<SEC-DOCUMENT>0001279569-17-000389.txt : 20170303
<SEC-HEADER>0001279569-17-000389.hdr.sgml : 20170303
<ACCEPTANCE-DATETIME>20170303142639
ACCESSION NUMBER:		0001279569-17-000389
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20170303
FILED AS OF DATE:		20170303
DATE AS OF CHANGE:		20170303

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:		17662896

	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>
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<DESCRIPTION>FORM 6-K
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<P STYLE="font: bold 14pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT><FONT STYLE="font-size: 14pt">UNITED
STATES</FONT><BR>
<FONT STYLE="font-size: 14pt">SECURITIES AND EXCHANGE COMMISSION</FONT><BR>
<FONT STYLE="font-size: 12pt">Washington, D.C. 20549</FONT></P>

<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0 0 24pt; text-align: center"><FONT STYLE="font-size: 18pt"><B>FORM
6-K</B></FONT></P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt"><FONT STYLE="font-size: 10pt">For the month of
March 2017</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 24pt"><B>TRANSALTA
CORPORATION</B></FONT></P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt">(Translation
of registrant&rsquo;s name into English)</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt"><B>110-12<SUP>th
</SUP>Avenue S.W., Box 1900, Station &ldquo;M&rdquo;, Calgary, Alberta, T2P 2M1</B></FONT></P>

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<P STYLE="font: 11pt Times New Roman, Times, Serif; margin: 0; text-align: center"><FONT STYLE="font-size: 10pt"><B></B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center"><FONT STYLE="font-size: 10pt">(Address
of principal executive offices)</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center"><FONT STYLE="font-size: 10pt">&nbsp;&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><FONT STYLE="font-size: 10pt">I<FONT STYLE="font-family: Times New Roman, Times, Serif">ndicate
by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.</FONT></FONT></P>

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    <TD STYLE="width: 50%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form 20-F &#9744;</FONT></TD>
    <TD STYLE="width: 50%; text-align: center"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Form 40-F &#9746;</FONT></TD></TR>
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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): ____</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">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): ____</FONT></P>

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

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

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0; text-align: center; margin-bottom: 0"><FONT STYLE="font-size: 10pt"><B>I</B></FONT></P>

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

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0"><FONT STYLE="font-size: 10pt">The document listed below as
Exhibit 99.1 to this Form 6-K is a copy of the Registrant&rsquo;s news release dated  March 3, 2017 announcing
&ldquo;TransAlta Reports Fourth Quarter and Full Year 2016 Results&rdquo;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><FONT STYLE="font-size: 10pt">This news release
is being furnished, not filed, and will not be incorporated by reference into any registration statement filed by TransAlta Corporation
under the Securities Act of 1933, as amended.</FONT></P>

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    <td style="width: 85%; padding-right: 5.4pt; padding-left: 5.4pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">News
    Release Dated  March 3, 2017 - TransAlta Reports Fourth Quarter and Full Year 2016 Results</FONT></td></tr>
</table>
<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt 40.5pt; text-indent: 0in"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

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

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


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<P STYLE="font: 14pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-align: center"><FONT STYLE="font-size: 10pt"><B>Signatures</B></FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt"><FONT STYLE="font-size: 10pt">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.</FONT></P>

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    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD COLSPAN="2"><FONT STYLE="font-size: 10pt"><B>TransAlta Corporation</B></FONT></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD STYLE="width: 52%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 5%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD STYLE="width: 43%"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">By:</FONT></TD>
    <TD STYLE="border-bottom: Black 1pt solid"><FONT STYLE="font-size: 10pt"><I>/s/ Donald Tremblay</I></FONT></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD></TD>
    <TD><FONT STYLE="font-size: 10pt">Donald Tremblay</FONT></TD></TR>
<TR STYLE="vertical-align: top; text-align: left">
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">&nbsp;</FONT></TD>
    <TD><FONT STYLE="font-size: 10pt">Chief Financial Officer</FONT></TD></TR>
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 24pt"></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 9.9pt 0 0"><FONT STYLE="font-size: 10pt">Date: March 3,
2017</FONT></P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0.25in 12pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt; text-indent: 0in"><FONT STYLE="font-size: 10pt"><B>EXHIBIT
INDEX</B></FONT></P>

