As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 3/16/09  Transalta Corp                    40-F       12/31/08    7:487                                    Merrill Corp/New/- FA

Document/Exhibit                   Description                      Pages   Size 

 1: 40-F        Annual Report of a Foreign Private Issuer           HTML  4,470K 
 2: EX-13.4     Annual or Quarterly Report to Security Holders      HTML    133K 
 3: EX-23.1     Consent of Experts or Counsel                       HTML     12K 
 4: EX-31.1     Certification per Sarbanes-Oxley Act (Section 302)  HTML     14K 
 5: EX-31.2     Certification per Sarbanes-Oxley Act (Section 302)  HTML     14K 
 6: EX-32.1     Certification per Sarbanes-Oxley Act (Section 906)  HTML     11K 
 7: EX-32.2     Certification per Sarbanes-Oxley Act (Section 906)  HTML     11K 

 

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PRESENTATION OF INFORMATION

 

Unless otherwise noted, the information contained in this annual information form (“Annual Information Form”) is given as at or for the year ended December 31, 2008.  Amounts are expressed in Canadian dollars unless otherwise indicated.  Financial information is presented in accordance with Canadian generally accepted accounting principles.

 

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This Annual Information Form, the documents incorporated herein by reference, and other reports and filings made with the securities regulatory authorities, include forward-looking statements.  All forward looking statements are based on TransAlta’s beliefs as well as assumptions based on information available at the time the assumption was made.  Forward looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as “may”, “will”, “believe”, “expect”, “anticipate”, “intend”, “plan”, “foresee”, “potential”, “enable”, “continue” or other comparable terminology.  These statements are not guarantees of TransAlta’s future performance and are subject to risks, uncertainties and other important factors that could cause TransAlta’s actual performance to be materially different from those projected.

 

Factors that may adversely impact the Corporation’s forward looking statements include risks relating to: (i) fluctuations in market prices and availability of fuel supplies required to generate electricity and in the price of electricity; (ii) the regulatory and political environments in the jurisdictions in which the Corporation operates; (iii) environmental requirements and changes in, or liabilities under, these requirements; (iv) changes in general economic conditions including interest rates; (v) operational risks involving the Corporation’s facilities, including unplanned outages at such facilities; (vi) disruptions in the transmission and distribution of electricity; (vii) disruptions in the source of fuels or water required to operate the Corporation’s facilities; (viii) trading risks; (ix) fluctuations in the value of foreign currencies and foreign political risks; (x) need for additional financing; (xi) liquidity risk; (xii) structural subordination of securities; (xiii) counterparty credit risk; (xiv) insurance risk; (xv) the Corporation’s provision for income taxes; (xvi) legal proceedings involving the Corporation; (xvii) reliance on key personnel and (xviii) labour relations matters and (xix) absence of a public market for certain of the securities offered.  The foregoing risk factors, among others, are described in further detail under the heading “Risk Factors” in this Annual Information Form and in the documents incorporated by reference in this Annual Information Form, including the TransAlta Management’s Discussion and Analysis for the year ended December 31, 2008 (the “Annual MD&A”).

 

Readers are urged to consider these factors carefully in evaluating the forward looking statements and are cautioned not to place undue reliance on these forward looking statements. The forward looking statements included in this document are made only as of the date hereof and the Corporation does not undertake to publicly update these forward looking statements to reflect new information, future events or otherwise, except as required by applicable laws.  In light of these risks, uncertainties and assumptions, the forward looking events might or might not occur.  The Corporation cannot assure you that projected results or events will be achieved.

 

DOCUMENTS INCORPORATED BY REFERENCE

 

TransAlta’s Audited Consolidated Financial Statements for the year ended December 31, 2008 and the Annual MD&A are hereby specifically incorporated by reference in this Annual Information Form.  Copies of these documents are available on SEDAR at www.sedar.com.

