TransAlta Power, L.P.
TSX : TPW.UN

TransAlta Power, L.P.

November 03, 2006 09:06 ET

TransAlta Power, L.P. reports higher third quarter results; declares distributions and announces new President

CALGARY, ALBERTA--(CCNMatthews - Nov. 3, 2006) - TransAlta Power, L.P. (TransAlta Power) (TSX:TPW.UN) today announced cash available for distribution (1) of $13.2 million or $0.18 per unit for the three months ending Sept. 30, 2006 compared to $12.6 million or $0.17 per unit for the three months ending Sept. 30, 2005. Distributions paid to unitholders in cash and units were $0.20 per unit, which is consistent with distributions paid in the same period for 2005. Cash available for distribution reflects the seasonality of operations as cash flow is generally lower and planned maintenance generally higher in the second and third quarter than in the first and fourth quarter.

Net income for the third quarter 2006 was $8.7 million or $0.12 per unit, compared to $8.3 million or $0.11 per unit for the third quarter 2005.

"Strong power pricing in Alberta and our ability to capture market conditions in Ontario with respect to the Ottawa plant improved both net income and cash available for distribution compared to the same period last year and the second quarter this year," said Ian Bourne, TransAlta Power, L.P. president and director. "Alberta power prices are expected to remain strong for the remainder of the year. In addition, we will complete the final phase of our current maintenance cycle and continue to work on a long-term solution to address the expiration of the current gas contract for the Ottawa plant."

In the third quarter 2006, Standard and Poor's, a credit rating agency, confirmed TransAlta Power's SR-2 stability rating, which is the second highest stability rating category.

Cash available for distribution was $38.6 million ($0.51 per unit) in the nine months ending Sept. 30, 2006 versus $39.5 million ($0.54 per unit) in the same period last year and was lower primarily as a result of increased capital expenditures related to planned maintenance. Distributions paid to unitholders in cash and units were $0.60 per unit, which is consistent with distributions paid in 2005.

Net income for the nine months ending Sept. 30, 2006 was $22.6 million ($0.30 per unit) compared to $23.7 million ($0.33 per unit) in the same period last year. Net income was lower due to higher fuel costs and depreciation expense, offset by higher margins at the Ottawa plant.

The complete third quarter report for 2006, including Management's Discussion and Analysis and unaudited financial statements, is available by clicking on the Quarterly Reports tab on the left hand side of our website, www.transaltapower.com.

Distributions of $0.06625 per unit were declared today and will be payable on each of Dec. 31, 2006, Jan. 31, 2007, and Feb. 28, 2007 to unitholders of record at the close of business Dec. 10, 2006, Jan. 10, 2007, and Feb. 10, 2007, respectively. Based on TransAlta Power's current operations, it is estimated approximately 35 per cent of the 2006 cash distributions will be tax-deferred.

On Oct. 31, 2006 the Federal Government announced the Tax Fairness Plan. This proposed legislation includes considerable changes to existing tax law related to "specified investment flow-throughs". The proposal is for these investment vehicles to be taxed in the same manner as corporations effective immediately for new conversions and starting in the 2011 tax year for existing organizations. TransAlta Power is currently evaluating the impacts of the proposed legislation. If enacted as proposed, TransAlta Power may be subject to taxation beginning in 2011.

TransAlta Power also announced that as part of Ian Bourne's planned retirement at the end of 2006, he will step down as President and director effective Nov. 6. Brian Burden, Executive Vice President and CFO of TransAlta Corporation, has been appointed to replace Mr. Bourne.

TransAlta Power, L.P. owns a 49.99 per cent interest in TransAlta Cogeneration, L.P., which owns interests in five gas-fired cogeneration facilities in Ontario, Alberta and Saskatchewan and in a coal-fired, mine-mouth facility in Alberta. These facilities have a total generating capacity of 1,352 megawatts of electric power, all of which is sold under long-term contracts to high-quality counterparties.

This news release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Power, L.P. and TransAlta Cogeneration, L.P. 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 legislative or regulatory developments, competition, cost of fuel necessary to produce electricity, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels and general economic conditions in geographic areas where TransAlta Cogeneration, L.P. operates. For further information on risks or any material assumptions utilized in making these forward looking statements refer to TransAlta Power, L.P.'s Annual Report, Management's Discussion and Analysis under the headings "Risk Factors and Risk Management" and "Critical Accounting Policies and Estimates" and under the heading "Outlook" in TransAlta Power, L.P.'s Third Quarter Report 2006 to shareholders. TransAlta Power, L.P. undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.

(1) Cash available for distribution is a measure of TransAlta Power's ability to make distributions to unitholders based on operating results. It is not defined under GAAP. For a further discussion of this non-GAAP term including a reconciliation of cash flow from operations, see page 4 of the MD&A.

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