TransAlta NYSE: TAC reported second-quarter 2026 adjusted EBITDA of C$291 million and free cash flow of C$143 million, or C$0.47 per share, as the power producer navigated softer merchant electricity prices in Alberta through hedging and asset optimization.
President and Chief Executive Officer Joel Hunter said the company’s average fleet availability was 90.2% during the quarter. He said TransAlta’s hedging strategy helped realized pricing remain above Alberta spot market levels, while hydro and wind assets provided environmental offsets against the company’s 2025 carbon compliance obligations.
The company reaffirmed its 2026 guidance range, although the recently announced acquisition of two Colorado natural-gas peaking plants is not included in that outlook.
Segment Results and Alberta Pricing
Chief Financial Officer Mike Politeski said TransAlta’s hydro segment generated C$87 million of adjusted EBITDA, down C$39 million from the second quarter of 2025. The decline reflected lower Alberta spot and hedge prices as well as reduced intercompany sales of emissions credits.
Wind and solar adjusted EBITDA totaled C$90 million, roughly consistent with the prior-year period. Higher U.S. wind resource offset lower Alberta pricing and reduced wind resource in Eastern Canada, Politeski said.
Adjusted EBITDA in the gas segment increased by C$14 million from a year earlier, supported by optimization of Alberta assets and contributions from the Far North acquisition. The company said it fully integrated four gas-fired facilities associated with that acquisition during the quarter.
Energy marketing adjusted EBITDA fell C$16 million, which Politeski attributed to subdued volatility in Western power markets and lower realized gains during the quarter. He said TransAlta expects additional gains to be realized by year-end as favorable trading positions settle. Corporate costs declined 8% year over year, while energy transition segment EBITDA declined following the expiration of a Centralia contract at the end of 2025.
Alberta spot prices averaged C$29 per megawatt-hour in the second quarter, compared with C$40 per megawatt-hour a year earlier, due primarily to seasonally lower demand and continued strong supply. TransAlta said it held approximately 2,400 gigawatt-hours of hedges at an average price of C$63 per megawatt-hour during the quarter.
- The company’s gas fleet realized an average price of C$68 per megawatt-hour, a 134% premium to average spot pricing.
- Its hydro fleet realized C$36 per megawatt-hour, a 24% premium to average spot prices.
- Merchant wind realized C$14 per megawatt-hour, affected by increased thermal production and intermittent wind and solar output.
- TransAlta also delivered about 900 gigawatt-hours of ancillary-service volumes at a 14% premium to average spot pricing.
For the balance of 2026, the company has about 4,500 gigawatt-hours of Alberta generation hedged at an average price of C$64 per megawatt-hour. It has approximately 6,600 gigawatt-hours hedged for 2027 at the same average price.
Data Center and Alberta Growth Strategy
Hunter said Alberta’s data center regulations, published in June, provide the Alberta Electric System Operator authority to advance the next phase of its large-load integration plan. The regulations include provisions allowing the AESO to identify underutilized capacity that could serve incremental data center demand.
TransAlta believes its gas-fired steam units could support grid reliability and AI infrastructure development. Hunter said the units are designed to operate at capacity factors above 90%, though their average capacity factor was approximately 20% in 2025 because of economic dispatch decisions rather than technical limitations.
The company remains in discussions with the AESO and said it is hopeful for additional clarity in the next quarter, though Hunter said TransAlta cannot speak for the regulator’s timing. The company continues to advance definitive agreements with CPP Investments and Brookfield following a memorandum of understanding announced in February.
Hunter said TransAlta could potentially proceed with an initial 230-megawatt data center allocation before broader capacity associated with underutilized generation is determined. If a larger amount of capacity is recognized, the company said its Keephills site has available land, natural gas supply and transmission infrastructure to support further development.
Colorado Acquisition and Centralia Conversion
In July, TransAlta announced an agreement to acquire two natural-gas peaking facilities in Colorado for US$1 billion, alongside a C$350 million common-share offering. The assets are fully contracted to investment-grade counterparties under long-term tolling agreements with pass-through provisions for operations and maintenance, fuel and capital costs.
Hunter said the acquisition is expected to add C$110 million of low-risk adjusted EBITDA annually and to be immediately accretive to free cash flow per share. Closing is expected in the fourth quarter, subject to regulatory approvals and Canyon Peak Power reaching commercial operations.
The company is also progressing its plan to convert Centralia Unit 2 from coal to natural gas. The U.S. Department of Energy issued a third 90-day temporary order in June requiring the unit to remain available for operation if needed. TransAlta said it plans to seek reimbursement from the Federal Energy Regulatory Commission for costs related to the second order.
Hunter said work toward a Class 3 cost estimate remains on schedule, with a final investment decision targeted for the first quarter of 2027. The company has previously estimated a C$600 million capital cost and a 5.5-times build multiple for the project, with commercial operation targeted for the fourth quarter of 2028. Potential work involving Centralia Unit 1 remains an early-stage, longer-term option, he said.
Balance Sheet and Capital Allocation
Moody’s reaffirmed TransAlta’s Ba1 credit rating with a stable outlook in June. S&P reaffirmed its BB+ rating but revised its outlook to negative. Politeski described the negative outlook as a temporary hurdle, citing softer Alberta pricing and Centralia’s current offline status.
Management said it expects balance-sheet improvement from a stronger Alberta forward market, the company’s hedge book, potential data center developments, expected Centralia cash flows after conversion and asset recycling. Hunter said TransAlta has several asset-sale processes underway but did not provide further details.
The company said it remains focused on safety, fleet availability, achieving its 2026 financial guidance, advancing data center and Centralia projects, pursuing strategic acquisitions, and maintaining disciplined capital allocation.
About TransAlta (NYSE:TAC)
TransAlta Corporation, originally founded in 1909 as Calgary Power Company Ltd., is a publicly traded energy company specializing in the development, ownership and operation of power generation and transmission assets. Headquartered in Calgary, Alberta, TransAlta has grown from its early hydroelectric roots into a diversified energy provider with a multi-fuel generating fleet.
The company's core business activities encompass power generation, asset management and energy trading services.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
Before you consider TransAlta, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and TransAlta wasn't on the list.
While TransAlta currently has a Moderate Buy rating among analysts, top-rated analysts believe these five stocks are better buys.
View The Five Stocks Here
Click the link to see MarketBeat's list of seven stocks and why their long-term outlooks are very promising.
Get This Free Report