 

 

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CORPORATE STRUCTURE

 

Name and Incorporation

 

TransAlta Corporation was formed by Certificate of Amalgamation issued under the Canada Business Corporations Act on October 8, 1992.  On December 31, 1992, a Certificate of Amendment was issued in connection with a plan of arrangement involving the Corporation and TransAlta Utilities Corporation (“TransAlta Utilities” or “TAU”) under the Canada Business Corporations Act.  The plan of arrangement, which was approved by shareholders on November 26, 1992, resulted in common shareholders of TransAlta Utilities exchanging their common shares for shares of TransAlta on a one-for-one basis.  Upon completion of the arrangement, TransAlta Utilities became a wholly-owned subsidiary of TransAlta.  On January 1, 2009, TransAlta was issued a Certificate of Amalgamation under the Canada Business Corporations Act in connection with the amalgamation of TransAlta Corporation, TransAlta Utilities, TransAlta Energy Corporation (“TransAlta Energy” or “TEC”) and Keephills 3 GP Ltd.  The amalgamation was completed as part of a series of transactions involving TransAlta and certain of its subsidiaries and affiliates carried out to reorganize (the “Reorganization”) TransAlta’s interest in certain of its assets.

 

The registered office and principal place of business of TransAlta is at 110 - 12th Avenue S.W., Calgary, Alberta, Canada, T2R 0G7.

 

Intercorporate Relationships

 

Effective January 1, 2009, the Corporation completed an internal reorganization whereby the assets and business affairs of TAU and TEC (with the exception of the wind business) were transferred to TransAlta Generation Partnership, a new Alberta general partnership, whose partners are TransAlta Corporation and TransAlta Generation Ltd., a wholly-owned subsidiary of TransAlta Corporation. TransAlta Generation Partnership is managed by TransAlta Corporation pursuant to the terms of the partnership agreement and a management services agreement.  Immediately following the transfer of assets by TAU and TEC to TransAlta Generation Partnership, TransAlta Corporation amalgamated with TAU, TEC, and Keephills 3 GP Ltd. pursuant to the Canada Business Corporations Act.  TransAlta remains the holding entity of the various businesses of the Corporation, some of which are now held directly, in the case of the wind assets, and some of which are now held indirectly, in the case of the former generation assets and businesses of TAU and TEC.

 

As of January 1, 2009, the principal subsidiaries of the Corporation and their respective jurisdictions of formation are set out below.

 

 

 

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Unless the context otherwise requires, all references to the “Corporation” and to “TransAlta” herein refer to TransAlta Corporation and its subsidiaries on a consolidated basis.  References to “TransAlta Corporation” herein refer to TransAlta Corporation, excluding its subsidiaries.

 

 

OVERVIEW

 

TransAlta and its predecessors have been engaged in the production and sale of electric energy since 1909.  The Corporation is among Canada’s largest non regulated electricity generation and energy marketing companies with an aggregate net ownership interest of 7,976 megawatts (“MW”) of generating capacity1 operating in facilities having approximately 9,697 MW of aggregate generating capacity. In addition, the Corporation has facilities under construction with a net ownership interest of 456 MW, of an aggregate generating capacity of 681 MW.  The Corporation is focused on generating electricity in Canada, the United States and Australia through its diversified portfolio of facilities fuelled by coal, gas, hydroelectric, wind and geothermal resources.

 

In Canada, the Corporation holds a net ownership interest of 5,661 MW of electrical generating capacity in thermal, gas-fired, wind-powered and hydroelectric facilities, including 4,937 MW in Western Canada, 628 MW in Ontario and 96 MW in New Brunswick.

 

In the United States, the Corporation’s principal facilities include a 1,376 MW thermal facility and a 248 MW gas-fired facility, both located in Centralia, Washington, which supply electricity to the Pacific northwest. The Corporation also holds a 50 per cent interest in CE Generation, LLC (“CE Generation”), through which it has an aggregate net ownership interest of approximately 385 MW of generating capacity in geothermal facilities in California and gas-fired facilities in Texas, Arizona and New York. In addition, the Corporation also has 6 MW of electrical generating capacity through hydroelectric facilities located in Washington and Hawaii.

 

In Australia, the Corporation has 300 MW of net electrical generating capacity from gas-fired generation facilities.

 

The Corporation regularly reviews its operations in order to optimize its generating assets and evaluates appropriate growth opportunities.  The Corporation has in the past and may in the future make changes and additions to its fleet of coal, gas, hydro, wind and geothermal fuelled facilities.

 

The Corporation is organized into two business segments: Generation and Commercial Operations and Development. The Generation group is responsible for constructing, operating and maintaining electricity generation facilities.  The Commercial Operations and Development group is responsible for managing the sale of production, purchasing natural gas, transmission capacity and market risks associated with the Corporation’s generation assets and for non asset backed trading activities.  Both segments are supported by a corporate group that provides finance, treasury, legal, regulatory, environmental, health and safety, sustainable development, corporate communications, government relations, information technology, human resources, internal audit, and other administrative support.