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    <td style="width: 85%; padding-right: 5.4pt; padding-left: 5.4pt; font: 12pt Times New Roman, Times, Serif; text-align: justify"><FONT STYLE="font-size: 10pt">Press
    release dated March 3, 2017</FONT></td></tr>
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<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0 12pt"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>

<P STYLE="font: 12pt Times New Roman, Times, Serif; margin: 0 0.25in 12pt 0"><FONT STYLE="font-size: 10pt">&nbsp;</FONT></P>



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<DESCRIPTION>NEWS RELEASE DATED MARCH 3, 2017
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<P STYLE="margin: 0; text-align: right"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Exhibit 99.1</B></FONT></P>

<P STYLE="margin: 0; text-align: right"><FONT STYLE="font: 8pt Arial, Helvetica, Sans-Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="margin: 0; text-align: right"><FONT STYLE="font: 8pt Arial, Helvetica, Sans-Serif"><B>&nbsp;</B></FONT></P>

<P STYLE="margin: 0; text-align: left"></P>

<P STYLE="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0pt 0 12pt"></P>

<P STYLE="font: 12pt Arial, Helvetica, Sans-Serif; margin: 0pt 0 12pt"><B>TransAlta Reports Fourth Quarter and Full Year 2016 Results</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">CALGARY, March 3, 2017 /CNW/ - TransAlta Corporation (&quot;TransAlta&quot;
or the &quot;Company&quot;) (TSX: TA; NYSE: TAC) today reported its fourth quarter and full year 2016 financial results. &nbsp;Comparable
EBITDA<SUP>(1) </SUP>for the fourth quarter 2016 was $374 million compared to $268 million during the same period last year. Comparable
FFO<SUP>(1)</SUP> for the quarter was $228 million, or $0.79 per share, compared to $243 million, or $0.86 per share, during the
same period last year. The Keephills 1 <I>Force Majeure (</I>the &quot;K1 FM&quot;) adjustments to our provisions had no impact
on FFO. &nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Comparable EBITDA&nbsp;for the full year ending December 31,
2016 totaled $1,145 million, an increase of $200 million compared to 2015. Comparable FFO for the full year ending December 31,
2016 was $763 million compared to $740 million in 2015 and in-line with the guidance range for the year of $755 to $835 million.
&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Improved results in 2016 are a result of full year contributions
from renewable assets acquired in the second half of 2015, solid performance from our gas and renewable portfolios, cost reduction
initiatives across the fleet implemented in 2015, and the reversal of our provision relating to the K1 FM in 2013. Our highly contracted
profile and hedging strategy mitigated the impact of lower prices during the year in Alberta; however, unfavourable market conditions
in the Pacific Northwest negatively impacted the contribution from our US coal segment.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&quot;We landed a solid year despite record low power prices
in Alberta and the Pacific Northwest,&quot; said Dawn Farrell, President and Chief Executive Officer. &quot;Highlights for year
include landing the coal transition agreement, meeting our 2016 guidance, and furthering the repositioning of our capital structure,&quot;
commented Mrs. Farrell.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">As at December 31, 2016, total debt, net of cash, totaled
$4.1 billion compared to $4.4 billion at December 31, 2015. The decrease is primarily due to debt paid down using the proceeds
received from the sale to TransAlta Renewables of economic interests in the Canadian Assets (as defined below) completed in January
2016, free cash flows generated by the business, and the strengthening of the Canadian dollar. Over the next four years, we have
approximately $2.2 billion of recourse and non-recourse debt maturing. We expect to refinance some of these upcoming debt maturities
over the next 18-months by raising $700 million to $900 million of debt secured by our contracted cash flows. We have access to
approximately $1.7 billion in liquidity at the end of the year and we expect to continue our de-leveraging strategy with a portion
of our free cash flow over the next four years being allocated to debt reduction.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Comparable net earnings attributable to common shareholders
for the full year ending December 31, 2016 was $34 million ($0.12 net earnings per share) compared to comparable net loss of $48
million ($0.17 net loss per share) in 2015. The year-over-year improvements primarily relate to contributions from assets we acquired
last year, solid performance from the renewable asset portfolio, cost reduction initiatives and the reversal of our provision for
the K1 FM. Reported net earnings attributable to common shareholders was $117 million ($0.41 net earnings per share) compared to
net loss of $24 million ($0.09 net loss per share) in 2015. Comparable net earnings and reported net earnings for the three months
ending December 31, 2016 were $53 million and $61 million, respectively as compared to $3 million and a net loss $7 million in
same period in 2015.</P>

