<SEC-DOCUMENT>0001137171-16-000401.txt : 20161229
<SEC-HEADER>0001137171-16-000401.hdr.sgml : 20161229
<ACCEPTANCE-DATETIME>20161229164943
ACCESSION NUMBER:		0001137171-16-000401
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20161229
FILED AS OF DATE:		20161229
DATE AS OF CHANGE:		20161229

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			TRANSALTA CORP
		CENTRAL INDEX KEY:			0001144800
		STANDARD INDUSTRIAL CLASSIFICATION:	ELECTRIC SERVICES [4911]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		6-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-15214
		FILM NUMBER:		162075615

	BUSINESS ADDRESS:	
		STREET 1:		110 12TH AVE SW BOX 1900 STATION M
		STREET 2:		CALGARY ALBERTA T2P 2MI
		CITY:			CALGARY
		STATE:			A0
		ZIP:			T2P2M1
		BUSINESS PHONE:		403-267-4724

	MAIL ADDRESS:	
		STREET 1:		110-12TH AVENUE SW
		CITY:			CALGARY ALBERTA CANADA
		STATE:			A0
		ZIP:			T2P2M1
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>transalta6k12292016.htm
<DESCRIPTION>TRANSALTA CORPORATION - 6-K
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     <TITLE>JA Filed by Filing Services Canada Inc. 403-717-3898
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<P STYLE="font: bold 14pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-align: center">UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</P>

<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-align: center"><B>FORM 6-K</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-align: center"><B>REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt">For the month of December, 2016</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>TRANSALTA CORPORATION</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">(Translation of registrant&rsquo;s name into
English)</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center">&nbsp;</P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>110-12<SUP>th</SUP> Avenue S.W., Box 1900,
Station &ldquo;M&rdquo;, Calgary, Alberta, T2P 2M1</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">(Address of principal executive offices)</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt">Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt">Form 20-F____ &#9;Form 40-F <U>X </U></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt">Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ____</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt">Indicate by check mark if the registrant is submitting the
Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ____</P>


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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 6pt; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><B>DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K</B></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">See the Exhibit Index hereto.</P>

<P STYLE="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><FONT STYLE="text-transform: uppercase"><B>Signatures</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-indent: 0.5in">Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.&#9;</P>

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<TR STYLE="vertical-align: top"><TD STYLE="padding-right: 9.9pt; padding-left: 5.4pt; width: 50%">Dated: December 29, 2016</TD>
      <TD STYLE="padding-right: 9.9pt; padding-left: 5.4pt; width: 50%"><B>TransAlta
        Corporation</B></TD>
    </TR>
<TR STYLE="vertical-align: top">
      <TD STYLE="padding-right: 9pt; padding-left: 5.4pt">&nbsp;</TD>
      <TD STYLE="padding-right: 9pt; padding-left: 5.4pt">&nbsp;</TD>
    </TR>
<TR STYLE="vertical-align: top">
      <TD STYLE="padding-top: 16px; padding-right: 5.4pt; padding-left: 336px"></TD>
      <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left">By: <U>/s/ Scott Jeffers </TD>
    </TR>
<TR STYLE="vertical-align: top">
      <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"></TD>
      <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left">Name: Scott Jeffers &#9;</TD>
    </TR>
<TR STYLE="vertical-align: top">
      <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left"></TD>
      <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; text-align: left">Title: &#9; Assistant Corporate Secretary</TD></TR>
</TABLE>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>


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<P STYLE="font: 12pt/115% Times New Roman, Times, Serif; margin: 0 0 10pt">&nbsp;</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: bold 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center">EXHIBIT INDEX</P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><B><U>EXHIBIT NUMBER</U></B></P>

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<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font: 12pt Times New Roman, Times, Serif">99.1</TD>
    <TD STYLE="width: 85%; padding-right: 5.4pt; padding-bottom: 6pt; padding-left: 5.4pt; font: 12pt Times New Roman, Times, Serif"><A HREF="mcr.htm">Material change report dated December 29, 2016</A></TD></TR>
</TABLE>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>



<P STYLE="margin: 0">&nbsp;</P>

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<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>mcr.htm
<DESCRIPTION>MATERIAL CHANGE REPORT DATED DECEMBER 29, 2016
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<P STYLE="margin: 0">&nbsp;</P>

<P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>Exhibit 99.1</B></P>

<P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>&nbsp;</B></P>

<P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: center"><B>Form 51-102F3</B></P>