 

 

1              TransAlta measures capacity as the net maximum capacity that a unit can sustain over a period of time, which is consistent with industry standards.  All capacity amounts are as of the date of this Annual Information Form and represent capacity owned and operated by the Corporation unless otherwise indicated.

 

 

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GENERAL DEVELOPMENT OF THE BUSINESS

 

The significant events and conditions affecting TransAlta’s business during the three most recently completed financial years are summarized below.  Certain of these events and conditions are discussed in greater detail under the heading “Business of TransAlta” in this Annual Information Form.

 

Recent Developments

 

·                                        On February 10, 2009, the Corporation reported that the 406 MW Sundance 4 facility had experienced an unplanned outage in December 2008 relating to the failure of an induced draft fan.  At the time, the unit was derated to approximately 205 MW.  The repair of the fan components by the original equipment manufacturer took longer than planned and, therefore, Unit 4 did not return to full service until February 23, 2009.  As a result of the extended derate, first quarter production was reduced by 328GWh and net income declined by $17 million.  The Corporation has given notice of a High Impact Low Probability Event to the PPA Buyer and the Balancing Pool which, if successful, will protect the Corporation from the financial loss and related penalties.  The available penalties that the Corporation expects to recover in net income are anticipated to be $14 million.

 

·                                        On January 29, 2009, the Board of Directors of the Corporation declared a quarterly dividend of $0.29 per common share, payable April 1, 2009 to holders of record on March 1, 2009.  This represents a $0.02 per share increase in the quarterly dividend, yielding on an annualized basis a dividend of $1.16 per share.

 

·                                        On January 29, 2009, the Corporation announced that it will be proceeding with the addition of two 23 MW efficiency uprates at its Keephills plant in Alberta. Both Keephills units 1 and 2 will be upgraded to 406 MW and are expected to be operational by the end of 2011 and 2012, respectively. The total capital cost of the projects is estimated at $68 million.

 

·                                        Effective January 1, 2009, the Corporation completed an internal reorganization whereby the assets and business affairs of TAU and TEC (with the exception of the wind business) were transferred to TransAlta Generation Partnership, a new Alberta general partnership, whose partners are TransAlta and TransAlta Generation Ltd., a wholly-owned subsidiary of TransAlta. TransAlta Generation Partnership is managed by TransAlta pursuant to the terms of the partnership agreement and a management services agreement.  Immediately following the transfer of assets by TAU and TEC to TransAlta Generation Partnership, TransAlta Corporation amalgamated with TAU, TEC, and Keephills 3 GP Ltd. pursuant to the Canada Business Corporations Act.  TransAlta remains the holding entity of the various businesses of the Corporation, some of which are now held directly, in the case of the wind assets, and some of which are now held indirectly, in the case of the former generation assets and businesses of TAU and TEC.

 

Year Ended December 31, 2008

 

·                                        On December 31, 2008, the Corporation announced that the 96 MW, $170 million Kent Hills Wind Farm had begun commercial operation.  The wind farm consists of 32 Vestas V90, 3MW wind turbines.  The capacity from this project is sold under a power purchase agreement with New Brunswick Power Distribution and Customer Service Corporation (“New Brunswick Power”).

 

·                                        On October 8, 2008, the Corporation announced the completion of the sale of its Mexican businesses to Intergen Global Ventures B.V. II for a sale price of US$303.5 million.  The sale included the 252 MW gas/diesel combined cycle gas plant in Campeche, a 259 MW combined cycle gas plant in Chihuahua and all associated commercial arrangements.

 

 

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·                                        On May 27, 2008, the Corporation announced that, commencing in 2009, it would be constructing another 66 MW wind generation facility in southern Alberta, consisting of 22 Vestas V90 3 MW wind turbines.  The total capital cost for this expansion of the Summerview wind power project is expected to be $123 million.  The capacity from this project is expected to be sold on the Alberta Power Pool.

 

·                                        On May 5, 2008, the Corporation announced that it had received regulatory approval from the Toronto Stock Exchange (“TSX”) for the continuation of its normal course issuer bid (“NCIB”) program.  Under the NCIB program, the Corporation has approval to purchase, for cancellation, up to 19.9 million of its common shares, representing 10 per cent of its public float as of April 23, 2008.

 

·                                        On April 21, 2008, the Corporation announced a 53 MW efficiency uprate at Unit 5 of its Sundance facility. The total capital cost of the project is estimated at $75 million with commercial operations expected to commence by the end of 2009.

