on a press release, specifically about how near-term headwinds in Alberta are materializing. I wonder if you could just elaborate a little bit on that and what you meant on that.

Yeah, Maurice, and good morning. What we meant by that is if you look at, again, our first quarter results, that's the average spot price being $32 per megawatt hour. What we experienced in the first quarter here in Alberta, and really in the West, if you will, taking into consideration the mid-sea market, is there was really no weather. It was very mild, very benign. And as a result, we didn't really see really any spikes in pricing that we normally would experience kind of in the winter in those markets. That really put pressure, obviously, on our results here in Alberta for the first quarter. So that's really the headwinds that we experienced. When you look for the balance of the year, as mentioned in my prepared remarks, the forward rate now, forwards are right around $41, kind of still within our range, at the lower end of our range, if you will, and the guidance that we provided at $40 to $60 per megawatt hour for the year. What gives us confidence, though, Maurice, right now, is a couple of things. One, obviously, our hedges hedged at $64 here for the balance of the year, which is very good. But also, we just look forward to that there could be a weather event. And, you know, the important thing here, Maurice, is that our fleet is available so that when that does happen, that we can flex up the portfolio very quickly to respond to those times in the market when it tightens up and pricing does spike. So, you know, again, we're confident still in our outlook for the year, despite the challenges that we faced in the first quarter. I was very pleased, though, that we generated very strong free cash flow in the quarter of $102 million. dollars and again you know we remain you know convinced stated that you know our guidance for the year is in line with the midpoint that we talked about at a billion dollars of EBITDA and

400 million of free cash flow. That's great and maybe it's a quick follow-up since you discussed four curves. I recall that in the past when we start thinking about 2028 and beyond you know there's discussion about whether or not the four curves are truly representative of what you think it's going to occur. Could you just share your thoughts of what you think about where the forwards are for those years, if you think that that's right or could go up? Yeah, Maurice, I think

it's very similar to what we discussed in Investor Day, that the forward curve today, when you look out to 28 and 29, is not reflected to what we believe. And I think what we pointed to in Investor Day is that between now and 2025, we see here in Alberta just over a gigawatt of net change in load, and due in large part, obviously, to phase one, being 1.2 gigawatts of load in the province, along with just normal demand growth over this period of time of roughly 600 megawatts. There's some incremental supply that would come, as we highlighted in Investor day, including, you know, potential unit upgrades at other facilities that obviously are not owned by TA, potentially a restoration of the inner tie, that when you can put it all together, you know, we see that, again, as mentioned, this net load increase of about 1.1 gigawatts. And we put that through the models that would, you know, that would translate to, you know, power prices or forward prices in that kind of north of $85. And I think what we used in investor day was roughly $100 megawatt hour by 2029. So nothing has changed with that. given that we do see the market kind of tightening up here over the next four or five years with not a lot by way of new supply coming.

And just to finish off on the carbon tax policy, it feels like maybe we're approaching a point where we're going to hear something. Just curious whether or not, what have you been hearing on that, But B, how much of the MOU that you have in front of you is highly dependent on this carbon tax outcome?

Yeah, I would say to you, again, you know as much as we do right now with respect to the MOU and kind of that glide path on the carbon tax, which recall an MOU would be up to $130 per ton. You know, I think the question is, you know, what's the time to get to there? You know, that's the discussion, obviously, between the Alberta government and the federal government there. You know, so nothing has really changed for us. I mean, it's we kind of we know we look at the MOU. It's it's directly positive, I think, for the energy industry overall here in Alberta. And we are we're awaiting the final outcomes of that, like everyone else. and that, but, you know, nothing has changed with respect to how we're thinking about things here in Alberta or in Canada in general today versus where we were even a month ago.

Is that a gating item for MOU?

No, I don't believe so.

Thanks for that. And congratulations again to both of you, Joel and Mike, on your new positions.

Our next question comes from the line of John Mould with TD Cowan. Your line is now open.

Hey, morning, everybody. I'd really just like to focus on your hedge update, too. You've added a meaningful volume of hedges for 2027 relative to what you disclosed at the end of year. And I guess the first part is how are you thinking about further, you know, firming those up as you're able to, just given where forwards are sitting relative to, you know, maybe where they might get to if there's a line of sight on, you know, material market tightening. And I realize that's a little inconsistent with, you know, when the load might arrive, but, you know, we've seen forwards move around pretty substantially on, you know, longer dated expected changes in load. And I guess, As a follow-up to that, what are you seeing in terms of appetite from customers to lock in prices at a level that are maybe higher relative to where things are sitting this year, but conversely, could be pretty attractive relative to where pricing might move to if we get a more balanced and normalized environment driven by some of the low growth we've talked about on the call today?

