TransAlta to acquire half of U.S. electricity generator

CALGARY, Alberta, Jan. 24, 2003 — TransAlta USA Inc. has agreed to acquire half of a U.S. generator from El Paso Merchant Energy, a business unit of El Paso Corp.

TransAlta will purchase El Paso’s 50 per cent interest in CE Generation LLC, including the right to a 50 per cent interest in a geothermal development project. MidAmerican Energy Holdings Company will continue to own the other 50 per cent interest of both CE Generation LLC and the geothermal development project.

CE Generation LLC holds 820 megawatts (MW) of operating capacity, including 330 MW of geothermal generation in California and 490 MW of gas-fired cogeneration in New York, Texas and Arizona.

“These are excellent assets that immediately contribute to earnings and most of the output is backed by long-term contracts,” said Steve Snyder, TransAlta’s President and CEO. “MidAmerican is a first-rate partner with proven local operational experience, to which we will add our marketing expertise.”

TransAlta will pay El Paso US$205 million plus approximately US$35 million in working capital, for a total of US$240 million. In addition, should TransAlta decide to participate in building the geothermal development project, TransAlta will compensate El Paso US$30 million for its development work.

CE Generation has non-recourse debt of approximately US$1 billion of which US$140 million is secured by a guarantee from MidAmerican. TransAlta will finance the acquisition with existing credit facilities. The transaction is subject to customary closing conditions and is expected to close by the end of January.

For 2003, TransAlta expects this acquisition to contribute $0.05 to earnings per common share. Including a US$30 million reduction in working capital, TransAlta expects to receive US$40 million to US$45 Million of cash for CE Generation LLC in 2003.

The transaction gives TransAlta a 50 per cent share in 13 existing facilities. Power contracts are in place for all gas-fired facilities and eight of 10 geothermal facilities in the acquisition.

All currency is expressed in Canadian dollars except where noted. An online information kit on the acquisition is posted on TransAlta’s Web site. Details are at

TransAlta Corporation is Canada’s largest non-regulated electric generation and marketing company, with more than $7 billion in assets and 9,000 megawatts of capacity either in operation or under construction. As one of North America’s lowest-cost operators, our growth is focused on developing coal- and gas-fired generation in Canada, the U.S. and Mexico.

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