$55 million community development, energy efficiency investment moving ahead

CENTRALIA, WASHINGTON--(Marketwired - July 30, 2015) - TransAlta Corporation (TSX:TA) (NYSE:TAC) has announced it is moving ahead with plans to invest $55 million over 10 years to support energy efficiency, economic and community development, and education and retraining initiatives in Washington State.

The initiative is part of TransAlta Centralia's transition from coal-fired operations in Washington, beginning in December 31, 2020.

The $55 million community investment is part of the TransAlta Energy Transition Bill, passed in 2011. This bill was an historic agreement between policymakers, environmentalists, labor leaders and TransAlta to transition away from coal in Washington State, closing the Centralia facility's two units, one in 2020 and the other in 2025.

TransAlta's long-term contract with Puget Sound Energy, which is up to 380 megawatts (MW), is key to Centralia operations. Although TransAlta did not secure additional long-term contracts totaling 500 MW as required in the original agreement as a condition of the investment, the company is following through on its funding pledge. Low power prices and slow economic growth reduced the need for new capacity.

"Being a good neighbor means investing in the communities in which we operate," said Dawn Farrell, TransAlta president and CEO. "Although growth has been slower than expected, we are taking the long view on this partnership with the community, Puget Sound Energy and Washington State and keeping our commitment. The funding enables the community to transition to new sources of energy over a reasonable timeframe as well as manage the economic and employment implications of the scheduled plant closures."

After the legislation passed, an agreement was signed to create three boards to distribute funding to support a variety of actions including, education and retraining; energy efficiency measures for low-income residents; and new technologies geared to improving the environment.

"TransAlta's decision is a welcome step that continues their commitment to Washington," said State Governor Jay Inslee. "I am excited about the opportunities these funds will create to grow the local economy and develop innovative new clean technology. Our partnership is a model for how we can make significant progress on climate change while creating jobs and strengthening communities."

TransAlta is considering plans to build a new gas plant at the Centralia site or convert the coal-fired units to natural gas. Until that time, TransAlta will continue to be a partner and environmental steward of the state's resources. TransAlta has invested more than $300 million to make Centralia one of the cleanest coal plants in North America today and we continue to improve our environmental performance.

"The company providing financial support for the workers and community as well as new clean energy technologies was a critical factor that made the 2011 agreement to close the coal-fired plant a landmark," said Nancy Hirsh, executive director of the NW Energy Coalition, "The Coalition looks forward to working with TransAlta to further clean energy investments in Washington."

Funding Boards

Annual payments for the funding boards have been made for the past three years with the last payment due Dec. 31, 2023. The boards will have an opportunity to start flowing dollars into projects starting December 31, 2015.

Weatherization Board: established to fund energy efficiency and weatherization for the residents, employees, business, non-profit organizations and local governments within Lewis County and South Thurston County; up to $1 million shall be allocated to fund residential energy efficiency and weatherization measures for low-income and moderate-income residents of Lewis County and South Thurston County;

Economic & Community Development Board: established to fund education, retraining, economic development, and community enhancement; up to $5M shall be allocated to fund education, retraining and economic development specifically targeting the needs of workers displaced from the Centralia facility;

Energy Technology Board: established to fund energy technologies with the potential to create environmental benefits to the State of Washington.

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About TransAlta:

TransAlta is a power generation and wholesale marketing company focused on creating long-term shareholder value. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate wind, hydro, natural gas and coal facilities in order to provide customers with a reliable, low-cost source of power. For over 100 years, TransAlta has been a responsible operator and a proud contributor to the communities in which it works and lives. TransAlta has been selected by Sustainalytics as one of Canada's Top 50 Socially Responsible Companies since 2009 and is recognized globally for its leadership on sustainability and corporate responsibility standards by FTSE4Good.

Forward Looking Statements:

This news release may contain forward looking statements, including statements regarding our business, expected length and contracting terms, anticipated financial performance of TransAlta Corporation or its subsidiaries and expected production of our facilities. These statements are based on TransAlta Corporation's belief (including those of its subsidiaries) and assumptions based on information available at the time the assumption was made. These statements 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 changes in the market place in which these assets operate, legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels, commodity prices and general economic conditions in the geographic areas where we operate.