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    <TD COLSPAN="2" STYLE="padding: 1.5pt; font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">_________________________________</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt; font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>(1)</I></FONT></TD>
    <TD STYLE="padding: 1.5pt; font: 10pt Arial, Helvetica, Sans-Serif"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods' results. Refer to the Comparable Funds from Operations and Comparable Free Cash Flow and Earnings and Other Measures on a Comparable Basis sections of the Company's MD&amp;A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.</I></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>2017 Outlook</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">The following table outlines TransAlta's financial outlook
for 2017 which was released on December 19, 2016:</P>

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    <TD STYLE="border-bottom: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Measure</B></FONT></TD>
    <TD STYLE="border-bottom: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Target</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable EBITDA<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$1,025 million to $1,135 million</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable FFO<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$765 million to $855 million</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Sustaining Capital</FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$260 million to $280 million</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable FCF<SUP>(1)</SUP></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$300 million to $365 million</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Fleet Availability</FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">88% to 90%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Coal Availability</FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">86% to 88%</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>2017 Key Priorities </B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">In addition to meeting the financial targets set out in the
2017 Outlook, other priorities in 2017 include:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Working collaboratively with the Government of Alberta
on advancing our investment in Brazeau, contributing to the design of a new capacity market, and establishing terms and conditions
to convert coal plants to gas; </FONT></TD></TR></TABLE>

