1.Elect each of the 11 director nominees of the Company for the ensuing year (see “Business of the Meeting – Election of Directors” in the accompanying Management Proxy Circular);

2.Receive the audited consolidated financial statements of the Company for the year ended Dec. 31, 2024, and the auditor’s report thereon (see “Business of the Meeting – Financial Statements” in the accompanying Management Proxy Circular);

3.Reappoint Ernst & Young LLP, the auditors of the Company, for the ensuing year and authorize the Board of Directors of the Company to fix their remuneration (see “Business of the Meeting – Reappointment of Auditors” in the accompanying Management Proxy Circular);

4.Consider a non-binding advisory resolution to accept the Company’s approach to executive compensation (see “Business of the Meeting – Advisory Vote on Executive Compensation” in the accompanying Management Proxy Circular);

5.Consider and, if deemed appropriate, pass, with or without variation, an ordinary resolution, the full text of which is reproduced starting on page 47 of the accompanying Management Proxy Circular, confirming and approving the continuation of the Amended and Restated Shareholder Rights Plan (see "Business of the Meeting — Renewal of Shareholder Rights Plan" in the accompanying Management Proxy Circular); and

6.Transact such other matters as may properly come before the Meeting or any adjournment or postponement thereof.

On behalf of the Board of Directors and management of TransAlta Corporation (the “Company”), you are cordially invited to attend our 2025 Annual and Special Meeting of Shareholders (the “Meeting”), which will take place on Thursday, April 24, 2025, at 11:30 a.m. (Mountain Time). The Meeting will take place in a virtual-only format to provide all holders of common shares ("Shareholders") at the close of business on March 7, 2025, the record date set for the Meeting, an equal opportunity to participate regardless of geographic location or particular circumstances that could otherwise prohibit their participation. Shareholders who attend the Meeting virtually will have an opportunity to participate, ask questions and vote in real time, provided they follow the procedures set out in our Management Proxy Circular.

The Notice of Annual and Special Meeting of Shareholders and Management Proxy Circular are attached. The Management Proxy Circular describes business to be conducted at the Meeting and provides information regarding our executive compensation program and corporate governance practices. During the Meeting, Shareholders will receive our audited consolidated financial statements for the year ended Dec. 31, 2024, and the auditors’ report, and will be asked to elect the directors; reappoint the auditors and authorize their remuneration to be fixed; participate in the advisory vote on our approach to executive compensation (say on pay); and continue our shareholder rights plan.

We encourage you to carefully review the Management Proxy Circular and vote on the business items to be considered at the Meeting.

Your vote and participation are very important. In 2024, we were pleased to have 194,587,285 votes cast in person or by proxy at our annual meeting of shareholders, representing 63.21 per cent of eligible common shares. We encourage all Shareholders to participate at this year’s Meeting. If you are unable to attend the Meeting, you may vote by telephone, via the internet or by completing and returning the enclosed form of proxy or voting instruction form. Please refer to the “How to Vote” section of the Management Proxy Circular for more information. We also encourage you to visit our website at any time before the Meeting as it provides important information about the Company.

We also invite you to review the Letter from the President and CEO in our 2024 Integrated Report, which outlines our strong performance in 2024.

Finally, we would like to extend our gratitude to directors Mr. Harry Goldgut and Ms. Sarah Slusser, who have announced their decision to not stand for re-election at the Meeting. Each have been valuable contributors to our Board since 2019 in the case of Mr. Goldgut, and since 2021 in the case of Ms. Slusser. We thank them for their commitment and insights during their respective tenures with the Board.

We look forward to your participation at the Meeting.

This Proxy Circular (as defined herein) includes “forward-looking information”, within the meaning of applicable Canadian securities laws, and “forward-looking statements”, within the meaning of applicable United States securities laws, including the Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward- looking statements”).

Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as "may", "will", "can", "could", "would", "shall", "believe", "expect", "estimate", "anticipate", "intend", "plan", "forecast", "foresee", "potential", "enable", "continue" or other comparable terminology. These statements are not guarantees of our future performance, events or results and are subject to risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from those set out in or implied by the forward-looking statements.

In particular, this Proxy Circular contains forward-looking statements about the following, among other things:

•the business and procedure of the Meeting, the composition of our Board of Directors (the "Board") following the Meeting;

•the strategic objectives of the Company and that the execution of the Company’s strategy will realize value for Shareholders;

•our sustainability goals and targets, including those in our 2024 Sustainability Report;

•optimizing and diversifying our existing assets;

•our executive compensation philosophy and practices, including the mix of short- and long-term incentives;

•the Company’s governance policies; the Company’s internal talent pipeline; and the Company’s pension plans.

The forward-looking statements contained in this Proxy Circular are based on many assumptions including, but not limited to, the following:

•no significant changes to applicable laws and regulations;

•no unexpected delays in obtaining required regulatory approvals;

•no material adverse impacts to investment and credit markets;

•no significant changes to power price and hedging assumptions;

•no significant changes to gas commodity price assumptions and transport costs;

•no significant changes to interest rates;

•no significant changes to the demand and growth of renewables generation;

•no significant changes to the integrity and reliability of our assets;

•no significant changes to the Company's debt and credit ratings;

•no unforeseen changes to economic and market conditions;

•no significant event occurring outside the ordinary course of business.

These assumptions are based on information currently available to TransAlta, including information obtained from third-party sources. Actual results may differ materially from those predicted by such assumptions.

Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this Proxy Circular include, but are not limited to:

•fluctuations in power prices;

•changes in supply and demand for electricity;

•our ability to contract our electricity generation for prices that will provide expected returns;

•our ability to replace contracts as they expire;

•risks associated with development projects and acquisitions;

•any difficulty raising needed capital in the future on reasonable terms or at all;

•our ability to achieve our targets relating to ESG;

•long-term commitments on gas transportation capacity that may not be fully utilized over time;

•changes to the legislative, regulatory and political environments;

•environmental requirements and changes in, or liabilities under, these requirements;

•operational risks involving our facilities, including unplanned outages and equipment failure;

•disruptions in the transmission and distribution of electricity;

•reductions in production;

•impairments and/or writedowns of assets;

•adverse impacts on our information technology systems and our internal control systems, including increased cybersecurity threats;

•commodity risk management and energy trading risks;

•reduced labour availability and ability to continue to staff our operations and facilities;

•disruptions to our supply chains;

•climate change-related risks;

•reductions to our generating units' relative efficiency or capacity factors;

•general economic risks, including deterioration of equity markets, increasing interest rates or rising inflation;

•general domestic and international economic and political developments, including potential trade tariffs;

•industry risk and competition;

•counterparty credit risks;

•inadequacy or unavailability of insurance coverage;

•increases in the Company's income taxes and any risk of reassessments;

•legal, regulatory and contractual disputes and proceedings involving the Company;

•reliance on key personnel; and

•labour relations matters.

The foregoing risk factors, among others, are described in further detail under the heading "Governance and Risk Management" in our Management's Discussion and Analysis for the year ended Dec. 31, 2024 (MD&A).

Readers are urged to consider these factors carefully when evaluating the forward-looking statements, which reflect the Company's expectations only as of the date hereof, and are cautioned not to place undue reliance on them. The forward-looking statements included in this document are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable laws. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described or might not occur at all. We cannot provide assurance that projected results or events will be achieved.

The Company evaluates its performance and the performance of its business segments using a variety of measures. Certain of the financial measures contained in this Proxy Circular, including earnings before interest, tax, depreciation and amortization (EBITDA) and free cash flow (FCF), are not standard measures defined under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures presented by other entities. These measures have no standardized meaning under IFRS and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS.

Non-IFRS measures are presented to provide management and investors with an understanding of our financial position and executive compensation programs. Certain additional disclosures and reconciliations for these non-IFRS financial measures have been incorporated by reference and can be found beginning on page M64 under the “Additional IFRS Measures and Non-IFRS Measures” section of our MD&A filed with Canadian securities regulators on www.sedarplus.ca and the U.S. Securities and Exchange Commission on www.sec.gov.

1.Elect each of the 11 director nominees of the Company for the ensuing year (see “Business of the Meeting – Election of Directors” in the accompanying Management Proxy Circular);

2.Receive the audited consolidated financial statements of the Company for the year ended Dec. 31, 2024, and the auditor’s report thereon (see “Business of the Meeting – Financial Statements” in the accompanying Management Proxy Circular);

3.Reappoint Ernst & Young LLP, the auditors of the Company, for the ensuing year and authorize the Board of Directors of the Company to fix their remuneration (see “Business of the Meeting – Reappointment of Auditors” in the accompanying Management Proxy Circular);

4.Consider a non-binding advisory resolution to accept the Company’s approach to executive compensation (see “Business of the Meeting – Advisory Vote on Executive Compensation” in the accompanying Management Proxy Circular);

5.Consider and, if deemed appropriate, pass, with or without variation, an ordinary resolution, the full text of which is reproduced starting on page 47 of the accompanying Management Proxy Circular, confirming and approving the continuation of the Amended and Restated Shareholder Rights Plan (see "Business of the Meeting — Renewal of Shareholder

Rights Plan" in the accompanying Management Proxy Circular); and

6.Transact such other matters as may properly come before the Meeting or any adjournment or postponement thereof.

The Company has elected to use the notice-and-access provisions under National Instrument 54-101 – Communication with Beneficial Owners of Securities of a Reporting Issuer and National Instrument 51-102 – Continuous Disclosure Obligations (“Notice-and-Access”) for distribution of the Meeting materials to registered and beneficial Shareholders. Notice-and-Access allows the Company to post electronic versions of its proxy-related materials on the System for Electronic Data Analysis and Retrieval (SEDAR+) and online at https://odysseytrust.com/client/transalta, rather than mailing paper copies to registered and beneficial Shareholders.

