TRANSALTA CORPORATION ANNUAL INFORMATION FORM FOR THE YEAR ENDED DECEMBER 31, 2019 March 3, 2020 TABLE OF CONTENTS PRESENTATION OF INFORMATION...................................................................................................................................................... 3 SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS....................................................................................... 3 DOCUMENTS INCORPORATED BY REFERENCE............................................................................................................................. 4 CORPORATE STRUCTURE........................................................................................................................................................................... 4 OVERVIEW.......................................................................................................................................................................................................... 7 GENERAL DEVELOPMENT OF THE BUSINESS.................................................................................................................................. 14 BUSINESS OF TRANSALTA.......................................................................................................................................................................... 20 Canadian Coal Business Segment.......................................................................................................................................................... 21 Canadian Gas Business Segment............................................................................................................................................................ 23 Australian Gas Business Segment.......................................................................................................................................................... 25 Hydro Business Segment........................................................................................................................................................................... 31 Wind and Solar Business Segment......................................................................................................................................................... 26 U.S. Coal Business Segment...................................................................................................................................................................... 35 Energy Marketing Segment...................................................................................................................................................................... 36 Corporate Segment...................................................................................................................................................................................... 37 Non-Controlling Interests......................................................................................................................................................................... 37 PPAs................................................................................................................................................................................................................... 38 Competitive Environment......................................................................................................................................................................... 39 Regulatory Framework............................................................................................................................................................................... 41 Competitive Strengths................................................................................................................................................................................ 44 ENVIRONMENTAL RISK MANAGEMENT............................................................................................................................................. 45 Ongoing and Recently Passed Environmental Legislation........................................................................................................... 45 TransAlta Activities...................................................................................................................................................................................... 49 RISK FACTORS................................................................................................................................................................................................... 49 EMPLOYEES........................................................................................................................................................................................................ 61 CAPITAL STRUCTURE.................................................................................................................................................................................... 61 Common Shares............................................................................................................................................................................................. 61 First Preferred Shares................................................................................................................................................................................. 62 Credit Facilities.............................................................................................................................................................................................. 69 Long-Term Debt............................................................................................................................................................................................ 69 Non-Recourse Debt..................................................................................................................................................................................... 71 Tax Equity......................................................................................................................................................................................................... 71 Restrictions on Debt.................................................................................................................................................................................... 71 CREDIT RATINGS............................................................................................................................................................................................. 72 DIVIDENDS.......................................................................................................................................................................................................... 74 Common Shares............................................................................................................................................................................................. 74 Preferred Shares........................................................................................................................................................................................... 74 MARKET FOR SECURITIES........................................................................................................................................................................... 77 Common Shares............................................................................................................................................................................................. 77 Preferred Shares........................................................................................................................................................................................... 78 DIRECTORS AND OFFICERS....................................................................................................................................................................... 83 INTERESTS OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS............................................................... 87 INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS....................................................... 88 CORPORATE CEASE TRADE ORDERS, BANKRUPTCIES OR SANCTIONS........................................................................... 88 MATERIAL CONTRACTS............................................................................................................................................................................... 89 CONFLICTS OF INTEREST............................................................................................................................................................................ 89 LEGAL PROCEEDINGS AND REGULATORY ACTIONS.................................................................................................................. 89 TRANSFER AGENT AND REGISTRAR..................................................................................................................................................... 89 INTERESTS OF EXPERTS............................................................................................................................................................................... 90 ADDITIONAL INFORMATION...................................................................................................................................................................