<P STYLE="font: 10pt/115% Arial, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: center"><B>MATERIAL CHANGE REPORT</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 1</B></FONT></TD>
    <TD STYLE="width: 85%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Name and Address of Company</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">TransAlta Corporation (&ldquo;<B>TransAlta</B>&rdquo; or the
        &ldquo;<B>Corporation</B>&rdquo;)</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">110 &ndash; 12<SUP>th</SUP> Avenue SW</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Calgary, Alberta T2P 2M1</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 2</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Date of Material Change</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">December 19, 2016</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 3</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>News Release</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">News release disseminated via Marketwire on December 19, 2016.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 4</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Summary of Material Change</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The Board of Directors of TransAlta approved
        a transaction pursuant to which all the outstanding first preferred shares in the capital of the Corporation are proposed to be
        exchanged for shares in a single new series of cumulative redeemable minimum rate reset first preferred shares, series 1, in the
        capital of the Corporation (the &quot;<B>New&nbsp;Preferred Shares</B>&quot;) pursuant to a plan of arrangement (the &quot;<B>Arrangement</B>&quot;).
        The terms of the New Preferred Shares will be substantially the same as the terms of the existing first preferred shares with the
        exception of an adjustment to the reset spread to 5.29%, a change to December 31, 2021 for the next reset date, and the addition
        of a minimum reset coupon rate of 6.50%.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
</TABLE>

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<P STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt">&nbsp;<BR CLEAR="ALL"></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; width: 15%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 5.1</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%; width: 85%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Full Description of Material Change</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
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<P STYLE="font: 11pt/115% Calibri, Helvetica, Sans-Serif; margin: 0 0 10pt">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="width: 85%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The Board of Directors of TransAlta approved
        a transaction pursuant to which all the outstanding first preferred shares in the capital of the Corporation are proposed to be
        exchanged for New&nbsp;Preferred Shares pursuant to the Arrangement. The terms of the New Preferred Shares will be substantially
        the same as the terms of the existing first preferred shares with the exception of an adjustment to the reset spread to 5.29%,
        a change to December 31, 2021 for the next reset date, and the addition of a minimum reset coupon rate of 6.50%.</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">As at the date of this Material Change
        Report, the Corporation has four series of cumulative redeemable rate reset first preferred shares outstanding, being the series
        A shares, series C shares, series E shares and series G shares, and one series of cumulative redeemable floating rate first preferred
        shares outstanding, being the series B shares (collectively, the &quot;<B>Existing Preferred Shares</B>&quot;).&nbsp;Pursuant to
        the Arrangement, the outstanding Existing Preferred Shares will be exchanged for New Preferred Shares at an exchange ratio specific
        to each series of Existing Preferred Shares.</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The Arrangement is expected to provide
        several benefits to holders of Existing Preferred Shares including:</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">dividend volatility will be minimized
        as a result of the downside protection provided under the terms of New Preferred Shares, which will include a &quot;minimum floor&quot;
        mechanism pursuant to which holders of the New Preferred Shares will have certainty that the reset coupon rate will be no lower
        than 6.50%;</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0 0 0 0.5in; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">the dividends to be paid to holders
        of New Preferred Shares are expected to be greater than the current dividends received by holders of the Existing Preferred Shares
        over the initial five-year reset period based on current interest rate levels;&nbsp;</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">trading liquidity is expected to be
        enhanced, as the consolidation of the Existing Preferred Shares into one series of New Preferred Shares is expected to provide
        holders of New Preferred Shares with more flexibility and depth in the market to buy and sell such New Preferred Shares; and</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">the exchange of Existing Preferred Shares
        for New Preferred Shares will constitute an automatic tax deferred exchange for Canadian income tax purposes.&nbsp;The Arrangement
        will, however, provide holders of Existing Preferred Shares with an option, at their election, to have the exchange occur in a
        manner which may allow a shareholder to realize a capital gain or a capital loss for Canadian income tax purposes.</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The Arrangement is also expected to benefit
        TransAlta by:</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">reducing the Corporation's notional
        capital balance of preferred shares by approximately $300 million, which strengthens the balance sheet and improves certain financial
        ratios; and</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0 0 0 0.25in; text-align: justify">&nbsp;</P>
<UL STYLE="margin-top: 0in; list-style-type: disc">

        <LI STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; text-align: justify; margin: 0">providing future preferred share issuance
        capacity based on the equity treatment guidelines of the Corporation's credit rating agencies.</LI>
</UL>

        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">Pursuant to the Arrangement, (i) holders
        of series A shares will receive 0.503 of a New Preferred Share; (ii) holders of series B shares will receive 0.550 of a New Preferred
        Share; (iii) holders of series C shares will receive 0.705 of a New Preferred Share; (iv) holders of series E shares will receive
        0.790 of a New Preferred Share; and (v) holders of series G shares will receive 0.820 of a New Preferred Share.&nbsp;The New Preferred
        Shares will pay fixed cumulative dividends of $1.625 per share per annum, yielding 6.5% per annum, payable on the last business
        day of March, June, September and December of each year, as and when declared by the Board of Directors of TransAlta.&nbsp;The
        dividend rate will be reset on December 31, 2021 and every five years thereafter at a rate equal to the sum of the then five-year
        Government of Canada bond yield and 5.29%, provided that, in any event, such calculated rate shall not be less than 6.50%. The
        New Preferred Shares will be redeemable by TransAlta, at its option, on December 31, 2021 and on December 31 in every fifth year
        thereafter.</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The Corporation will deliver an information
        circular, describing the proposed Arrangement in greater detail, to holders of Existing Preferred Shares entitled to vote in connection
        with the Arrangement, with a view to completing the Arrangement in the first quarter of 2017.&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"></P>