Under Notice-and-Access, instead of receiving printed copies of the Meeting materials, registered and beneficial Shareholders receive a Notice-and-Access notification containing details of the Meeting date, location and purpose, as well as information on how they can access the Meeting materials electronically.

The Meeting materials will be available at https://odysseytrust.com/client/transalta and on the Company's SEDAR+ profile at www.sedarplus.ca on or about March 25, 2025. The use of this alternative means of delivery is more environmentally friendly as it reduces paper use and also reduces the Company’s printing and mailing costs.

It also helps expedite the receipt of our Meeting materials by Shareholders. Shareholders are reminded to review the Meeting materials before voting. If you would prefer to receive a paper copy of the Meeting materials, free of charge, or if you have any questions regarding Notice-and-Access, you can contact our transfer agent, Odyssey Trust Company (Odyssey), at 1-888-290-1175.

Beneficial Shareholders may request a paper copy by going online to www.proxyvote.com or by calling toll-free at 1-877-907-7643 and entering the control number located on their voting instruction form and following the instructions provided.

Requests for paper copies should be made as soon as possible but must be received no later than April 4, 2025, in order to allow sufficient time for Shareholders to receive and review the Meeting materials and return the proxy form or voting instruction form before the proxy deadline.

Shareholders who are unable to attend the Meeting are requested to complete, date and sign the enclosed form of proxy and return it, in the envelope provided, to Odyssey Trust Company, Attention: Proxy Department, Trader's Bank Building, 702 - 67 Yonge Street, Toronto, Ontario, M5E 1J8, so that it is received no later than 11:30 a.m. (Mountain Time) on April 22, 2025, or, if the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed Meeting.

This Management Proxy Circular (“Proxy Circular”) is dated March 7, 2025, and is provided to Shareholders in connection with the solicitation of proxies by and on behalf of the management of TransAlta Corporation (“TransAlta”, “Company”, “we” and “our”) and the Board of Directors of the Company (the “Board”) for use at the Annual and Special Meeting of Shareholders of the Company (the “Meeting”), to be held at 11:30 a.m. (Mountain Time) on April 24, 2025, or any adjournment or postponement thereof.

This Proxy Circular was provided to you because at the close of business on March 7, 2025, the record date set for the Meeting, you owned TransAlta common shares. As a Shareholder, you have the right to attend the Meeting, ask questions, and vote your TransAlta common shares in person or by proxy, as more fully described under “How to Vote” further below.

Solicitation of proxies will be primarily by mail, but may also be undertaken by telephone, by email, in person, over the internet, by oral communication or by other means of communication by the directors, officers, employees, consultants or agents of the Company and its subsidiaries, at no additional compensation.

All costs associated with the solicitation of proxies by or on behalf of the Company will be borne by the Company. TransAlta may use the Broadridge QuickVote™ service to assist beneficial Shareholders with voting their common shares over the telephone.

You will find additional information regarding our business in the Company's annual information form dated as of Feb. 19, 2025 (AIF), as well as our audited consolidated financial statements and accompanying MD&A. Copies of these documents and our other public documents are available on our website at www.transalta.com, on SEDAR+ at www.sedarplus.ca and on the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system at www.sec.gov.

Unless stated otherwise, all dollar amounts are expressed in Canadian dollars.

If you held common shares at the close of business on March 7, 2025 (the “Record Date”), you are entitled to attend the Meeting, or any adjournment or postponement thereof, and vote your common shares. Each TransAlta common share entitles you to one vote.

At the close of business on March 7, 2025, there were 297,900,304 common shares issued and outstanding. Our common shares trade under the symbol “TA” on the Toronto Stock Exchange (TSX) and under the symbol “TAC” on the New York Stock Exchange (NYSE). As of the close of business on March 7, 2025, we also had 9,629,913 Series A preferred shares, 2,370,087 Series B

preferred shares, 9,955,701 Series C preferred shares, 1,044,299 Series D preferred shares, 9,000,000 Series E preferred shares, 6,600,000 Series G preferred shares and 400,000 Series I preferred shares issued and outstanding. Our Series A, B, C, D, E and G preferred shares trade under the symbols TA.PR.D, TA.PR.E, TA.PR.F, TA.PR.G, TA.PR.H and TA.PR.J, respectively, on the TSX. All of the outstanding Series I preferred shares are held by an affiliate of Brookfield Asset Management Inc. and are not publicly traded. The holders of our preferred shares do not have rights to receive notice of, attend or vote at the Meeting.

The Company has elected to use Notice-and-Access for distribution of the Meeting materials and the Company’s 2024 Integrated Report, consisting of the audited consolidated financial statements for the fiscal year ended Dec. 31, 2024, together with the auditor’s report therein and related MD&A, to both registered and beneficial Shareholders (collectively the “2024 Integrated Report”). Notice-and-Access allows the Company to post electronic versions of these materials on SEDAR+ and online at https://odysseytrust.com/client/transalta, rather than mailing paper copies to registered and beneficial Shareholders. Under Notice-and-Access, instead of receiving printed copies of the Meeting materials and 2024 Integrated Report, registered and beneficial Shareholders receive a Notice-and-Access notification containing details of the Meeting date, location and purpose, as well as information on how they can access the Meeting materials and 2024 Integrated Report electronically.

The Meeting materials will be available at https://odysseytrust.com/client/transalta and on the Company's SEDAR+ profile at www.sedarplus.ca on or about March 25, 2025. The use of this alternative means of delivery is more environmentally friendly as it reduces paper use, and also reduces the Company’s printing and mailing costs. It also expedites receipt of our Meeting materials by Shareholders. Shareholders are reminded to review the Meeting materials before voting.

If you would prefer to receive a paper copy of the Meeting materials or 2024 Integrated Report, free of charge, or if you have any questions regarding Notice-and-Access, you can contact our transfer agent, Odyssey, at 1-888-290-1175. Requests for paper copies should be made as soon as possible but must be received no later than April 4, 2025, in order to allow sufficient time for Shareholders to receive and review the Meeting materials and return the proxy form                                         

or voting instruction form before the proxy deadline. Beneficial Shareholders may request a paper copy by going online at www.proxyvote.com or by calling toll-free at 1-877-907-7643 and entering the control number located on the voting instruction form and following the instructions provided.

Shareholders who are unable to attend the Meeting are requested to complete, date and sign the form of proxy (or voting instruction form, as applicable) and return it to Odyssey Trust Company, Attention: Proxy Department, Trader's Bank Building, 702 - 67 Yonge Street, Toronto, Ontario, M5E 1J8, so that it is received no later than 11:30 a.m. (Mountain Time) on April 22, 2025, or, if the Meeting is adjourned or postponed, no later than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed Meeting.

If you are a registered Shareholder and you (i) do not wish to receive our annual integrated report next year; or (ii) wish to receive interim reports, please fill out and return the form for registered Shareholders included in the Meeting materials. If you are a beneficial Shareholder and returned last year’s form requesting a copy of our annual or interim reports, you will be asked again this year whether you wish to receive these documents for 2025. If you would like to receive these documents, please fill out and return the form for beneficial Shareholders included in the Meeting materials.

You will find additional information regarding our business in our AIF for the fiscal year ended Dec. 31, 2024, and our financial information is provided in our audited consolidated financial statements and accompanying MD&A for the fiscal year ended Dec. 31, 2024. Copies of these documents along with our other public documents are available on our website at www.transalta.com, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

The meeting materials will also be available on the Company's website at https://transalta.com/investor-centre/reports-and-filings on or about March 25, 2025.

Our Board values open dialogue and welcomes advice from our Shareholders. Our Board has adopted a Shareholder Engagement Policy that is intended to encourage and facilitate Shareholders expressing their views on strategic, governance and other matters directly to the Board. Our Board also encourages Shareholder participation at our annual Shareholder meetings. Further details about our Shareholder Engagement Policy and our Shareholder engagement practices are discussed beginning on page 88 under “Governance – Shareholder Engagement”. At the Meeting, registered Shareholders and duly appointed proxyholders (including beneficial Shareholders who have duly appointed themselves as proxyholders) will be able to ask questions of the Chair of the Board as well as our President and Chief Executive Officer. In between Shareholder meetings, the Company supports an open

and transparent process for Shareholders to contact the Board, including the chairs of the Board committees, through the office of the Corporate Secretary or at the email listed below.

Shareholders may communicate directly with the Board or any Board members by directing their correspondence to the Board by mail or by email as follows by marking it “Confidential – Board – Shareholder Engagement”:

or:

The Board, through the oversight of the Audit, Finance and Risk Committee (AFRC) and Human Resources Committee (HRC), has established several options for employees, contractors, Shareholders, suppliers and other stakeholders to report any accounting irregularities, ethical violations or any other matters they wish to bring to the attention of the Board. The AFRC or HRC, as applicable, may be contacted by:

+Web page (internet portal) at www.transalta.com/ethics-helpline; or

+A confidential, anonymous voicemail on TransAlta’s Ethics Helpline at 1-855-374-3801 (Canada/United States) and 1-800-40-5308 (Australia); or

+Mail addressed to:

+

Internal Audit TransAlta Corporation Suite 1400, 1100 1 St SE Calgary, Alberta T2G 1B1			or			Chair of the AFRC/HRC Subject Matter “004” TransAlta Corporation Suite 1400, 1100 1 St SE Calgary, Alberta T2G 1B1

+Further details about our Whistleblower Policy are discussed beginning on page 52 under “Governance – Our Ethical Commitment – Whistleblower Procedures”.