 

·                                        On April 3, 2008, TransAlta announced a partnership with Alstom LLC to develop a one million tonne/year carbon capture and storage project at one of TransAlta’s coal-fired power stations in Alberta.  This project has been shortlisted by the Alberta Government for contributory funding as part of the province’s $2 billion carbon capture and storage (“CCS”) program, with a decision expected by June 30, 2009.

 

·                                        On February 20, 2008, the Corporation announced it had signed a purchase and sale agreement with Intergen Global Ventures B.V. pursuant to which Intergen agreed to pay the Corporation US$303.5 million in cash for its Mexican assets.

 

·                                        On February 13, 2008, the Corporation announced that, commencing in 2009, it would be constructing a 66 MW wind generation facility in southern Alberta, consisting of 22 Vestas V90 3 MW wind turbines.  The total capital costs for this Blue Trail wind power project is expected to be $115 million.  The capacity from this project is expected to be sold on the Alberta Power Pool.

 

·                                        On February 1, 2008, the Board of Directors of the Corporation declared a quarterly dividend of $0.27 per common share, payable April 1, 2008 to holders of record on March 1, 2008.  This represents a $0.02 per share increase in the quarterly dividend, yielding on an annualized basis a dividend of $1.08 per share.

 

Year Ended December 31, 2007

 

·                                        During the third quarter, the Corporation completed an uprate on the Sundance Unit 4 facility.  A final measurement took place in the fourth quarter of 2007 and the generating capacity added as a result of this uprate was 53 MW.

 

·                                        On September 11, 2007, the Corporation announced it had received regulatory approval to increase the number of shares it may purchase under its NCIB program.  As a result, the Corporation was authorized to purchase for cancellation up to 20.2 million shares or approximately 10 per cent of the 202 million common shares issued and outstanding as of April 23, 2007.

 

·                                        On July 17, 2007, the Corporation amended the power purchase agreement with New Brunswick Power to increase capacity at its Kent Hills wind power facility from 75 MW to 96 MW.  As a result, total capital costs for the Kent Hills project will also increase by $40 million, from $130 million to $170 million. The Corporation also signed a purchase and sale agreement with Vector Wind Energy,

 

 

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a wholly owned subsidiary of Canadian Hydro Developers Inc., to acquire its Fairfield Hill wind power site, including an option to develop the site at a future date.

 

·                                        On June 21, 2007, TransAlta Utilities entered into an agreement with Bucyrus Canada Limited and Bucyrus International Inc. for the purchase of a dragline to be used primarily in the supply of coal for the Keephills 3 joint venture project. The total dragline purchase costs are approximately $150 million, with final payments for goods and services due by May 2010. The total payments made under this agreement in 2007 were $18 million.

 

·                                        On February 26, 2007, the Corporation and EPCOR Power Development Corporation (“EPCOR”) announced that they were proceeding with building the 450 MW Keephills 3 power project located approximately 70 kilometres west of Edmonton, Alberta.  The capital cost for the project, including mine capital, is expected to be approximately $1.6 billion and is expected to be completed at the end of the first quarter of 2011. Through the Keephills 3 Limited Partnership (“K3LP”), an affiliate of the Corporation, TransAlta and EPCOR will be equal partners in the ownership of Keephills 3, with TransAlta responsible for managing the joint venture and EPCOR responsible for the construction.  Upon completion, it is expected that TransAlta will operate the facility and EPCOR and TransAlta will independently dispatch and market their share of the unit’s electrical output.  The project has received approval from the Alberta Energy and Utilities Board and from Alberta Environment.

 

·                                        On January 19, 2007, the Corporation announced that it had been awarded a 25-year Power Purchase Agreement (“PPA”) to provide 75 MW of wind power to New Brunswick Power.  Under the agreement, TransAlta will construct, own and operate a wind power facility in New Brunswick.  The capital cost of the project is estimated to be $130 million.  The project is subject to regulatory and environmental approvals and is expected to begin commercial operations by the end of 2008.  Natural Forces Technologies Inc., an Atlantic Canada based wind developer, is TransAlta’s co-development partner in this project.

 

·                                        On January 2, 2007, the Corporation redeemed, at par, all of its outstanding 7.75 per cent preferred securities, with an outstanding principal amount of $175 million.