Yeah, John, good morning. I would say to you that as we look out to 2027 and beyond, but focusing more on 2027, yeah, we did add hedges throughout the quarter. Today, as I mentioned in my prepared remarks, we're around 5,500 gigawatt hours hedged, and an average price is $65, again, well above where we're at on the forwards today. If you look at the forward curve right now, it's around $46. dollars. Just to put it into context, we have recalled that with our hedging, it's not only financial. The large part of it actually is our C&I book. And these tend to be an average tenor of three years. And they tend to attract a premium over the forward, given our customers want that certainty for their three-year period as relates to the amount of generation they require. So our team remains very active in that market. I think it is one of our core capabilities that we have here in Alberta to really manage that book, if you will. I would say to you that when we look to 28 and 29, there's really no liquidity out there at this point in time. Generally, what we see when we're looking at putting on any type of hedges is kind of about 18 months forward, if you will. But I would say also that if we saw forward pricing that is below where we expected to be. So based on my prior comments and what we said at Investor Day, I think the team would hold back saying that the forward curve is reflective of where we think pricing will ultimately go to. And we've done this in the past where a number of years ago, where we looked at the forward curve and we really looked at it and said that the forward curve isn't reflective of where we expect pricing to go. So think of this back in really 2021, 22, and 23. And we benefited from that, that we were a bit, I would call, more open. And similarly, the team saw a tightening or a loosening in the market, if you will, there was going to be more supply really in 24 and 25 and became very active in the hedging. And, you know, and thankfully we did that. And again, as I said earlier, you know, we are hedged at $64 for this year. And last year, we were hedged at $71. And again, we have a strong team that is constantly looking at the markets and saying, okay, what's best here to either lock in at current forward pricing or remain open? So hopefully, it gives you some context around it. We are focused on 27 and really 28, 29 remain open right now, given there's not a lot of liquidity out there and the forward curve is not reflective of where we think it will go.

Okay, that's great. All my other questions were answered, so I'll leave it there. Congrats to Mike and Grant.

Our next question comes from the line of Patrick Kinney with National Bank Capital Markets. Your line is now open.

Hey, good morning, everybody. Just back on the MOU at Key Pills, outside of your commercial discussions, just wondering if you could provide an update on, you know, where things are at with the site development plans and the permitting process. Maybe just comment on how things have progressed from an overall regulatory approval standpoint to build out the full gigawatt potential, just relative to your initial assumptions coming into the year.

Yeah, I would say to you, Pat, first of all, this is one of the advantages of using KeyPills. It's an operating facility today. All its permits are in place. What was key last year was with Parkland County getting the rezoning approved by Parkland County, and we got that, which was a significant step forward for us as it relates to data center development there. And obviously, we've got our allocation under phase one here at the ASO, as you well know. So everything is well in hand because it is an operating facility here that there's nothing meaningful here that we need by way of permits here to continue to advance the opportunity that we have in front of us at Key Bills today.

Okay, that's great. And then on Centralia, just wondering if you had an update or any clarity on the mandate being potentially terminated or perhaps extended beyond mid-June. And I guess, if still online, if your team sees any opportunity to start generating some positive cash flow from the facility through the summer.

Yeah, Pat, so yeah, you're referring obviously to the 202C order that we received that's out to kind of call it mid-June. You know, obviously TransAlta continues to comply with the order. We're also actively engaged both with the state of Washington and the DOE as it relates to the order. It hasn't run thus far, and our expectation is that it likely will not run here through the order, given that when you look at pricing in the mid-sea market, which today is around $42 for the balance of the year, and looking at the variable cost of production from the facility, it's well in excess of that. So we don't expect that the facility will run, but we are, again, complying with the order. I think it's also important to note that we continue to advance the coal to gas conversion with the facility and working with PSC. We are encouraged by PSC filing for the rate filing here back in the first quarter. And we are doing the front-end engineering and design work right now at the facility, which is good, to get to a final investment decision sometime in Q1 of next year. What we do know is Centralia is critical to the reliability and needs in the market that everybody's in agreement that the coal-to-gas conversion is essential. And, again, we have really good dialogue between the state of Washington and the DOE.

Okay, thanks for that. And then last one for me, Joel, just from a balance sheet perspective, as you navigate this weaker period of free cash flow in Alberta, while at the same time still keen to look at M&A opportunities outside the province, just wondering how you might be thinking about asset divestitures across the portfolio, say over the near to medium term, just to ensure a strong financial position. and have some dry powder ahead of any, you know, future opportunities that might come along?

Yeah, Pat, you know, it's a couple of things I've just observed. You know, first one, as we said at Investor Day, is that, you know, our metrics are getting EBITDA being the key metric here. It could drift, you know, above that four times, but it would be temporary that when you look at where we see our EBITDA going in Alberta with stronger prices in that kind of post-2027 time period, that there's certainly a glide path out, along with having, you know, Centralia come online, it will generate about $150 million per year of EBITDA for us starting really in 2029. So again, there's a glide path here that we see. But to your point around, you know, to create additional alcohol dry powder we are looking at the portfolio we have a few things that we're looking at right now that we're very actively engaged on where we may look to rotate some assets here within the portfolio to to create some of that dry powder I given that we are seeing you know the question earlier around the M&A opportunities it remains very robust so that we want to be in a position that again that if there's an opportunity out there that's again live with our strategy, a highly contracted asset. We want to, you know, and again, and the risk adjusted returns meet our hurdle rates, and it's creative on a per share basis that we would look to pursue that opportunity, but at the same time, not overly stretching the balance sheet. And then, you know, on top of, you know, capital rotation, you know, there was a transformative type opportunity. There's other levers that we can pull as well, including, you know, the Brookfield conversion here for the hydro assets that we have that's one and then you always have common equity for something that is transformational here but again any opportunities that we look at have to be creative okay that's great thanks

Joel appreciate the comments thanks Bob thank you there are no further questions at this time I would now like to turn the conference back to Stephanie

Paris for closing remarks thank you everyone that concludes our call for today. If you have any further questions, please contact the TransAlta Investor Relations

team. This concludes today's conference call. You may now disconnect.