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<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Commissioning South Hedland; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Growing our renewables platform through RFP's in Saskatchewan,
Alberta and Australia; </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Continuing to execute our financing strategy to further
strengthen the balance sheet; and </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Continuing to lead in safety and environment performance.</FONT></TD></TR></TABLE>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif">
<TR>
    <TD COLSPAN="2" STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>______________________</I></FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>(1)</I></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods' results. Refer to the Comparable Funds from Operations and Comparable Free Cash Flow and Earnings and Other Measures on a Comparable Basis sections of the Company's MD&amp;A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>2016 Strategic Accomplishments</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">In addition to delivering solid financial results in-line
with our guidance, we accomplished the following:</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Entered into an off-coal agreement with the Government
of Alberta for the cessation of coal-fired emissions at our Alberta coal facilities. Under the terms of the off-coal agreement,
we will receive transition payments of approximately $37.4 million (our net share) from 2017 to 2030 for a total amount of approximately
$524 million. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Entered into a memorandum of understanding with the
Government of Alberta to collaborate and co-operate in the development of a policy framework to facilitate coal-to-gas conversions
and renewable electricity development, and ensure existing generation is able to effectively participate in a future capacity market.
</FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Signed a new contract for our Mississauga cogeneration
facility effective January 1, 2017, with Ontario's Independent Electricity System Operator (&quot;IESO&quot;) and terminated our
existing contract early. The new contract, which expires in December 2018, provides us with monthly payments totaling approximately
$209 million over the term of the contract with no delivery obligations. The new contract will allow us to reduce operational costs
for this facility while retaining flexibility to operate the facility should economic conditions permit. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Completed the sale to TransAlta Renewables Inc. (&quot;TransAlta
Renewables&quot;) of an economic interest in the Sarnia cogeneration facility and two renewable energy facilities (collectively,
the &quot;Canadian Assets&quot;) for aggregate proceeds valued at $540 million. Cash proceeds of this transaction were $173 million.
We also received 15.6 million common shares of TransAlta Renewables and a $215 million convertible debenture. Proceeds were used
to reduce TransAlta's indebtedness. In November 2016, the economic interest was converted to direct ownership of the Canadian Assets
by TransAlta Renewables. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Repositioned our capital structure through two non-recourse
bond issuances in 2016, through our subsidiaries, New Richmond Wind L.P. and TAPC Holdings L.P., in the amounts of $159 million
and $202.5 million, respectively. These financings have aligned debt maturities with the contracted cash flows of the underlying
assets. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Announced the sale of our 51 per cent interest in
the 88 MW Wintering Hills non-contracted wind facility, located in Alberta, for approximately $61 million in early 2017. The sale
provides us with near-term liquidity, increases our financial flexibility, and reduces our merchant exposure in Alberta. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Continued to advance the construction of the South
Hedland power project. We expect the project to be delivered on schedule and on budget in mid-2017. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt">Announced a reduction of our dividend to $0.16 per
common share on an annualized basis from $0.72 previously. As a result, our annual dividend is approximately $46 million, down
from $205 million, thereby increasing our financial flexibility. </FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>Fourth Quarter and Full Year Segmented Review</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border: black 1pt solid; font: 10pt Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD ROWSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Comparable EBITDA </B></FONT><BR>
<FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>(in CAD$ millions)</B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>3 Months Ended</B></FONT></TD>
    <TD COLSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Year Ended</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2016</B></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2015</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2016</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2015</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Canadian Coal</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">178</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">67</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">473</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">334</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">U.S. Coal</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">14</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">22</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">41</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">63</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Canadian Gas</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">70</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">57</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">244</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">212</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Australian Gas</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">32</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">34</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">128</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">122</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Wind and Solar</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">66</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">65</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">195</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">176</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Hydro</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">20</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">19</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">82</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">73</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Energy