 

Year ended December 31, 2006

 

·                                        On December 18, 2006, TransAlta Utilities assigned its rights in the development agreement it held with EPCOR, governing the joint development of the Keephills 3 power project, to K3LP.  K3LP subsequently sold a 50 per cent undivided interest in the Keephills 3 power project to the EPCOR Power Development (K3) Limited Partnership and has entered into a joint venture agreement governing the continued development of the Keephills 3 power project.  In the event the Keephills 3 power project proceeds to operation, it is anticipated that TransAlta will be the operator of the project pursuant to an operations and maintenance agreement and coal supply agreement.

 

·                                        On November 27, 2006, TransAlta announced it would immediately stop mining operations at its Centralia, Washington coal-mine.  TransAlta also announced that it had entered into agreements to purchase and transport coal from the Powder River Basin to fuel TransAlta’s Centralia thermal facility.

 

·                                        On November 17, 2006, TransAlta Utilities entered into a settlement agreement with Canadian National Railway Company for a portion of outstanding claims for lost margin and incremental expenses relating to the train derailment and resulting oil spill into Lake Wabamun in 2005.  The terms of the settlement are subject to a confidentiality agreement and cannot be disclosed.

 

 

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·                                        On February 17, 2006, a wholly-owned subsidiary of TransAlta, together with a subsidiary of Mid-American Energy Company (“Mid-American”), entered into an agreement to purchase a 10 MW hydro facility in Hawaii to be held directly by the Wailuku Holding Company LLC, a company jointly and equally owned by TransAlta and Mid-American.

 

·                                        On February 15, 2006, TransAlta announced it had signed a five-year agreement with the Ontario Power Authority (“OPA”) for the supply of electricity from TransAlta’s Sarnia Regional Cogeneration Power Plant.  Under the terms of the agreement, Transalta will be available to supply an average of 400 MW of electricity to the Ontario electricity market.  The supply contract is effective until December 31, 2010.

 

·                                        On February 1, 2006, TransAlta Utilities entered into a development agreement with EPCOR to jointly pursue the Keephills 3 power project.  Keephills 3 is a proposed 450 MW facility adjacent to TransAlta’s existing Keephills facility, approximately 70 kilometres west of Edmonton, Alberta.

 

 

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BUSINESS OF TRANSALTA

 

Generation Business Segment

 

The following table summarizes the Corporation’s generation facilities which are operating, under construction or under development, as at January 31, 2009:

 

Region		Facility		Capacity  (MW)		Ownership  (%)		Net Capacity  Ownership  Interest		Fuel		Revenue Source		Contract  Expiry Date
Western Canada (28 Facilities)		Sundance (1)		2,126		100		2,126		Coal		Alberta PPA / Merchant (2)		2017, 2020
		Keephills (3)		812		100		812		Coal		Alberta PPA		2020
		Sheerness		780		25		195		Coal		Alberta PPA		2020
		Wabamun		279		100		279		Coal		Merchant		-
		Genesee 3		450		50		225		Coal		Merchant		-
		Keephills 3 (4)		450		50		225		Coal		Merchant		-
		Fort Saskatchewan		118		30		35		Gas		Long-term contract (“LTC”)		2019
		Meridian		220		25		55		Gas		LTC		2024
		Poplar Creek		356		100		356		Gas		LTC/Merchant		2024
		Hydro assets (5)		801		100		801		Hydro		Alberta PPA		2013-2020
		Castle River (6)		44		100		44		Wind		LTC/Merchant		2011
		McBride Lake		75		50		38		Wind		LTC		2024
		Summerview 1 (7)		70		100		70		Wind		Merchant		-
		Blue Trail (4)		66		100		66		Wind		Merchant		-
		Summerview 2 (4)		66		100		66		Wind		Merchant		-
		Total Western Canada		6,713				5,393
		Mississauga		108		50		54		Gas		LTC		2017
Eastern		Ottawa		68		50		34		Gas		LTC		2012
Canada		Windsor		68		50		34		Gas		LTC/Merchant		2016
(5 Facilities)		Sarnia (8)		506		100		506		Gas		LTC/Merchant		2022
		Kent Hills		96		100		96		Wind		PPA		2033
		Total Eastern Canada		846				724
		Centralia (9)		1,376		100		1,376		Coal		Merchant		-
		Centralia Gas		248		100		248		Gas		Merchant		-
		Power Resource		212		50		106		Gas		Merchant		-
		Saranac		240		37.5		90		Gas		LTC		2009
United States		Yuma		50		50		25		Gas		LTC		2024
(17 Facilities)		Imperial Valley Geothermal Facilities (10)		327		50		164		Geothermal		LTC/Merchant		2016-2029
		Skookumchuk		1		100		1		Hydro		-		-
		Wailuku		10		50		5		Hydro		LTC		2023
		Total US		2,464				2,015
Australia		Parkeston		110		50		55		Gas		LTC		2016
(5 Facilities)		Southern Cross (11)		245		100		245		Gas/Diesel		LTC		2013
		Total Australia		355				300
Total				10,378				8,432