The Canada Business Corporations Act (CBCA) permits eligible Shareholders to submit shareholder proposals for consideration at each annual meeting of Shareholders. A proposal may be submitted by Shareholders to the Company for inclusion in the Proxy Circular in connection with the 2026 annual

meeting of Shareholders during the period of Nov. 25, 2025, to Jan. 24, 2026. Please refer to the CBCA and the regulations for details about how to submit a proposal and eligibility criteria for a proposal. All proposals must be sent by registered mail to:

Registered Shareholders and duly appointed proxyholders (including beneficial Shareholders who have duly appointed themselves as proxyholders) who attend the Meeting online will be able to listen to the Meeting, ask questions and vote at the Meeting by completing a ballot that will be made available online during the Meeting, all in real time, provided that they are connected to the internet. Non-registered (beneficial) Shareholders who have not duly appointed themselves as proxyholder will not be able to vote or communicate at the Meeting. This is because the Company and our transfer agent, Odyssey, do not have a record of the non-registered Shareholders, and, as a result, have no knowledge of non-registered shareholdings or entitlements to vote unless non-registered Shareholders appoint themselves as proxyholder.

If you are a registered Shareholder and wish to appoint a third-party proxyholder to vote on your behalf at the Meeting, you must appoint such proxyholder by inserting their name in the space provided on the form of proxy sent to you and follow all of the instructions therein, within the prescribed deadline. Registered Shareholders wishing to appoint a third-party proxyholder (other than the TransAlta representative proxyholders indicated on the form of proxy) must also register their proxyholders by emailing appointee@odysseytrust.com. Please provide the name of the appointee, their email contact information and the amount of the appointment shares.

If you are a non-registered Shareholder and wish to vote at the Meeting, you must first appoint yourself as proxyholder by inserting your own name in the space provided on the voting instruction form sent to you and following all of the applicable instructions, within the prescribed deadline, provided by your intermediary and then registering yourself as proxyholder by emailing appointee@odysseytrust.com. Please provide the name of the appointee, their email contact information, the amount of the appointment shares and the intermediary that the shares are held with. After you register, Odyssey will provide you with a control number via email. If your voting instruction form does not provide a space for you to insert the name of your proxyholder, you may need to obtain a legal proxy and submit and deliver it to the Company or its registrar and transfer agent, Odyssey, before the proxy deadline.

In all cases, all proxies must be received and all proxyholders must be registered before 11:30 a.m. (Mountain Time) on April 22, 2025, or, in the case of an adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the adjourned or postponed Meeting in order to participate and vote at the Meeting.

The Meeting will be held in a virtual-only format and can be accessed by logging in online at https://meetings.lumiconnect.com/ 400-164-661-424. We recommend that you log in at least 15 minutes before the Meeting begins.

+Click “Login” and then enter your control number (see below) and password “transalta2025” (case sensitive); OR

+Click “Guest” and then complete the online form.

The Meeting will be available through an HTML client for mobile web and compatible with the latest versions of Chrome, Microsoft Edge and Safari. If you are having technical difficulties in joining the Meeting or participating during the Meeting, there will be live chat or support on the Lumi Global meeting platform that can assist with inquiries. It is also recommended that you obtain live event support by contacting our transfer agent and registrar, Odyssey, at 1-888-290-1175. If you continue to experience issues after following the advice given, please contact support@lumiglobal.com or “raise a ticket”. When you contact support at Lumi Global, please ensure you have the following information available in order for Lumi Global to help you as quickly as possible: Event Name, Meeting ID, Username, Control Number, Issue.

If you attend the Meeting online, it is important that you remain connected to the internet at all times during the

Meeting in order to vote when balloting begins. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the Meeting online and complete the required procedure. If you have questions regarding your ability to participate in or vote at the Meeting, please contact Odyssey at 1-888-290-1175.

If you do not wish to vote at the Meeting, please refer to the Meeting materials (which are also accessible electronically) for information on how to vote by appointing a proxyholder, submitting a proxy or, in the case of a non-registered Shareholder, through an intermediary. Voting by proxy is the easiest way to vote, as it enables someone else to vote on your behalf. Voting in advance of the Meeting is available via the means described in your proxy or voting instruction form and our Meeting materials.

We will hold a live question and answer session to answer any question submitted during the Meeting. The following attendees will be able to submit questions:

+registered Shareholders;

+non-registered or beneficial Shareholders who have appointed themselves proxyholder as outlined in the Proxy Circular, and

+other duly appointed proxyholders.

Guests will not be able to submit questions during the Meeting.

To ask a question, please type your question into the chat function. Additional instructions on how to ask questions will be explained during the Meeting.

We encourage you to submit your questions in advance of the Meeting to Investor Relations by emailing investor_relations@transalta.com.

We are committed to transparent communication at our Meeting. Questions asked related to the business of the Meeting will be answered in the order received for each item of business.

If you returned your signed proxy and did not appoint anyone to be your proxyholder, John P. Dielwart, Chair of the Board, and John H. Kousinioris, President and Chief Executive Officer of TransAlta, have agreed to act as your proxyholder to vote for or against, as applicable, your shares at the Meeting in accordance with your instructions.

+FOR electing each of TransAlta’s 11 nominated directors;

+FOR reappointing Ernst & Young LLP as the auditors and authorizing the Board to fix their remuneration;

+FOR the non-binding advisory vote on our approach to executive compensation; and

+FOR the ordinary resolution approving the continuation of the Company's Amended and Restated Shareholder Rights Plan.

You can change a vote you made by proxy provided such change is received before 11:30 a.m. (Mountain Time) on April 22, 2025, or, in the case of any adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time of the adjourned or postponed Meeting by either:

+submitting a new proxy that is dated later than the proxy previously submitted and mailing it to Odyssey Trust Company, Attention: Proxy Department, Trader's Bank Building, 702 - 67 Yonge Street, Toronto, Ontario M5E 1J8;

+voting again by telephone or the internet; or

+any other means permitted by applicable law.

You can revoke a vote you made by proxy by submitting by mail a notice of revocation executed by you or by your attorney, or, if the Shareholder is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized, to Odyssey Trust Company, Attention: Proxy Department, Trader's Bank Building, 702 - 67 Yonge Street, Toronto, Ontario, M5E 1J8. Your notice of revocation must be received before 11:30 a.m. (Mountain Time) on April 22, 2025, or, in the case of any adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the adjourned or postponed Meeting. If a registered Shareholder votes during the Meeting, that will revoke any proxy they have given.

You are a beneficial Shareholder if your common shares are registered in the name of an intermediary and your certificate is held with a bank, trust company, securities broker, trustee or other institution (each, an “Intermediary”). TransAlta common shares beneficially owned by a beneficial Shareholder are registered either: (i) in the name of an Intermediary that the beneficial Shareholder deals with in respect of the TransAlta common shares (Intermediaries include, among others, banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans); or (ii) in the name of a clearing agency (such as CDS Clearing and Depository Services Inc.), of which the Intermediary is a participant.

The Company has distributed copies of the Notice-and-Access notification to the Intermediaries and clearing agencies for distribution to beneficial Shareholders. The Company will pay for an Intermediary to deliver the Notice-and-Access notification (and printed copies of the Meeting materials, if requested) to objecting beneficial Shareholders.

If you are a beneficial Shareholder, your package includes a voting instruction form. Beneficial Shareholders should carefully follow the instructions provided in the voting instruction form by using one of the methods described to vote their TransAlta common shares. The voting instruction form is similar to a form of proxy; however, it can only instruct the registered Shareholder how to vote your shares.

If you wish to vote through your Intermediary, follow the instructions on the voting instruction form provided by your Intermediary. Your Intermediary is required to ask for your voting instructions before the Meeting. Please contact your Intermediary if you did not receive a voting                

instruction form. Alternatively, you may receive from your Intermediary a pre-authorized proxy indicating the number of common shares to be voted, which you should complete, sign, date and return as directed on the proxy.

We do not have access to the names or holdings of our non-registered Shareholders. That means you can only vote your common shares at the Meeting if you have previously appointed yourself as the proxyholder for your common shares. If you wish to vote at the Meeting, appoint yourself as your proxyholder by writing your name in the space provided on the proxy or voting instruction form provided by your Intermediary and following the instructions under “How to Vote – Voting at the Meeting” above to register yourself as proxyholder. Do not complete the voting section on the proxy or voting instruction form as your vote will be taken at the Meeting. Return the proxy or voting instruction form to your Intermediary in the envelope provided. You may also appoint someone else as the proxyholder for your common shares by printing their name in the space in the proxy or voting instruction form provided by your Intermediary, submitting it as directed on the form and following the instructions under “How to Vote – Voting at the Meeting” above to register that person as your proxyholder. Your vote, or the vote of your proxyholder, will be taken and counted at the Meeting.

Your proxyholder must vote your shares in accordance with your instructions at the Meeting. Please ensure that the person you appoint is aware that they have been appointed and attends the Meeting. If your proxyholder does not attend the Meeting, your shares will not be voted. The proxy or voting instruction form confers discretionary authority upon the named proxyholder in respect of amendments to or variations of matters identified in the Notice of Meeting and any other matters that may properly come before the Meeting or any adjournment or postponement thereof.

Please note that if you are a US beneficial Shareholder and you wish to attend the Meeting and vote your shares, you must follow the instructions on the back of your proxy or voting instruction form to obtain a legal proxy. Once you have received your legal proxy, you will need to submit and deliver it to the Company or its registrar and transfer agent, Odyssey, before the proxy deposit date in order to vote your shares.