Marketing </FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">13</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">26</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">52</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">37</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Corporate</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">(19)</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">(22)</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">(70)</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">(72)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Total Comparable EBITDA</B></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>374</B></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>268</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>1,145</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>945</B></FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Canadian Coal:</U> Comparable EBITDA for the year
ended Dec. 31, 2016 increased $139 million compared to 2015, primarily due to the reversal of the $80 million provision relating
to the K1 FM in 2013. The year over year impact to comparable EBIDTA of this provision was $139 million, as last year's comparable
EBITDA was reduced by $59 million due to this provision. Our high level of contracted generation and hedging strategy largely mitigated
the impact of low power prices in Alberta. Comparable EBITDA was also positively impacted by a reduction in our operations, maintenance,
and administration costs. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>U.S. Coal:</U> Comparable EBITDA decreased by $22
million compared to 2015 as a result of reduced margins due to lower prices and the unfavorable impact of mark-to-market on certain
forward financial contracts that do not qualify for hedge accounting. This was partially offset by lower coal transportation costs
and a reduction in our coal impairment charges. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Canadian Gas:</U> Comparable EBITDA for 2016 increased
by $32 million compared to 2015, as a result of a year-over-year change in unrealized mark-to-market on our gas position, cost
efficiency initiatives, and favourable pricing in Ontario from our contracts for power and gas. The re-contracting of the Poplar
Creek facility reduced our operations, maintenance and administration (&quot;OM&amp;A&quot;) costs by more than $9 million in 2016,
compared to last year. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Australian Gas:</U> Comparable EBITDA for the year
increased by $6 million compared to 2015, mainly due to the addition of capacity payments for the gas conversion project at our
Solomon gas plant that was completed in May 2016, as well as the uplift from our natural gas pipeline that was commissioned in
March 2015. The change in value of the Australian dollar had limited impact on our comparable EBITDA in 2016. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Wind and Solar:</U> Comparable EBITDA for 2016
increased $19 million compared to 2015, as assets acquired in the second half of 2015 contributed approximately $23 million to
the increase. Lower merchant prices in Alberta and lower generation in Canada negatively impacted our EBITDA. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Hydro:</U> Comparable EBITDA for 2016 increased
$9 million compared to 2015. Higher generation contributed to higher revenues. Our financial contracts partially offset lower levels
of revenues in the Alberta ancillary market. We also benefited from cost reduction initiatives implemented in late 2015. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Energy Marketing:</U> Comparable EBITDA for 2016
from Energy Marketing increased $15 million compared to 2015, as a result of solid performance in all markets where we are active.
During the second quarter of 2015, unexpectedly volatile markets in Alberta and the Pacific Northwest negatively impacted gross
margin. Operating, maintenance, and administration costs increased $12 million to $24 million in 2016 compared to 2015, due to
increases in share based incentive compensation and lower charges to other business segments for energy hedging and optimization
services. </FONT></TD></TR></TABLE>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 12pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 12pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 4.5pt"></TD><TD STYLE="width: 18pt"><FONT STYLE="font-family: Symbol; font-size: 10pt">&#183;</FONT></TD><TD><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 10pt"><U>Corporate:</U> Our Corporate overhead costs of
$70 million were lower in 2016 compared to 2015 and 2014 ($72 million and $71 million, respectively), as we realized benefits of
cost efficiency initiatives which were offset by reduced allocations to our business segments.</FONT></TD></TR></TABLE>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>Consolidated Financial Review </B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Reported net earnings attributable to common shareholders
was $117 million ($0.41 net earnings per share) compared to net loss of $24 million ($0.09 net loss per share) in 2015. Comparable
net earnings attributable to common shareholders was $34 million ($0.12 net earnings per share), up from a comparable net loss
of $48 million ($0.17 net loss per share) in 2015. The improvements year-over-year primarily relate to contributions from assets
we acquired last year, solid performance from the renewable asset portfolio, and cost reduction initiatives. The K1 FM provision
reversal also impacted 2016 net earnings favourably. Our reported net earnings attributable to common shareholders in 2016 were
impacted positively by the re-contracting of the Mississauga cogeneration facility ($48 million<SUP>(1)</SUP>) and negatively by
the Wintering Hills wind facility impairment ($21 million<SUP>(1)</SUP>). Changes in the fair value of de-designated and economic
hedges at U.S. Coal also had a negative impact on our reported net earnings of $17 million<SUP>(1,2) </SUP>in 2016 (2015 &ndash;
$38 million<SUP>(1,2)</SUP>). 2015's reported net loss also included the gain on the Poplar Creek restructuring ($192 million<SUP>(1)</SUP>),
the cost of the settlement with the Market Surveillance Administrator (the &quot;MSA&quot;) ($55 million<SUP>(1)</SUP>), and a
$95 million income tax expense related to an internal reorganization. These items are not included in our comparable net earnings.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Total sustaining capital expenditures (including flood recovery
capital) were $272 million, below the guidance range for 2016 of $330 million to $350 million and lower than $305 million incurred
in 2015 as we were able to reschedule some capital expenditures including a large inspection of our gas generation units at Sarnia
