Annual and Special Meeting2007

Board of Directors

William D. Anderson

Board of Directors

Stanley J. Bright

Board of Directors

Timothy W. Faithfull

Board of Directors

Gordon D. Giffin

Board of Directors

C. Kent Jespersen

Board of Directors

Michael M. Kanovsky

Board of Directors

Gordon S. Lackenbauer

Board of Directors

Dr. Martha C. Piper

Board of Directors

Luis Vazquez Senties

Board of Directors

Stephen G. Snyder

Board of Directors

Donna Soble Kaufman

Annual and Special Meeting2007

Chief Financial Officer’s ReportBrian Burden

Forward looking statementsThis presentation may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. All forward-looking statements are based on our beliefs and assumptions based on information available at the time the assumption was made. These statements are not guarantees of our future performance and are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include cost of fuels to produce electricity, legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels and general economic conditions in geographic areas where TransAlta Corporation operates. Given these uncertainties, the reader should not place undue reliance on this forward-looking information, which is given as of this date. The material assumptions in making these forward-looking statements are disclosed in our 2006 Annual Report to shareholders and other disclosure documents filed with securities regulators.

Unless otherwise specified, all dollar amounts are expressed in Canadian dollars.

Outline

•2006 Financial Results

•2007 Financial and Operating Objectives

•Financing Growth

2006 financial results

Results 2006 2005

Comparable earnings (MM) $233.8 $161.3 $127.1

Comparable earnings $1.16 $0.82 $0.66

$186.32

$0.94

$1.00

$619.8

$159.7

89.4

51,810

$44.91

$0.22

$1.00

$675.63

$217.2

89.0

48,213

2004

Net earnings (MM) $170

Per share

Net earnings $0.88

Dividends $1.00

Cash flow from Operations (MM) $591.2

Free Cash Flow $170.1

Availability (%) 89.2

Production (GWh) 51,396

Strong availability, increased gross margin, lower OM&A and income tax expense offset by Centralia one-time events

1. Includes $153.6 million after tax charge related to Centralia mine closure, $84.4 million impairment of the Centralia Gas facility, $6.2 million after tax writedown of a turbine in inventory in Q1, and $53.3 million benefit from tax rate changes in Q2

2. Includes $12 million after tax gain on discontinued operations, and $13 million from a tax settlement on a deferred receivable3. Includes $185 MM receivable received Jan. 2, 2007, due to timing of collection of November sales

Financial ratios Target 2006 2005 2004

Cash flow to interest (x) >4.2

>28

<48

4.7 4.3

Cash flow to total debt (%)

5.5

26.2 23.0 19.1

Debt to total capital (%) 40.9 43.9 46.4

Strong credit ratios indicative of commitment to maintaining investment grade

Financial objectives and measures

Objectives Measures 2007 Goals 2006

9%8.3%2

$1.16

$675 MM3

Investment grade

$7.93

Flat

48%7.1%

Increase comparable earnings per share Comparable EPS 6 - 10% $0.82

$620 MM

Investment grade

$8.13

+225 MW(G3 online)

Deliver long-term shareholder return

TSRROCE1

10%~10%

Improve productivity OM&A/installed MWh Offset inflation

Grow capacity profitably Installed capacity Increase ~5%/yr

Increase operating cash flow Operating cash flow $650 - $750 MM

Maintain strong financial ratios Credit ratios

Investment grade

2005

1. Return on capital employed (ROCE) = earnings before non-controlling interests, income taxes and net interest expense/average annual invested capital.

2. 8.3% ROCE is on a comparable basis. Q1 2007 reported ROCE is 2.4%3. Includes $185 MM receivable received Jan. 2, 2007 due to timing of collection of November sales

Operating objectives and measures

Objectives Measures 2007 Goals 200690% 89%1

81%

$1.5 B

$233 MM

Compliance in all markets

>75% 2

Increase

Make sustaining capex predictable

Sustaining capex budget $320 - $345 MM $153 MM

< emissionsintensity

Maintain targeted availability

Fleet availability 88.6%

Contract plant output Contracted

output > one year

82%

Reduce environmental footprint

Emissions reductions

Compliance in all markets

Increase gross margin Margin $1.4 B

2005

1. Includes impact of the August 6, 2006 Centralia blade failure. Excluding the blade failure, availability was 89.6%2. At December 31, 2006, 93% of plant capability is contracted for 2007, this included contracts that are less than one

year in term

Q1 2007 highlights

Results Q1’07 Q1’06 % VarianceComparable earnings (MM) $66.0 $75.4 (13)