If you wish to vote by telephone or the internet, follow the instructions for telephone or internet voting on the proxy or voting instruction form provided by your Intermediary.

TransAlta may use the Broadridge QuickVote™ service to assist beneficial Shareholders with voting their common shares over the telephone.

If you have voted through your Intermediary and would like to change or revoke your vote, contact your Intermediary to discuss whether this is possible and what procedures you need to follow. The change or revocation of voting instructions by a beneficial Shareholder can

take several days or longer to complete and, accordingly, any such action should be completed well in advance of the deadline prescribed in the proxy or voting instruction form by the Intermediary or its service company to ensure it is given effect in respect of the Meeting.

Whether beneficial Shareholders vote by mail, telephone or the internet, your voting instructions or legal proxy must be received by our transfer agent, Odyssey, or the Company or its agents, by no later than 11:30 a.m. (Mountain Time) on April 22, 2025, or, in the case of any adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the adjourned or postponed Meeting. All required voting instructions must be submitted to your Intermediary sufficiently in advance                

of this deadline to allow your Intermediary time to forward this information to our transfer agent, Odyssey, or the Company or its agents, before the proxy voting deadline. The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting, without notice. We reserve the right to accept late proxies and to waive the proxy cut-off deadline, with or without notice, but we are under no obligation to accept or reject any particular late proxy (or voting instruction form).

TransAlta’s Articles of Amalgamation (the “Articles”) allow the Company to have not less than three and not more than 19 directors. Our Board considers annually the number of directors required.

The Board has determined that between nine and 14 directors are currently required in order to provide for effective decision-making, staffing of Board committees and to address succession planning requirements.

Each of the director nominees has indicated their willingness to serve as a director. Each of the proposed nominees, with the exception of John H. Kousinioris, President and Chief Executive Officer, is “independent” within the meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices.

If elected, each director will serve until the next annual meeting of Shareholders or until their successor is elected or appointed. Our directors are elected annually, individually and by majority vote. Our majority voting policy is described under “Our Policy on Majority Voting” below. We believe our Board should reflect the right balance between those directors who have the skills and experience necessary to ensure our business and strategies can be executed upon and those who have the technical, industry, operating, financial, business and other competencies to maximize effective decision-making.

A skills and expertise matrix outlining the combined skills and expertise of our director nominees is included below under “Skills Matrix” on page 36 of this Proxy Circular. We also strive to maintain a diversity of experiences and perspectives on our Board, taking into consideration our skills matrix and our Board and Workforce Diversity Policy, which is described under “Governance – Board Characteristics – Diversity” on page 60 of this Proxy Circular.

+Brian Baker

+John P. Dielwart

+Alan J. Fohrer

+Laura W. Folse

+John H. Kousinioris

+Candace J. MacGibbon

+Thomas M. O’Flynn

+Bryan D. Pinney

+James Reid

+Manjit K. Sharma

+Sandra R. Sharman

The Company’s majority voting policy, which is contained in the General Governance Guidelines for the Board, provides that if there is only one candidate nominated for each position available on the Board (an uncontested election), each candidate is elected only if the number of votes cast in their favour represents a majority of the votes cast in person or represented by proxy at the shareholder meeting. If an incumbent director who was a candidate is not re-elected in an uncontested election, the director may continue in office until the earlier of the

90th day after the day of the election and the day on which the successor is appointed or elected. Majority voting will not apply in the case of a contested election of directors, in which case the directors will be elected by a plurality of votes of the shares represented in person or by proxy at the meeting, and voted on the election of directors. See Appendix B to this Proxy Circular for further details regarding our policy on majority voting.

The Board does not have any interlocking directorships. A board interlock occurs when two or more of TransAlta’s directors also serve together as directors of another public company. The Board has not adopted specific guidelines limiting the number of board interlocks that can exist at any time. However, pursuant to the General Governance Guidelines for the Board (see Appendix B), when considering potential qualified candidates for                                                                                           

nomination to the Board, and in annually evaluating each director’s independence on the Board and individual contributions and performance, any board interlocks are taken into account to ensure they do not undermine the independence or effectiveness of our directors. We also have no interlocking relationships between HRC members and our President and Chief Executive Officer.

In order to support the continued renewal of skills, expertise and personal attributes, the Board undertakes a robust annual Board, committee and individual director evaluation process. The Board reviews annually the size and composition of the Board and each of its committees and addresses the succession planning needs associated

with ensuring the Board has the necessary diversity of skills and experience. The Board undertakes to ensure that the appropriate degree of experience and institutional knowledge is balanced with the regular introduction of fresh perspectives from new directors.

Except as noted below, no director nominee is, as at the date of this Proxy Circular, or has been, within the past 10 years before the date hereof, a director or executive officer of any other issuer that, while that person was acting in that capacity: (i) was the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under applicable securities legislation for a period of more than 30 consecutive days; or (ii) was subject to an event that resulted, after the person ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under applicable securities legislation for a period of more than 30 consecutive days; or (iii) while that director nominee was acting in their capacity as a director or executive officer of that issuer, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets. No director nominee has, within the past 10 years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or been subject to or instituted any proceedings, arrangement or compromise with

creditors or had a receiver, receiver manager or trustee appointed to hold the assets of the director nominee. No director nominee has been subject to: (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for the director nominee.

Mr. Reid is a director of Second Wave Petroleum Inc. (SWP), a private oil and gas exploration and production company. On June 30, 2017, SWP made an assignment into bankruptcy pursuant to the Bankruptcy and Insolvency Act (Canada) (BIA). On Sept. 7, 2017, SWP made a proposal under the BIA and on Oct. 5, 2017, the proposal was approved by the Court of Queen’s Bench of Alberta and the bankruptcy was annulled.

Mr. Dielwart was Chair of the Board of Denbury Resources Inc. which filed for bankruptcy protection in the United States on July 29, 2020, under a prepackaged reorganization plan with its bondholders. Denbury emerged from Chapter 11 on Sept. 18, 2020, at which time the board was reconstituted and Mr. Dielwart ceased being a director.

We maintain a skills matrix where each director indicates whether they have expertise and professional background in areas we consider to be essential for TransAlta, having regard to our strategies, plans, operations and stakeholders. The skills matrix is also used by the Board as part of its succession planning process when identifying, selecting and nominating directors for appointment to the Board, and as part of evaluating the necessary skills, experiences and qualifications needed to maximize effective decision-making by the Board and its committees.

Given the breadth of experience and skills of each director nominee, the table below lists only the top four competencies possessed by each director nominee based on the Board’s assessment and each director’s self-evaluation. The Board believes the director nominees possess a diversity of skills and the appropriate mix of competencies needed for the Board to effectively carry out its mandate and oversee the execution of the Company’s strategies.

We have published the Company’s 2024 audited consolidated financial statements, including the related auditors’ report and the related MD&A. The full text of the 2024 Integrated Report, audited consolidated annual

financial statements and MD&A in either English or French  are  available  on  our  website  at  www.transalta.com/investors/results-reporting, under our profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov.

At the Meeting, you will be asked to reappoint Ernst & Young LLP as our auditors to hold office until the next annual meeting of Shareholders at remuneration to be fixed by the Board.

You can vote “For” or “Withhold” by considering and, if deemed advisable, approving the following resolution:

“BE IT RESOLVED THAT Ernst & Young LLP be appointed as auditors of TransAlta Corporation until the close of its next annual meeting of Shareholders, and the directors of TransAlta Corporation be authorized to fix their remuneration.”

Representatives of Ernst & Young LLP will be available at the Meeting to answer any questions you may have. Ernst & Young LLP have been our external auditors since 1947.

Through the processes described below under “Auditor Independence” we have confirmed Ernst & Young LLP is independent with respect to the Company within the meaning of the relevant rules and related interpretations prescribed by all relevant professional bodies in Canada and applicable legal requirements and also that they are independent accountants with respect to the Company under all relevant U.S. professional and regulatory standards.

The AFRC regularly assesses the Company’s external auditors and annually reviews audit quality, auditor tenure and the appropriateness of audit fees, including the impact of the tenure of the audit firm and the controls and processes that ensure their independence, such as partner rotations. This assessment also considers the nature, extent and permissibility of any proposed audit services.

The AFRC has considered whether the provision of services other than audit services is compatible with maintaining the auditors’ independence. The AFRC has adopted a policy that prohibits TransAlta from engaging the auditors for “prohibited” categories of non-audit services and requires pre-approval of the AFRC for other  

permissible categories of non-audit services, such categories being determined under the Sarbanes-Oxley Act (“Sarbanes-Oxley”). This policy also provides that the Chair of the AFRC may approve permissible non-audit services during the quarter and report such approval to the AFRC at its next regularly scheduled meeting.

At the Meeting, you will be asked to consider and approve, on a non-binding and advisory basis, a resolution on our approach to executive compensation as disclosed in this Proxy Circular. A detailed discussion of our approach to executive compensation follows in our Compensation Discussion and Analysis (CD&A) section

beginning on page 94, which also includes a discussion on our compensation strategy, the objectives of different elements of our compensation programs, the way performance is assessed and compensation decisions are made, and how our compensation policies and practices are designed to align pay with

performance and the Company’s strategies. Over the past few years, the HRC and the Board have carefully considered and continue to enhance our approach to executive compensation, to ensure alignment with Company performance, our strategic goals and the principles of pay-for-performance. We continue to make enhancements to our approach to executive compensation consistent with those principles, the details of which are set out in the CD&A beginning on page 94 of the Proxy Circular. In 2024, we received 99.02 per cent support from Shareholders for our approach to executive compensation.