 

Notes:

(1)                    Includes a 53 MW uprate expected to be commercial in 2009.

(2)                    Merchant capacity refers to 53 MW and 44 MW uprates on units 4 and 6, respectively.

(3)                    Includes two 23 MW uprates on units 1 and 2 expected to be commercial in 2011, and 2012, respectively.

(4)                    These facilities are currently under development.

(5)                    Comprised of 13 facilities.

 

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(6)                          Includes 7 individual turbines at other locations.

(7)                          Comprised of 2 facilities.

(8)                          Sarnia’s net maximum capacity (“NMC”) has been adjusted from 575 MW due to decommissioning of equipment at the facility.

(9)                          Centralia Thermal’s NMC has been reduced from 1,404 MW to reflect a lower plant output as a result of its conversion to burning Powder River Basin coal.

(10)                      Comprised of 10 facilities.

(11)                      Comprised of 4 facilities.

 

Canada:  Alberta

 

Thermal facilities

 

The following table summarizes the Corporation’s western Canadian thermal generation facilities:

 

Location		Plant		Capacity (MW)		Ownership (%)		Commissioning Dates
Wabamun (1)		Wabamun Unit No. 4		279		100		1968
Sundance		Sundance Unit No. 1		280		100		1970
		Sundance Unit No. 2		280		100		1973
		Sundance Unit No. 3		353		100		1976
		Sundance Unit No. 4		406		100		1977
		Sundance Unit No. 5 (2)		406		100		1978
		Sundance Unit No. 6		401		100		1980
Keephills		Keephills Unit No. 1 (3)		406		100		1983
		Keephills Unit No. 2 (3)		406		100		1984
		Keephills Unit No. 3 (4)		450		50		2011
Sheerness		Sheerness Unit No. 1		390		25		1986
		Sheerness Unit No. 2		390		25		1990
Genesee		Genesee 3		450		50		2005
Total				4,897

 

Notes:

(1)                         Wabamun unit 4 is expected to be removed from service upon the expiry of its license in 2010.

(2)                         Includes a 53 MW uprate expected to be commercial in 2009.

(3)                         Includes two 23 MW uprates on units 1 and 2 expected to be commercial in 2011, and 2012, respectively.

(4)                         This facility is currently under development.

 

The Keephills, Sundance and Wabamun facilities (the “Alberta thermal plants”) are located approximately 70 kilometres west of Edmonton, Alberta and are owned by TransAlta.  The Sheerness facility is jointly owned by TransAlta Cogeneration, L.P. (“TA Cogen”), an Ontario limited partnership, and ATCO Power (2000) Ltd. (“ATCO Power”). The Genesee facility is jointly owned by TransAlta and EPCOR.  TransAlta’s thermal plants are generally base load plants, meaning that they are expected to operate for long periods of time at or near their rated capacity.  Availability is an important measure of the economic success of a thermal plant. The weighted equivalent availability factor for the Alberta thermal plants in 2008 was 82.9 per cent compared with 87.1 per cent in 2007 and 88.7 per cent in 2006.  For the Sheerness facility, the weighted equivalent availability factor was 94.1 per cent in 2008 compared to 94.4 per cent in 2007 and 92.2 per cent in 2006.  For the Genesee 3 facility, the weighted equivalent availability factor was 78.2 per cent in 2008 compared to 92.9 per cent in 2007 and 96.9 per cent in 2006.

 

Fuel requirements for TransAlta’s thermal power facilities are supplied by surface strip coal-mines located in close proximity to the facilities.  TransAlta owns two surface mines in Alberta that supply coal to its Alberta thermal plants.  The Whitewood mine supplies the Wabamun plant and the Highvale mine supplies the Sundance and Keephills facilities.  TransAlta estimates that the recoverable coal reserves contained in these mines are expected to be sufficient to supply the anticipated requirements for the life of these facilities including running post PPA expiry and plant expansion.