due to lower operating hours and our Ghost River diversion project.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>Fourth Quarter and Year Ended 2016 Highlights</B></P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; border: black 1pt solid; font: 10pt Arial, Helvetica, Sans-Serif">
<TR STYLE="vertical-align: bottom">
    <TD ROWSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>In $CAD millions, unless otherwise stated </B></FONT></TD>
    <TD NOWRAP COLSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>3 Months Ended</B></FONT></TD>
    <TD COLSPAN="2" STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Year Ended</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2016</B></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2015</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2016</B></FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><B>Dec. 31, 2015</B></FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Adjusted availability (%)<SUP>(3,4)</SUP></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">88.9%</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">88.4%</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">89.2%</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">89.0%</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Production (GWh) <SUP>(4)</SUP></FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">10,624</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">11,107</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">38,157</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">40,673</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Revenue</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$717</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$595</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$2,397</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$2,267</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable EBITDA</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$374</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$268</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$1,145</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$945</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Reported Net Earnings (loss) attributable to common shareholders</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$61</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($7)</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$117</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($24)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Net Earnings (loss) attributable&nbsp; to common shareholders</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$51</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$3</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$34</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($48)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Funds from Operations</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$228</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$243</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$763</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$740</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Cash Flow from Operating Activities</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$122</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$118</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$744</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$432</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Free Cash Flow&nbsp;</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$93</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$174</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$299</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$315</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt">&nbsp;</TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt">&nbsp;</TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt">&nbsp;</TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt">&nbsp;</TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Net Earnings (loss) per common share</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.21</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($0.02)</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.41</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($0.09)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Net Earnings (loss) per share</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.18</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.01</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.12</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">($0.17)</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Funds from Operations&nbsp;&nbsp; &nbsp;per share</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.79</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.86</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$2.65</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$2.64</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Comparable Free Cash Flow per share</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.32</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.61</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$1.04</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$1.13</FONT></TD></TR>
<TR STYLE="vertical-align: bottom">
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Dividends declared per common share</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.08</FONT></TD>
    <TD NOWRAP STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.18</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.20</FONT></TD>
    <TD STYLE="border: black 1pt solid; padding: 1.5pt; text-align: center"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">$0.72</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="width: 100%; font: 10pt Arial, Helvetica, Sans-Serif">
<TR>
    <TD COLSPAN="2" STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">_________________________</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">(1)</FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Net of related income tax expense.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>(2)</I></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Hedge accounting could not be applied to certain contracts, and accordingly, the mark-to-market on these contracts impacted reporting earnings. The impacts of these mark-to-market fluctuations have been removed from revenues to arrive at comparable results, which reflect the economic nature of these contracts.</FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>(3)</I></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Availability and production includes all generating assets (generation operations and finance leases that we operate). </FONT></TD></TR>
<TR STYLE="vertical-align: top">
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt"><I>(4)</I></FONT></TD>