Comparable earnings $0.33 $0.38 (13)

$69.21

$0.35

$0.25$200.7$114.4

96.9

$66.0

12,444

(5)

(6)

-64

(63)

(9) 2

$0.33

$0.25$330.82

$41.6

88.23

12,697

Net earnings (MM)Per share

Net earnings

DividendsCash flow from Operations (MM)

Free Cash Flow

Availability (%)Production (GWh)

1. Includes $6.2 million after tax write down of a turbine in inventory2. Includes $185 MM receivable received Jan. 2, 2007, due to timing of collection of November sales3. Normalizing the impact of Centralia derates, availability was 94%

Variance primarily due to normal unplanned outages and higher planned outages at Alberta Thermal, and accelerated test burns of PRB coal

Short term increase in sustaining capex

$MM 2006 2007

$214 $320 - $345

$100 - $105

$80 - $85

Centralia Fuel Blend - $55 - $60

$85 - $95

$255 - $2651

$3 - $5

$578 - $615

$100

$27

$87

$10

Mexico $10

Total $234

Sustaining

Routine capital

Mine capital

Major maintenance

Growth

Increase in sustaining capital supports Alberta mine activities and Centralia fuel blend modifications. Growth capex includes Sun 4 uprate,

Kent Hills wind project and Keephills 3.

1. Includes approximately ~$20 million for Kent Hills, ~$35 million for Sundance 4, ~$200 million for Keephills 3

Disciplined capital allocation process

1. Strategic fit• Commercial and operational criteria• Merchant vs. contracted• Brownfield, acquisition and greenfield

2. Internal rate of return • Project specific hurdle rates • Unlevered IRR must be greater than WACC • Assumes 50:50 capital structure

3. Net present value• Allocate capital to projects yielding greatest

cash flow4. Accretion

• Should be accretive to cash flow and earnings1

5. Credit quality• Supports investment grade credit rating

• Decisions benchmarked vs. 10% TSR and 10% ROCE goals

• Balance between brownfield expansion, acquisition and greenfield development manages cash resources and supports credit ratios

1. Excludes construction period for greenfield and brownfield development

2007 - What investors can expect

•Build on strong platform established over last three years•Drive strong operating cash flow from existing assets to

support investment grade financial ratios and achieve near-term financial and commercial goals

•Maximize shareholder value through accretive investments which fit business model and complement portfolio

•Disciplined execution of current portfolio and growth opportunities should result in achievement of ROCE and total shareholder return objectives

Chief Executive Officer’s ReportSteve Snyder

Return on Capital

Employed

10% plus

Our Goals

TotalShareholder

Return

10% plus

State of the Industry

Strong economic growth• Increased demand•Reserve margins

Uncertainties•Regulatory landscape•Hybrid markets•Price and availability of fuels•Replacement costs for plants•The environment

We’re ready

• Increased investment in renewables

•Emission trades and offsets

•Canadian Clean Power Coalition

•Public policy discussions•Carbon Capture and

Storage Task Force

Environmental Leadership

Market Opportunities

Coal-fired plants

Coal-fired plants(IN DEVELOPMENT)

Hydro plants

Gas-fired plants

Wind-powered plants

Wind-powered plant(IN DEVELOPMENT)

Geothermal plantsCorporate offices

Energy Marketing offices

4,887 MW

278 MW

807 MW

2,464 MW

152 MW

75 MW

163 MW

GENERATION FACILITIESCAPACITY OWNED

Alberta

Ontario

Mexico

Australia

United States

A sound and sustainable business model

Financial Strengths•Strong balance sheet, stable credit rating

Operations•Higher availability, reduced expenses

Life Cycle Planning•Careful spending, higher performance levels

Commercial Development and Marketing•Assessing portfolio and markets, growing the business

Executive Team

Annual and Special Meeting2007