 

Coal for the Sheerness facility is provided from the adjacent Sheerness mine.  The coal reserves of the mine are owned, leased or controlled jointly by TA Cogen, ATCO Power and Prairie Mines & Royalties Limited (“PMRL”). 

 

 

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by the Corporation to other parties, in which case Suncor is entitled to a share of that revenue, under certain conditions.

 

The Fort Saskatchewan plant is located in Fort Saskatchewan, Alberta and is owned by TA Cogen and Air Liquide Canada Inc.  The 118 MW Fort Saskatchewan gas fired combined cycle cogeneration plant in Alberta provides electricity and steam to Dow Chemical Canada Inc.

 

Hydroelectric facilities

 

The following table summarizes the Corporation’s western Canadian hydroelectric facilities:

 

Location		Plant		Capacity (MW)		Ownership (%)		Commissioning Dates
Bow River System		Horseshoe		14		100		1911
		Kananaskis		19		100		1913, 1951
		Ghost		51		100		1929, 1954
		Cascade		36		100		1942, 1957
		Barrier		13		100		1947
		Bearspaw		17		100		1953, 1954
		Pocaterra		15		100		1955
		Interlakes		5		100		1955
		Spray		103		100		1951, 1960
		Three Sisters		3		100		1951
		Rundle		50		100		1951, 1960
						100
North Saskatchewan River System		Brazeau		355		100		1965, 1967
		Bighorn		120		100		1972
Total				801

 

The Corporation’s hydroelectric facilities are primarily peaking plants, meaning they are generally only operated during times of peak demand.

 

Wind Generation Facilities

 

The following table summarizes the Corporation’s wind generation facilities:

 

Location		Plant		Capacity (MW)		Ownership (%)		Commissioning Dates
Fort MacLeod		McBride Lake		75		50		2003
Pincher Creek		Castle River and Other		44		100		1997 – 2001
Pincher Creek		Summerview 1		70		100		2004
New Brunswick		Kent Hills		96		100		2008
Fort Macleod		Blue Trail (1)		66		100		2009
Pincher Creek		Summerview 2 (1)		66		100		2010
Total				417

 

Note:

(1)            Facility under development reflects expected capacity and commissioning date.

 

The Corporation owns and operates approximately 248 MW of net capacity (excluding facilities under development) and operates approximately 285 MW of capacity primarily in three wind farms in southwestern Alberta and one in New Brunswick.

 

Castle River is a 40 MW facility comprised of 59 Vestas V47 (660 kW) turbines and 1 Vestas V44 (600 kW) turbine located at Pincher Creek, Alberta.  The facility is 71 per cent contracted primarily to ENMAX Energy Corp.

 

 

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capacity of 829 MW, including 327 MW of geothermal generation in California and 502 MW of gas fired cogeneration in New York, Texas and Arizona.

 

CE Generation affiliates currently operate 10 geothermal facilities in Imperial Valley, California.  Each of the geothermal facilities sells electricity pursuant to independent, long term contracts.

 

CE Generation affiliates currently operate three natural gas fired facilities in Texas, Arizona and New York State, having an aggregate generation capacity of 502 MW.  The Arizona facility sells its output pursuant to long-term contracts while the Texas facility has contracted a tolling agreement for capacity, which expires at the end of 2009.  The New York facility sells its output pursuant to long-term contracts until mid-2009, after which point its capacity will be sold on the spot market. The intent is to re-contract both the New York facility and the Texas facility under a tolling agreement for capacity.

 

Wailuku

 

On February 17, 2006, a subsidiary of TransAlta, together with a subsidiary of Mid-American entered into an arrangement to purchase a 10 MW hydro facility in Hawaii to be held directly by the Wailuku Holding Company LLC.  Each of TransAlta and Mid American hold a 50 per cent interest in the facility.  The facility sells electricity pursuant to the terms of a 30 year long-term contract with the Hawaii Electricity Light Company.

 

Australia

 

The Corporation holds interests in Western Australia consisting of the 110 MW Parkeston generation facility through a 50/50 joint venture with NP Kalgoorlie Pty Ltd, a subsidiary of Newmont Australia Limited, and the 245 MW Southern Cross Energy gas and diesel generation facilities.  Most of TransAlta’s generation supplies two large mining companies through long-term capacity contracts and the remaining amount of surplus energy and capacity is sold into Australia’s Wholesale Electricity Market which was introduced in Western Australia in late 2006.