As a Shareholder, on a non-binding and advisory basis, you can vote “For” or “Against” our approach to executive compensation by considering and, if deemed advisable, approving the following resolution:

“BE IT RESOLVED THAT, on a non-binding and advisory basis, and not to diminish the role and responsibilities of the Board of Directors, the Shareholders accept the approach to executive compensation disclosed in the Company’s Management Proxy Circular dated March 7, 2025, delivered in connection with the 2025 annual and special meeting of Shareholders of the Company.”

Since your vote is advisory, it will not be binding on the Board. However, the Board and, in particular, the HRC will consider the outcome of the vote as part of their ongoing review of executive compensation. The Company plans to hold an advisory vote on our approach to executive compensation on an annual basis.

TransAlta is party to an amended and restated shareholder rights plan agreement (the “Rights Plan”) made as of April 28, 2022, between the Company and Odyssey Trust Company, as rights agent, which amended and restated the shareholder rights plan agreement dated as of Oct. 13, 1992. The Rights Plan is designed to preserve the fair treatment of Shareholders if there is a take-over bid for the Company.

On Nov. 4, 2024, we entered into an agreement with Odyssey Trust Company and Computershare Trust Company of Canada pursuant to which Computershare Trust Company of Canada resigned as rights agent under the Rights Plan and Odyssey Trust Company was appointed as rights agent under the Rights Plan.

The Rights Plan was last renewed at the Company’s annual and special Shareholders meeting held on April 28, 2022. The Rights Plan will expire as of the close of

the Meeting unless the Shareholders vote at the Meeting to continue its operation. If the Shareholders approve the Rights Plan Resolution (as defined below), the Rights Plan will continue in effect for an additional three years and will expire at the end of our 2028 annual meeting (unless the Shareholders vote to extend it at that time).

At a meeting on Feb. 18, 2025, the Board approved, subject to the approval of Shareholders, the continuation of the Rights Plan. The Board believes that maintaining the Rights Plan is in the best interest of the Company and its shareholders. When reviewing the Rights Plan this year, the Board considered the terms and objectives of the Rights Plan and whether there had been any legislative changes or other developments since the Rights Plan was last approved. No amendments to the Rights Plan are being proposed.

One right (a “Right”) was issued and attached to each Common Share of TransAlta (for the purposes of this section “- Summary of Principal Terms of Amended and Restated Plan” only, the “Common Shares”) outstanding at 12:01 a.m. (Calgary time) (the “Record Time”) on Dec. 31, 1992 (the “Effective Date”) and automatically attaches to each Common Share issued after the Record Time but prior to the earlier of the Separation Time (as defined below) and expiration of the Rights Plan.

The Rights are not exercisable prior to the Separation Time. After the Separation Time, each Right entitles the registered holder thereof to purchase from the Company one Common Share at an exercise price equal to three (3) times the Market Price of a Common Share determined as at the Separation Time, subject to adjustment and certain anti-dilution provisions (the

“Exercise Price”). If a Flip-in Event occurs (as described below), each Right will be adjusted and, except as described under “Flip-in Event” below, will entitle the registered holder to receive from the Company, upon payment of the Exercise Price, Common Shares having an aggregate Market Price on the date of the Flip-in Event equal to twice the Exercise Price.

The issue of the Rights is not initially dilutive. Upon a Flip-in Event occurring and the Rights separating from the Common Shares, reported earnings per share on a fully-diluted or non-diluted basis may be affected. Holders of Rights not exercising their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution.

Before the Separation Time, the Rights are evidenced by the certificates for the Common Shares (or by the book entry form registration for the associated Common Shares if issued in book entry form) and are transferable only together with, and will be transferred by a transfer of, the associated Common Shares and are not transferable separately from such shares. At the Separation Time, the Rights will separate from the associated Common Shares and, from and after such time, the Rights will be evidenced by separate Rights Certificates (or separate book entry registration) which will be transferable and trade separately from the shares.

The “Separation Time” is the close of business on the 10th trading day after the earliest to occur of: (i) the “Stock Acquisition Date”, which is the first date of public announcement of facts indicating that a person has become an Acquiring Person, (ii) the date of the commencement of, or first public announcement of the intent of any person (other than the Company or a

subsidiary thereof) to make a take-over bid (other than a Permitted Bid or a Competing Permitted Bid), and (iii) the date on which a Permitted Bid or Competing Permitted Bid fails to qualify as such. In any case, the Separation Time can be such later date determined by the Board. For purposes of the Rights Plan, a “take-over bid” is an offer to acquire “Voting Shares” (being the Company’s outstanding Common Shares and any other shares of the Company entitled to vote generally in the election of directors), and/or “Convertible Securities” (being securities convertible, exercisable or exchangeable into Voting Shares (other than the Rights) or other securities which are directly or indirectly convertible, exercisable or exchangeable into Voting Shares) where the securities subject to the offer, together with the securities Beneficially Owned (as described below) by the person making the take-over bid (the “Offeror”), constitute 20 per cent or more of the Company’s outstanding Voting Shares.

In general, an “Acquiring Person” is a person who is the Beneficial Owner of 20 per cent or more of the outstanding Voting Shares. Excluded from the definition of “Acquiring Person” are the Company and its subsidiaries and, generally, any person who becomes a Beneficial Owner of 20 per cent or more of the outstanding Voting Shares as a result of one or more, or any combination of, (i) a Voting Share Reduction, (ii) Permitted Bid Acquisitions, (iii) an Exempt Acquisition, (iv) Pro Rata Acquisitions, or (v) Convertible Security Acquisitions (as each term is defined in the Rights Plan).

Also excluded from the definition of “Acquiring Person” are (i) underwriters or members of banking or selling

groups acting in connection with a distribution of securities by way of a prospectus or private placement, and (ii) any person (a “Grandfathered Person”) who was the Beneficial Owner of 20 per cent or more of the outstanding Voting Shares determined as at the Record Time, unless such Grandfathered Person becomes, after the Record Time, the Beneficial Owner of additional Voting Shares that increases its Beneficial Ownership of Voting Shares by more than 1 per cent of the number of Voting Shares outstanding as at the Record Time, subject to certain exceptions.

In general, a person is a “Beneficial Owner” if such person or its affiliates or associates or any other person acting jointly or in concert: (i) owns directly or indirectly the securities at law or equity; and (ii) has the right to acquire (immediately or within 60 days) the securities upon the exercise of any Convertible Securities or pursuant to an agreement, arrangement or understanding (other than a customary underwriting agreement or pledges of securities).

However, in general, a person is not a Beneficial Owner under the Rights Plan where: (i) the securities have been, or have been agreed to be pursuant to a Lock-up Agreement (as described below), deposited or tendered pursuant to a take-over bid made by the person, its

affiliates, associates or joint actors, unless those securities have been taken up or paid for; (ii) such person (including a fund manager, trust company or pension fund administrator) is engaged in the management of investment funds for others and, generally, as long as that person: (A) holds those securities in the ordinary course of its business for the account of others; and (B) is not making a take-over bid or acting jointly or in concert with a person who is making a take-over bid; or (iii) such person is a registered holder of securities as a result of carrying on the business of or acting as a nominee of a securities depository.

Under the Rights Plan a bidder or other person will not be deemed to Beneficially Own a security because it has entered into a Lock-up Agreement with holders of Voting Shares and/or Convertible Securities.

Generally, a “Lock-Up Agreement” is an agreement between a person and a holder of Voting Shares and/or Convertible Securities (the terms of which are publicly disclosed and a copy of which is made available to the public within the time frames set forth in the definition of Lock-up Agreement), pursuant to which the holder (a “Locked-up Person”) agrees to deposit or tender Voting Shares and/or Convertible Securities to a take-over bid (the “Lock-up Bid”) made or to be made by such person or any of its affiliates, associates or joint actors. A Lock-

Up Agreement must permit the Locked-up Person to withdraw its Voting Shares and/or Convertible Securities in order to deposit or tender them to another take-over bid or support another transaction, provided that (i) the agreement permits the Locked-up Person to terminate its obligation to deposit securities to the Lock-up Bid in order to tender its securities to another take-over bid or to support another transaction having a greater value of consideration or consideration per security that exceeds the bid by a specified amount, and (ii) the agreement permits the Locked-up Person to terminate its obligation to deposit securities to the Lock-up Bid in order to tender its securities to another take-over bid or to support another transaction if the number of securities

offered to be purchased under the competing bid or transaction is greater than the number of securities under the Lock-up Bid or is at least a specified percentage greater than those under the Lock-up Bid and the price per security under the competing offer is equal to or greater than the Lock-up Bid price.

The Lock-Up Agreement must not provide for break-up fees or similar payments payable if the Locked-up Person fails to deposit its securities to the Lock-up Bid in order to accept or support a competing transaction, which exceed the greater of (i) 2.5 per cent of the price or value of the consideration payable under the Lock-up Bid to the Locked-up Person and (ii) one-half of the

increased value that is offered under the competing offer.

A Lock-Up Agreement may contain a right of first refusal or require a period of delay to give the bidder an opportunity to match the price, value or number in a competing take-over bid or transaction (or other similar limitation on a shareholder’s right to withdraw its securities from the agreement), so long as the limitation does not preclude the exercise by the shareholder of its right to withdraw securities in sufficient time to tender to the competing take-over bid or to support the other transaction.