    <TD STYLE="padding: 1.5pt"><FONT STYLE="font-family: Arial, Helvetica, Sans-Serif; font-size: 8pt">Adjusted for economic dispatching at U.S. Coal.</FONT></TD></TR>
</TABLE>
<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">TransAlta is in the process of filing its Annual Information
Form, Audited Consolidated Financial Statements and accompanying notes, as well as the associated Management's Discussion &amp;
Analysis. These documents will be available today on the Investors section of TransAlta's website at www.transalta.com or through
SEDAR at www.sedar.com.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">TransAlta is also in the process of filing its 40-F with the
U.S. Securities and Exchange Commission. The form will be available through their website at www.sec.gov. Paper copies of all documents
are available to shareholders free of charge upon request.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B>Conference call</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">We will hold a conference call and webcast at 9:00 a.m. MT
(11:00 a.m. ET) today to discuss our fourth quarter and 2016 results.&nbsp; The call will begin with a short address by Dawn Farrell,
President and CEO, and Donald Tremblay, Chief Financial Officer,<B>&nbsp;</B>followed by a question and answer period for investment
analysts and investors. A question and answer period for the media will immediately follow.&nbsp; Please contact the conference
operator five minutes prior to the call, noting &quot;TransAlta Corporation&quot; as the company and &quot;Jaeson Jaman&quot; as
moderator.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0; text-align: center"><B>Dial-in numbers: </B><BR>
<B>Toll-free North American participants call: 1-888-231-8191</B><BR>
<B>Outside of Canada &amp; USA call: 1-647-427-7450</B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">A link to the live webcast will be available on the Investor
Centre section of TransAlta's website at http://www.transalta.com/powering-investors/events-and-presentations. If you are unable
to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code
66068990 followed by the # sign. A transcript of the broadcast will be posted on TransAlta's website once it becomes available.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B><I>About TransAlta</I></B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><I>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,
solar, 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 recognized on CDP's Canadian Climate Disclosure Leadership Index (CDLI), which includes Canada's top 20 leading companies
reporting on climate change, and has been selected by Corporate Knights as one of Canada's Top 50 Best Corporate Citizens and is
recognized globally for its leadership on sustainability and corporate responsibility standards by FTSE4Good. </I></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><I>For more information about TransAlta, visit our web site
at transalta.com, or follow us on Twitter @TransAlta.</I></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><B><I>Cautionary Statement Regarding Forward Looking Information</I></B></P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0"><I>This news release contains forward looking statements including,
without limitation, statements pertaining to TransAlta's business and anticipated future financial performance; our expected strategies
and opportunities; TransAlta's key priorities for 2017; expected comparable EBITDA, comparable FFO and comparable free cash flow
ranges for 2017; expected sustaining capital expenditures for 2017; expected fleet and coal availability for 2017; the commissioning
of South Hedland and the associated timing and costs thereof; expectations regarding governmental regulatory regimes and legislation
and the expected impact of such regimes and regulations on the Company; the cost of complying with resulting regulations and laws;
the refinancing our upcoming debt maturities over the next 18-months by raising $700 million to $900 million of debt secured by
contracted cash flows and; expectations regarding our de-leveraging strategy, including applying a portion of our free cash flow
over the next four years to reduce debt.&nbsp; These statements are based on TransAlta's belief and assumptions based on information
available at the time the assumptions were made, including assumptions regarding Alberta power prices, and the regulatory regimes
and economic conditions relevant to the markets in which we operate. 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: operational risks involving our facilities; changes in market prices where we operate;
unplanned outages at generating facilities and the capital investments required; equipment failure and our ability to carry out
repairs in a cost effective and timely manner; the effects of weather; disruptions in the source of fuels, water or wind required
to operate our facilities; energy trading risks; failure to obtain necessary regulatory approvals in a timely fashion; negative
impact to our credit ratings; legislative or regulatory developments and their impacts; increasingly stringent environmental requirements
and their impacts; increased competition; global capital markets activity (including our ability to access financing at a reasonable
cost); changes in prevailing interest rates; currency exchange rates; inflation levels and commodity prices; general economic conditions
in the geographic areas where TransAlta operates; impediments to the construction and commissioning of South Hedland; and disputes
or claims involving TransAlta. 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 news release. The financial outlook that is contained in this news release
was approved March 2, 2017 and is being provided for the purpose of giving the reader information about management's current expectations
and plans. 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>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">Note: All financial figures are in Canadian dollars unless
otherwise indicated.</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">SOURCE TransAlta Corporation</P>

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

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">To view this news release in HTML formatting, please use the
following URL: http://www.newswire.ca/en/releases/archive/March2017/03/c6012.html</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">%CIK: 0001144800</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 0"><B>For further information:</B> Investor Inquiries: Jaeson Jaman,
Manager, Investor Relations, Phone: 1-800-387-3598 in Canada and U.S., Email: investor_relations@transalta.com; Media Inquiries:
Stacey Hatcher, Manager, Communications, Phone: Toll-free media number: 1-855-255-9184, Email: ta_media_relations@transalta.com</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">CO: TransAlta Corporation</P>

<P STYLE="font: 10pt Arial, Helvetica, Sans-Serif; margin: 9.75pt 0">CNW 08:00e 03-MAR-17</P>



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