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<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Calibri, Helvetica, Sans-Serif; border-collapse: collapse">
<TR STYLE="vertical-align: top">
    <TD STYLE="width: 15%; padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="width: 85%; padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">The closing of the Arrangement will be
        subject to various conditions, including: (i)&nbsp;the approval of not less than two-thirds of the votes cast in person or by proxy
        at a special meeting of holders of each series of Existing Preferred Shares; (ii)&nbsp;approval of the Arrangement by the Court
        of Queen's Bench of Alberta; and (iii) any required regulatory approvals, including the listing of the New Preferred Shares on
        the Toronto Stock Exchange.</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">PricewaterhouseCoopers LLP has provided
        its fairness opinion that the Arrangement is fair, from a financial point of view, to holders of each series of Existing Preferred
        Shares.&nbsp;Based on the fairness opinion and after consulting with its financial and legal advisors, among other considerations,
        the Board of Directors of the Corporation (i) has unanimously determined that the Arrangement is in the best interests of the Corporation;
        (ii) has unanimously determined that the Arrangement is fair to the holders of each series of Existing Preferred Shares; and (iii)
        recommends that holders of each series of Existing Preferred Shares vote in favour of the Arrangement.&nbsp;In connection with
        the Arrangement, CIBC World Markets Inc. acted as the financial advisor to the Corporation and Norton Rose Fulbright Canada LLP
        acted as legal counsel to the Corporation.</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0; text-align: justify">&nbsp;</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 5.2</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0"><B>Disclosure for Restructuring Transactions</B></P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0"><B>&nbsp;</B></P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Not applicable.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 6</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Reliance on Section 7.1(2) of National Instrument 51-102</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Not applicable.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 7</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Omitted Information</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Not applicable.</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 8</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Executive Officer</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt">
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">The name and business number of the executive officer who
        is knowledgeable about the material change and this report is:</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Donald Tremblay</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Chief Financial Officer</P>
        <P STYLE="font: 10pt/normal Arial, Helvetica, Sans-Serif; margin: 0">Telephone: (403) 267-2060</P></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Item 9</B></FONT></TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif"><B>Date of Report</B></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%">&nbsp;</TD>
    <TD STYLE="padding-right: 5.4pt; padding-left: 5.4pt; line-height: 115%"><FONT STYLE="font: 10pt Arial, Helvetica, Sans-Serif">December 29, 2016</FONT></TD></TR>
</TABLE>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><B><I>Forward-Looking Statements</I></B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0">&nbsp;</P>

<P STYLE="font: 10pt/115% Arial, Helvetica, Sans-Serif; margin: 0 0 10pt; text-align: justify"><I>This material change report contains
forward-looking statements and forward-looking information within the meaning of applicable securities laws. The use of any of
the words &quot;expect&quot;, &quot;anticipate&quot;, &quot;continue&quot;, &quot;estimate&quot;, &quot;may&quot;, &quot;will&quot;,
&quot;project&quot;, &quot;should&quot;, &quot;believe&quot;, &quot;plans&quot;, &quot;intends&quot; and similar expressions are
intended to identify forward-looking information or statements.&nbsp;All statements other than statements of historical facts included
in this material change report may constitute forward-looking statements, including statements regarding the Arrangement including
completion of the Arrangement and the timing in respect thereof, the rights, privileges, restrictions and conditions attaching
to the New Preferred Shares, the expected benefits of the Arrangement to the holders of the Existing Preferred Shares and to the
Corporation, the exchange ratios in respect of the number of New Preferred Shares to be issued in exchange for the Existing Preferred
Shares, the expected dividends to be paid on the New Preferred Shares and receipt of all required approvals including shareholder
approvals, court approval and regulatory approvals and the timing associated with such approvals.&nbsp;By their nature, forward-looking
information requires us to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that
predictions and other forward-looking information will not prove to be accurate and readers are cautioned not to place undue reliance
on our forward-looking information as a number of factors could cause actual future results, conditions, actions or events to differ
materially from the targets, expectations, estimates or intentions expressed in the forward-looking information. Some of the factors
that could cause such differences include: failure to obtain necessary approvals in a timely fashion or at all; legislative or
regulatory developments and their impacts: global capital markets activity; changes in prevailing interest rates; currency exchange
rates; inflation levels; general economic conditions in the geographic areas where we operate; and deterioration of financial markets.
Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta's expectations only
as of the date of this material change report. TransAlta disclaims any intention or obligation to update or revise these forward-looking
statements, whether as a result of new information, future events or otherwise, except as required by law.</I></P>



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