Subject to certain exceptions, a “Flip-in Event” occurs when an Acquiring Person becomes the Beneficial Owner of 20 per cent or more of the Voting Shares. In the event that, prior to the expiration of the Rights Plan, a Flip-in Event which has not been waived by the Board occurs (see “Redemption, Waiver and Termination” below), effective at the close of business on the 10th trading day after the Stock Acquisition Date, each Right (except for Rights Beneficially Owned or which may thereafter be Beneficially Owned by an Acquiring Person

or certain of its related parties or transferees, which Rights will become null and void), may be exercised to purchase from the Company, in accordance with the terms of the Rights Plan, that number of Common Shares having an aggregate Market Price (as defined in the Rights Plan) on the date of the Flip-in Event equal to twice the Exercise Price, on payment of the Exercise Price (subject to customary anti-dilution adjustments set forth in the Rights Plan).

A take-over bid that qualifies as a Permitted Bid or Competing Permitted Bid will not trigger the exercise of the Rights. The requirements for a “Permitted Bid” include the following:

1.The take-over bid must be a formal (i.e., non-exempt) bid made to all holders of record of Voting Shares, other than the bidder;

2.The take-over bid contains irrevocable and unqualified conditions that no Voting Shares and/or Convertible Securities will be taken up or paid for: (i) prior to the close of business on the date which is not less than 105 days following the date of the take-over bid or such shorter minimum deposit period that a take-over bid (that is not exempt from any requirements of Division 5 (Bid Mechanics) of National Instrument 62-104 —Take-over Bids and Issuer Bids (NI 62-104) must remain open for deposits of securities, in the applicable circumstances at such time, pursuant to NI 62-104;

and (ii) then only if, at the close of business on the date the Voting Shares and/or Convertible Securities are first taken up and/or paid for under such take-over bid, more than 50 per cent of the Voting Shares held by Independent Shareholders (as defined below) have been deposited or tendered to the take-over bid and not withdrawn;

3.Unless the take-over bid is withdrawn, securities deposited or tendered pursuant thereto may be withdrawn until taken up and paid for; and

4.Unless the take-over bid is withdrawn, in the event that the deposit condition set forth in paragraph 2(ii) above is satisfied, the bidder will make a public announcement of that fact and the take-over bid will remain open for deposits and tenders of Voting Shares and/or Convertible Securities for not less than 10 days from the date of such public announcement.

A “Competing Permitted Bid” is a take-over bid that:

1.Is made after a Permitted Bid or another Competing Permitted Bid has been made and prior to its expiry or withdrawal;

2.Satisfies all the requirements of a Permitted Bid other than the requirement set forth in paragraph 2(i) of the requirements for a Permitted Bid set forth above; and

3.Contains an irrevocable and unqualified condition that no Voting Shares and/or Convertible Securities will be taken up or paid for prior to the close of business on the last day of the minimum initial deposit period that such take-over bid must remain

open for deposits or tenders of securities pursuant to NI 62-104 after the date of the take-over bid constituting the Competing Permitted Bid.

“Independent Shareholders” means, generally, holders of Voting Shares other than any Acquiring Person, any Offeror, any affiliate, associate or joint actor of an Acquiring Person or Offeror, or any employee benefit plan, deferred profit sharing plan, stock participation plan or similar plan or trust for the benefit of employees of the Company or its subsidiaries unless the beneficiaries of the plan or trust direct how Voting Shares will be voted and whether such shares will be tendered to a take-over bid.

The Board may, after having obtained the prior approval of the holders of Voting Shares or Rights, as applicable, at any time prior to the occurrence of a Flip-in Event, elect to redeem all but not less than all of the then outstanding Rights at a redemption price of $0.00001 per Right, appropriately adjusted for anti-dilution as provided in the Rights Plan (the “Redemption Price”).

The Board may waive the application of the Rights Plan in respect of the occurrence of any Flip-in Event if the Board has determined within 10 trading days following a Stock Acquisition Date that a person became an Acquiring Person under the Rights Plan by inadvertence and without any intention to become or knowledge that it would become an Acquiring Person, but the waiver must be on the condition that the Acquiring Person reduces its Beneficial Ownership of Voting Shares within 14 days after such determination by the Board, or such later date as the Board may determine, such that the person is no longer an Acquiring Person.

If a person who has made a Permitted Bid, a Competing Permitted Bid or a take-over bid in respect of which the Board has waived the application of the Rights Plan consummates the acquisition of Voting Shares, the Board is deemed to have elected to redeem the Rights at the Redemption Price.

The Board may, prior to the occurrence of a Flip-in Event that would occur by reason of a take-over bid made by means of a take-over bid circular to all holders of record of Voting Shares (a “qualified bid”), waive the application of the Rights Plan to such Flip-in Event upon prior written notice to the Rights Agent. However, if the Board

waives the application of the plan for any such qualified bid, the Board is deemed to have waived the application of the plan in respect of any other Flip-in Event occurring by reason of any other qualified bid made prior to the expiry of any bid for which the waiver is, or is deemed to have been, granted.

The Board may, with the prior consent of the holders of Voting Shares, waive the application of the Rights Plan to a Flip-in Event at any time prior to the occurrence of such Flip-in Event, if such Flip-in Event would occur by reason of an acquisition of Voting Shares otherwise than pursuant to a take-over bid made by means of a take-over bid circular to holders of Voting Shares and otherwise than by inadvertence. If the Board so waives the application of the plan, the Board must extend the Separation Time to a date at least 10 business days subsequent to the meeting of Shareholders called to approve such waiver.

Where a take-over bid that is not a Permitted Bid or Competing Permitted Bid is withdrawn or otherwise terminated after the Separation Time and prior to the occurrence of a Flip-in Event, the Board may elect to redeem all the outstanding Rights at the Redemption Price. In such event, the Rights Plan will continue to apply as if the Separation Time had not occurred and one Right will remain attached to each Common Share as provided for in the Rights Plan.

If the Board is deemed to have elected or elects to redeem the Rights as described above, or where the approval of the holders of Voting Shares or Rights is required and obtained for such redemption, as the case

may be, the right to exercise the Rights will thereupon, without further action and without notice, terminate and the only right thereafter of the holders of Rights will be to receive the Redemption Price. Within 10 business days of any such election or deemed election to redeem the Rights, or within 10 business days of the requisite approval of the holders of Voting Shares or Rights, as the case may be, the Company will notify the holders of the Voting Shares or, after the Separation Time, the

holders of the Rights. Each such notice of redemption will state the method by which the payment of the Redemption Price will be made. Upon a redemption of Rights, the Company is not obliged to make a redemption payment to any holder of Rights unless the holder is entitled to receive at least $1.00 in respect of all Rights held by such holder.

TransAlta may, without the approval of the holders of Voting Shares or Rights, make amendments: (i) to correct clerical or typographical errors; and (ii) to maintain the validity and effectiveness of the Rights Plan as a result of any change in applicable legislation, regulations or rules thereunder. Any amendment referred to in (ii) must, if made before the Separation Time, be submitted for approval to the holders of Voting Shares at the next meeting of Shareholders and, if made after the Separation Time, must be submitted to the holders of Rights for approval.

Prior to the Separation Time, TransAlta may, with the prior consent of holders of Voting Shares received at the

special meeting called and held for such purpose, amend, vary or rescind any of the provisions of the Rights Plan and the Rights, whether or not such action would materially adversely affect the interests of the holders of Rights generally. After the Separation Time, TransAlta may, with the prior consent of the holders of Rights received at the meeting called and held for such purpose, amend, vary or rescind any of the provisions of the Rights Plan and the Rights, whether or not such action would materially adversely affect the interests of the holders of Rights generally.

At the Meeting, Shareholders will be asked to consider and, if deemed appropriate, pass an ordinary resolution ratifying, confirming and approving the continuation of the Rights Plan for a further three-year period (the “Rights Plan Resolution”). In accordance with the Rights Plan, the Rights Plan Resolution must be passed by a majority (e.g., 50 per cent plus one) of the votes cast by the Independent Shareholders present in person, or represented by proxy, at the Meeting. As described above, Independent Shareholders are all Shareholders other than, generally, an Acquiring Person or a person making a takeover bid for the Voting Shares and any affiliate or associate of, or any person acting jointly or in concert with, either of them. The Company is not aware of any Shareholder which is not an Independent Shareholder and therefore required to be excluded from such vote. The Rights Plan Resolution, as set forth below, is subject to such amendments, variations or additions as may be approved at the Meeting:

“BE IT RESOLVED THAT:

1.The amended and restated shareholder rights plan of TransAlta Corporation (the “Company”) be continued for a further three-year period and the amended and restated shareholder rights plan agreement made as of April 28, 2022, between the Company and Odyssey Trust Company, as rights agent, which amended and restated the shareholder rights plan agreement dated as of Oct. 13, 1992, be and is hereby ratified, confirmed and approved; and

2.Any director or officer of the Company be and is hereby authorized and directed to execute and deliver for and in the name of and on behalf of the Company all such certificates, instruments, agreements, documents and notices and to do all such other acts and things as in such person’s opinion may be necessary or desirable for the purpose of giving effect to this resolution.”

As of the date of this Proxy Circular, the Board and management are not aware of any other items of business to be brought before the Meeting. If there are changes or new business at the Meeting, your proxyholder can vote your common shares on these items as your proxyholder sees fit.

Following the conclusion of the formal business to be conducted at the Meeting, we will invite questions and comments from registered Shareholders and duly appointed proxyholders.

We believe that responsible and transparent corporate governance practices provide us with a framework for exercising timely and effective decisions and serve as a foundation for our commitment to you, and other stakeholders, in representing your and other stakeholders’ interests with integrity, honesty and ethical conduct.

This section discusses TransAlta’s corporate governance practices and provides information pertaining to our Board and its committees.

