TransAlta Corporation (TransAlta) has reported revenues of CAD3.1 billion for the year-end 2008, compared with the revenues of CAD2.8 billion in the previous year-end. It has also reported net earnings of CAD235 million, or CAD1.18 per share, for the year-end 2008, compared with the net earnings of CAD309 million, or CAD1.53 per share, in the previous year-end.

Improved comparable results were driven by higher electricity prices in Alberta and the Pacific Northwest, greater merchant production, and increased Energy Trading gross margins. These gains were partially offset by lower Generation gross margins due to higher unplanned outages at Alberta Thermal and the unplanned outage at Genesee 3 as a result of a turbine blade failure.

Net earnings for the year were lower primarily due to the after-tax equity loss of CAD62 million related to the write-down of TransAlta’s Mexico business and higher income taxes for the corporation. Net earnings in 2007 included a one-time gain of around CAD48 million (CAD0.24 per share) resulting from a reduction in the Canadian federal corporate income tax rate.

Cash flow from operations for the year ended December 31, 2008 was CAD1,038 million, compared to CAD847 million for the year ended December 31, 2007. The increase in cash flow from operations in 2008 was driven by higher cash earnings and favourable movements in working capital. In 2008 TransAlta also received 13 PPA payments compared to 12 payments in 2007.

TransAlta’s balance sheet and financial ratios remain strong and it maintains stable investment grade credit ratings. The company has CAD2.2 billion of committed credit facilities and as of December 31, 2008, CAD1.4 billion was available.

In the fourth quarter 2008, TransAlta reported comparable earnings of CAD79 million (CAD0.40 per share) compared to CAD103 million (CAD0.51 per share) in the fourth quarter 2007. The decrease in comparable earnings was driven by lower Generation gross margins due to higher planned and unplanned outages at Alberta Thermal, and the unplanned outage at Genesee 3. This was partially offset by an increase in interest income as a result of a favourable tax assessment.

Net earnings for the fourth quarter 2008 were CAD94 million (CAD0.47 per share) compared to CAD130 million (CAD0.64 per share) in the fourth quarter of 2007. Net earnings were lower primarily due to the reduction in the Canadian federal corporate income tax rate in the fourth quarter of 2007.

Cash flow from operations in the fourth quarter of 2008 was CAD428 million, an increase of CAD236 million compared to CAD192 million earned in the same quarter in 2007. The increase was driven by higher PPA payments received in the quarter and other favourable changes in working capital.

Fleet availability for the year was 85.8% compared to 87.2% in 2007. The decrease in availability is attributed to the higher unplanned outages at Alberta Thermal and Genesee 3 and the planned outage at Centralia Thermal. This was partially offset by lower derates at Centralia Thermal. Fleet availability for the fourth quarter decreased to 86.2% compared to 91.8% in the fourth quarter of 2007 due to higher planned and unplanned outages.

On December 31, 2008 TransAlta began commercial operations of its 96 MW, CAD170 million Kent Hills Wind Farm. Kent Hills, under a 25 year power purchase agreement with New Brunswick Power, will provide 280,000 megawatt hours per year – enough electricity to meet the needs of around 17,300 homes.

Subsequent Events

TransAlta announced today it is 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 CAD68 million.

“TransAlta delivered record cash flow from operations and achieved its goal of delivering low double digit comparable earnings per share growth,” said Steve Snyder, TransAlta’s president and chief executive officer. “This demonstrates the strength and flexibility we have built up across our businesses.”

“Our strong financial position and discipline provides us with the platform to help navigate through the difficult market conditions ahead of us,” Snyder said. “Our focus for 2009 will be to maintain our financial liquidity while we improve availability at our Alberta Thermal operations and continue to contain costs in the face of recessionary markets.”