 

TA Cogen

 

The Corporation’s interest in the 220 MW Meridian natural gas fired generation facility in Saskatchewan, the 780 MW Sheerness thermal generation facility, the 118 MW Fort Saskatchewan gas fired cogeneration facility in Alberta, and the Mississauga, Ottawa and Windsor Essex facilities in Ontario, are held through TA Cogen, an Ontario limited partnership owned 50.01 per cent by subsidiaries of TransAlta and 49.99 per cent by Stanley Power Inc., a subsidiary of Cheung Kong Infrastructure Holdings Limited.

 

Commercial Operations and Development

 

The Commercial Operations Development group provides a number of strategic functions to the Corporation, including the following:

 

·                                          Gathering and assessing market intelligence, enabling management to more effectively engage in strategic planning and decision making for the Corporation.  This includes identifying and ranking markets which are the most attractive to enter, and developing strategies and plans to effectively compete in each market where the Corporation operates;

 

·                                          Identifying specific opportunities to develop, acquire, or divest of generation assets in markets where the Corporation is operating or growing and completing the business arrangements so the Corporation can either make investment or divesture decisions;

 

·                                          Negotiating and entering into contractual agreements with customers for the sale of output from the Corporation’s generating assets, including electricity, steam or other energy related commodities;

 

 

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·                                          Scheduling physical deliveries of natural gas supplies used to generate electricity and the electrical generation outputs from each asset to meet contractual obligations while managing the physical and financial risks associated with the generation and transmission of electrical energy, including during those periods of unplanned outages;

 

·                                          Increasing the value of electricity output and fuel inputs from each generating asset through a variety of regional portfolio optimization strategies in both the current year and over the long-term; and

 

·                                          Recommending optimum maintenance schedules and operating levels according to current and anticipated market conditions that will maximize earnings from each of the generation assets.

 

Beyond these functions, the Commercial Operations Development group derives additional revenue and earnings from the wholesale trading of electricity and other energy related commodities and derivatives.

 

The group seeks to manage and limit risk exposures from both financial and physical positions, as well as counterparty risks.  The key risk control activities of the Commercial Operations Development group, in conjunction with other functions of the Corporation, include credit review approval and reporting, risk measurement monitoring and reporting, validation of transactions, and trading portfolio valuation monitoring and reporting.

 

The Corporation uses mark-to-market valuation and the application of a value at risk (“VAR”) determination for risk control practices for its trading portfolios.  This approach is a measure of assessing the potential trading losses that the Corporation could experience over a given time, due to fluctuations in energy prices in each market.  The Corporation’s policy is to actively manage and limit the group’s aggregate VAR exposure within board approved limits.

 

Competitive Environment

 

TransAlta is the largest generator of electricity in Alberta, measured by capacity, and has a significant portfolio of generation assets in the Pacific Northwest and western U.S.  The Corporation also owns and operates generating assets in eastern Canada and Australia.

 

The Corporation expects continued long-term growth of electricity demand in its core markets although short-term growth rates may be significantly reduced in the current economic environment.  In addition to increased demand, many of the markets in which TransAlta participates have established renewable portfolio targets or standards that require new renewable power investments.

 

As part of its balanced approach to capital allocation which includes returning capital to shareholders through dividends and share buybacks, TransAlta also has plans for investing in new capacity in its core markets where opportunities exist for renewable and cogeneration assets.

 

Alberta is Canada’s fourth largest province by population with approximately 3.6 million residents representing approximately 11 per cent of Canada’s total population.  Alberta consumed approximately 70,000 GWh of electricity in 2008.  As at December 31, 2008, the aggregate installed capacity of generating facilities in Alberta was approximately 12,300 MW.

 

Electrical utilities in the U.S. Pacific Northwest are organized into the Western Electricity Coordinating Council (“WECC”).  The WECC is the largest geographically of the ten regions in the North American Electric Reliability Council and is divided into four sub regions, of which Region 1 includes British Columbia, Alberta, Washington, Oregon, Idaho, Montana, Utah, Western Wyoming and Northern Nevada.  This sub region is referred to as the Northwest Power Pool (“NWPP”).  The WECC estimates that approximately 369,000 GWh of electricity was consumed in the NWPP in 2008.  The WECC also reported an estimated aggregate electrical generating capacity of approximately 85,000 MW in the NWPP for the year ending 2008.