TransAlta is listed on the TSX, under the trading symbol “TA”, and the NYSE, under the trading symbol “TAC”, and is subject to the governance regulations, rules and standards applicable under both exchanges. Our corporate governance practices meet or exceed the governance requirements of the TSX and the Canadian Securities Administrators, including:

+National Instrument 52-109 – Certification of Disclosure in Issuers’ Annual and Interim Filings;

+National Instrument 52-110 – Audit Committees;

+National Policy 58-201 – Corporate Governance Guidelines; and

+National Instrument 58-101 – Disclosure of Corporate Governance Practices.

As a “foreign private issuer” under U.S. securities laws, we are generally permitted to comply with Canadian corporate governance requirements. The NYSE governance rules require us, however, to disclose any significant ways in which our corporate governance practices differ from those followed by U.S. domestic issuers. This disclosure can be found in Appendix A to this Proxy Circular under the heading “New York Stock Exchange – Significant Differences in Corporate Governance Practices” and on our website at www.transalta.com/investors/governance.

Our corporate governance practices also comply with applicable requirements enacted under SEC rules initiated under Sarbanes-Oxley and also incorporate a number of best practices, including certain recommendations by the Canadian Coalition for Good Governance. Our articles and bylaws also set out certain matters that govern our business activities.

The key elements of TransAlta’s governance practices are:

+Ensuring employees, management and the Board are committed to ethical business conduct, integrity and honesty;

+Establishing key policies and standards to provide a framework for how we conduct our business;

+Retaining directors, other than our CEO, who are independent;

+Having a Board with individuals who have a mix of diversity, skills, knowledge and experience, including the core competencies identified in our skills matrix, to maximize the effectiveness of the Board and its committees and oversight of the execution of our strategies;

+Maximizing the effectiveness of the Board, its committees and individual directors through annual evaluations and the continuing education of our directors; and

+Facilitating and fostering an open dialogue between our management and the Board with our Shareholders and community stakeholders.

One of our most valuable assets is our reputation. A strong commitment to ethical conduct is a central element of our corporate governance. We have adopted the following codes of conduct to guide our business decisions and everyday business activities:

+Code of Business Conduct for Directors, which applies to our directors;

+Corporate Code of Conduct, which applies to all employees, officers and consultants of TransAlta and its subsidiaries;

+Finance Code of Ethics, which applies to all financial employees of the Company;

+Energy Trading Code of Conduct, which applies to all of our employees engaged in energy marketing; and

+Supplier Code of Conduct, which applies to the Company’s suppliers and vendors.

Our codes of conduct outline the standards and expectations we have for our employees, officers, directors, consultants and suppliers with respect to, among other things, the protection and proper use of our assets.

The codes also provide guidelines with respect to securing our assets, conflicts of interest, respect in the workplace, social responsibility, privacy, compliance with laws, insider trading, environment, health and safety and our commitment to ethical and honest conduct. Our Code of Business Conduct for Directors and Corporate Code of Conduct go beyond the laws, rules and regulations that govern our business in the jurisdictions in which we operate; they outline principal business practices with which all directors, employees and consultants must comply. Our employees, officers and directors are reminded annually about the importance of ethics and professionalism in their daily work, and must certify annually that they have reviewed and understand their responsibilities as set forth in the respective codes of conduct. This certification also requires our employees, officers and directors to acknowledge that they have complied with the standards set out in the respective code during the last calendar year. In 2024, the Company undertook mandatory Code of Conduct training for all employees and was able to achieve 100 per

cent participation. Progress on the Corporate Code of Conduct completion and results is reported to the HRC at least once annually.

The Company has adopted a Supplier Code of Conduct that requires suppliers (and their employees and contractors) of goods and services to the Company to adhere to the Company’s values, including as it pertains to health and safety, ethical business conduct, labour issues and human rights, conflicts of interest and environmental leadership. Suppliers can report any concerns related to the Supplier Code of Conduct using TransAlta’s Ethics Helpline and disclose any actual or perceived conflicts of interest via email to conflicts@transalta.com. All concerns raised will be kept in confidence to the extent appropriate and permitted by law. Information will only be shared in circumstances where it is necessary to completely and fairly resolve the concern. The Ethics Helpline can be reached at 1-855-374-3801 (Canada/United States) and 1-800-40-5308 (Australia) or via the internet at www.transalta.com/ethics-helpline. A complete copy of our Supplier Code of Conduct is available on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov and is also available on our website at www.transalta.com/investors/governance.

As part of our commitment to good corporate governance, the Code of Business Conduct for Directors provides guidance and principles to govern the performance of our directors’ duties and to foster a culture of honesty, integrity and accountability, consistent with the applicable principles contained in our Corporate Code of Conduct. A complete copy of our Code of Business Conduct for Directors is available under our profile on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov and is also available on our website at www.transalta.com/investors/governance.

Our Finance Code of Ethics outlines the obligations of our financial employees to provide accurate, complete, objective and relevant financial information, while our Energy Trading Code of Conduct focuses on preventing, detecting and deterring violations of laws and regulations relating to our energy trading and marketing business.

Copies of our codes of conduct for directors, officers, employees, suppliers, traders and financial employees are available on our website at www.transalta.com/investors/governance.

In addition, our Whistleblower Policy provides a mechanism for our employees, contractors, officers and

directors to report, among other things, any actual or suspected ethical or legal violations. We would seek to remedy the impact promptly in order to establish a corrective action plan in collaboration with the relevant individuals and stakeholders. There will be no retaliation for matters reported in good faith.

At TransAlta, we expect and promote a culture of integrity and ethical business conduct by requiring employees, officers and directors to conduct their personal business and affairs in a manner that ensures that their private or personal interests do not interfere or appear to interfere with the interests of the Company. Our policies provide that each director and executive officer must comply with the disclosure requirements of the CBCA regarding any interest in material contracts or material transactions or proposed material contracts or proposed material transactions. If a declaration of material interest is made, the declaring director shall not vote on the matter if put to a vote of the Board. In addition, under the Code of Business Conduct for Directors, directors are more generally required to avoid any activity that could compromise, or appear to compromise, the performance of their duties and responsibilities or their objectivity and exercise of sound, ethical business judgment in the performance of their duties. Directors faced with an actual or potential conflict of interest, including those that may arise because of a director’s (or a relative’s) interests or relationships

outside the Company may be asked to recuse themselves from any deliberations with respect to the matter.

The Charter of the AFRC provides that the AFRC will assist the Board in its oversight of material transactions involving related parties. The AFRC will consider the related-party transaction and may recommend the use of a standing committee or an ad hoc special committee to assist the Board in the evaluation of any such related-party transactions. The AFRC is considered the appropriate committee to initially assess related-party transactions given the additional independence requirements required of each committee member pursuant to applicable securities laws. For the purposes of this policy, the term “related party” includes entities that the Company controls, but are not wholly owned, and applies to any agreement entered into with such a related party that has a value in excess of $30 million (based on the aggregate value of the contract). In the past, the Board has established special committees to consider related-party transactions.

The Company maintains an insider trading policy and reporting guidelines that place restrictions on “insiders” and those in a special relationship with TransAlta from trading in TransAlta shares and other securities of the Company. Our policy meets the requirements of the stock exchanges on which our shares are listed as well as those of corporate law and includes the following measures:

+Establishing quarterly and annual trading blackout periods when financial results are being prepared and have not yet been publicly disclosed. These blackouts extend to all employees engaged in the preparation of our financial results and all officers and directors. The blackouts are effective from the first day following

the end of a quarter or fiscal year-end and end at the close of trading on the second trading day after we publicly release or disclose our earnings or financial results;

+Publishing and communicating the dates for regular blackout periods and sending a monthly reminder to all reporting insiders of their obligations;

+Establishing special trading blackouts at times when employees, for business reasons, may be in possession of material non-public information; and

+Requiring all reporting insiders to pre-clear securities trading transactions.

Our whistleblower procedures help uphold our strong values and preserve our culture of ethical business conduct. Our procedures are not limited to accounting, auditing and financial processes, and instead provide employees, contractors, Shareholders and other stakeholders the ability to report ethical violations, violations of laws or Company policies or any other potentially material matters they wish to bring to the attention of our Board through the AFRC or the HRC. All submissions can be made directly to the Chair of the AFRC or HRC by identifying the submission with “subject matter 004”. Submissions can also be made anonymously or confidentially and may be made using our toll-free number or via our Ethics Helpline at www.transalta.com/ethics-helpline.

Complaints are investigated by the Company’s ethics investigations committee under the oversight of the AFRC or HRC, as applicable. The AFRC receives all incidents, complaints or information reported through the Ethics Helpline. The AFRC reviews matters relating to potential or suspected material breaches of securities laws, accounting, internal accounting controls, auditing or financial reporting matters. The HRC reviews matters relating to material ethical or legal violations. If the findings are urgent, they will be reported to the Chair of the AFRC or HRC, as applicable, immediately.

Our Board is responsible for the stewardship of the Company, overseeing the execution of the Company’s strategies and establishing our key policies and standards, including policies for the assessment and management of our risks. The Board has adopted General Governance Guidelines to provide a framework for how we conduct our business and to help us meet our responsibilities. These guidelines include a general overview of the Board’s role in our governance, a statement of key principles and policies applicable to the Board and its committees, and a mandate that describes the Board’s major responsibilities, goals and duties. We believe that these practices benefit all stakeholders and form the building blocks for long-term success.

These guidelines are reviewed annually by the GSSC and the Board to ensure they reflect the most appropriate governance standards for the Company. Our guidelines may be found in Appendix B to this Proxy Circular and on our website at www.transalta.com/investors/governance.

In accordance with the General Governance Guidelines, the Board has delegated to the CEO and senior management the responsibility for the day-to-day management of the business and affairs of the Company. Nevertheless, the Board takes an active and engaged role in working with senior management and overseeing the strategies, risks, governance and affairs of the Company. In addition to those matters that must, pursuant to applicable laws and our bylaws, be approved

by the Board, the Board has delegated to management the authority to approve expenditures within specified limits. The Board retains responsibility for significant matters such as major changes to strategy or significant transactions, CEO succession planning, governance and organizational structure, material acquisitions and divestitures, major capital expenditures, debt and equity financing transactions and approval of material environmental policies.

The Board has also adopted terms of reference for the Chair setting out the Chair’s responsibilities and duties. The Chair is required to be independent within the meaning of applicable corporate and securities laws. The Chair is responsible for the leadership of the Board and ensuring that the Board governs the Company’s business and affairs. To lead the Board in fulfilling its duties, the Chair ensures that the Board has sufficient information to make business decisions; establishes the frequency of Board meetings; coordinates, in conjunction with the CEO, the Executive Vice President, Legal and the

Corporate Secretary, the agenda for the Board and Shareholder meetings; and ensures that the functions of each committee are effectively carried out. In addition to the role of leading the Board, the Chair is an essential link between the Board and the CEO in ensuring that the CEO is aware of any concerns raised by the Board and that the Board promptly receives information pertaining to management strategies, plans and performance matters. A copy of the terms of reference for the Chair can be found on our website at www.transalta.com/investors/governance.

The Board considers the responsibilities set out in our General Governance Guidelines for the Board, each of the committee charters, including the committee chair responsibilities and the Terms of Reference for the Chair of the Board, to be comprehensive descriptions of the roles and responsibilities of the Board, the Chair of the Board, each of the committee chairs, each committee and each director.

The Board has delegated various responsibilities to four standing committees, which in turn regularly report and make recommendations (when applicable) to the full Board: (i) Audit, Finance and Risk; (ii) Governance, Safety and Sustainability; (iii) Human Resources; and (iv) Investment Performance.

The Chair of each committee, who is guided by a committee charter, is responsible for the organization of the committee and fulfilment of its mandate and works closely with the Board Chair to ensure the committee’s functions are effectively carried out. The committee charters, along with the Terms of Reference for the Chair of the Board, can be found on our website at

www.transalta.com/investors/governance. Please see each committee’s report in this Proxy Circular for an overview of their principal functions and activities during 2024. The Board may also from time to time establish special committees for a variety of reasons, including to facilitate effective decision-making or to manage potential conflicts of interest.

In 2022, the Board designated a member of the Board, Mr. Alan Fohrer, as the Company’s Dam Safety Advisor and adopted a mandate for the Dam Safety Advisor. The Board determined to appoint an individual member of the Board as a Dam Safety Advisor in order to assist the Board in fulfilling its oversight role in regard to the Company’s dam safety practices given the unique and technical aspects of dam safety. The Dam Safety Advisor has the responsibility to:

+Meet with the Company’s Chief Dam Safety Engineer to discuss overall dam safety practices, outcomes and any recommendations of the Company’s Chief Dam Safety Engineer;

+Assist the Board in fulfilling its stewardship role by applying their technical skills and expertise to Board discussions that concern dam safety;

+Provide leadership to the Board in ensuring the proper and timely discharge of the Board’s responsibilities as it pertains to dam safety and to support the alignment of dam safety decisions and policies with the Company’s overall strategy and objectives; and

+Report to the Board, in addition to the Company’s Chief Dam Safety Engineer and Executive Vice President, Generation, as to the material activities, risks, recommendations and decisions relating to the Company’s Dam Safety Program and any related management systems.

The Board has oversight of our strategy and strategic planning process and closely monitors, collaborates with and oversees management’s performance in executing on our strategy and meeting the objectives of our strategic plan.

The Board meets annually for a strategic planning session with management in which it reviews, discusses and approves the Company’s strategic plan and progress made towards achieving the plan. The Board regularly engages in discussions and reviews the Company’s strategies and potential alternatives, addressing the evolving needs and circumstances of the Company and the environments in which we operate, with and without the presence of senior management, and with the benefit of advice from outside financial advisors and consultants, as appropriate.

The Board also holds in camera meetings without the presence of the CEO or other members of management to assess, test and discuss the Company’s strategic plan and priorities, and alternatives thereto, with a view to ensuring the appropriateness and execution of the Company’s strategic plan to maximize Shareholder value.

The Board reviews and updates its strategic plan annually during strategic planning sessions. As part of this strategic planning session, management provides an assessment on the competitive environment, growth opportunities, regulatory environment and capital allocation to identify opportunities and risks to our business strategy. In 2024, this strategic planning session was held in person and included considering growth initiatives and strategies, the changing regulatory environment, an assessment of the Alberta electricity market and power prices, including the impact of inflation, and other matters of strategic importance to the Company.

Sustainability, or environmental, social and governance (ESG) management and performance, is a core value at TransAlta. Sustainability is integrated into our governance, decision-making, risk management and day-to-day business processes.

We have 31 years of sustainability reporting and also voluntarily integrating our sustainability report into our annual integrated report since 2015. We partially adopt guidance from the Canadian Sustainability Standards Board, International Sustainability Standards Board, International Financial Reporting Standards (IFRS) Foundation, Integrated Reporting Framework, Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB). Moreover, the Company aligns its sustainability targets with the UN Sustainable Development Goals and the Future-Fit Business Benchmark, which defines sustainable goals for businesses.

TransAlta's sustainability pillars support our corporate strategy and weave through our business. Our pillars were refreshed in 2024 and include:

+Reliable and Responsible Electricity Production;

+Safe, Healthy, Diverse and Engaged Workplace;

+Positive Indigenous, Stakeholder, Customer and Employee Relationships;

+Environmental Stewardship; and

+Technology and Innovation.

In 1997, we were an early adopter of wind power generation. At the end of 2021, TransAlta no longer generated electricity with coal in Canada and also ceased all coal mining operations. Since 2015, we have reduced our scope 1 and 2 greenhouse gas (GHG) emissions by 22.7 MT CO2e or 70 per cent. TransAlta plans to cease generation from our remaining U.S. coal unit by the end of 2025, which will further reduce the Company’s emissions.

The key components of our Company’s approved 2025+ sustainability targets include:

+A continued focus on safe operations and environmentally sustainable practices, including undertaking significant reclamation work;

+By 2026, achieving a Company-wide reduction in scope 1 and 2 GHG emissions of 75 per cent below 2015 levels, and by 2045 reducing our scope 1 and 2 emissions to net zero;

+Enhancing our commitment to workplace gender diversity, including adopting a target of 50 per cent representation of women on the Board by 2030 and 40 per cent representation of women among all of our employees by 2030; and

+Achieve a 30 per cent reduction of our scope 1 and 2 GHG emissions intensity by 2030 from a 2023 base year.

In 2024, TransAlta's received an award for best ESG reporting (mid-cap) by Investor Relations (IR) Magazine Canada. We also received the ESG, Sustainability and Purpose Award from the Governance Professionals of Canada (GPC). This award underscores our commitment to embedding sustainability into our governance, strategy and risk management practices.1

Sustainability factors are overseen by the GSSC. The Board maintains ultimate oversight over TransAlta's sustainability matters, including risks and opportunities related to material capital project decisions and other matters not specifically covered in a committee mandate.

The HRC mandate includes oversight of the key compensation, human resources and pension policies and plans of TransAlta, including policies that support human rights and ethical conduct. In addition to executive compensation, variable incentive and equity compensation plans, pay for performance, compensation governance and risk assessments, the HRC has broad oversight over various human resources policies, strategies and workplace trends. The HRC's annual work plan includes formal discussions at least two times a

year on top talent retention and workforce trends, management succession and leadership development, culture and ED&I, specifically addressing progress on Board-approved ED&I and culture strategies, employee engagement, psychological safety, and inclusion and belonging metrics and trends. The HRC also reviews all human-resource-related whistleblower complaints. TransAlta's current Board includes five members (38 per cent) with human resources experience.

Environmental: The GSSC receives updates to TransAlta's environmental matters including climate change-related risks and opportunities and GHG emissions targets. Furthermore, the AFRC reviews climate change and sustainability disclosure in the financial disclosure documents.

Social: The GSSC reviews TransAlta's implementation of a safety-conscious culture, emergency preparedness plans, Board and workforce diversity targets and stakeholder matters. The HRC receives updates regarding TransAlta's ED&I Council, culture transformation, mental health and wellness and psychological safety initiatives.

Governance: The GSSC reviews the risk management matrix and voluntary ESG reporting and disclosure. The GSSC also monitors updates to securities law and proxy

advisor policies, and reviews Board skills matrices. The AFRC oversees financial risk management, financial reporting, auditor independence and the implementation of internal and external audits. The HRC reviews executive compensation levels, employee compensation and benefits programs, and the overall compensation program.

The Company's current Board includes four members (31 per cent) with climate-related experience.

The full details of the approved sustainability targets are available at www.transalta.com/sustainability and more information regarding these sustainability targets and the Company’s ESG performance are also included in the Company’s 2024 Integrated Report.

The Board is responsible for overseeing the Company’s risk identification, management and mitigation strategies and the risk assessment process, including:

+Making sure we identify our principal risks and assess those risks annually, taking into consideration our risk appetite and any potential changes in our business or the marketplace;

+Monitoring our risk management programs through the work of the committees that report to the Board; and

+Ensuring that management has put in place appropriate systems to identify, mitigate and manage

the Company’s risks and that residual risks remain within our risk appetite.

We have adopted a comprehensive Enterprise Risk Management Framework that evaluates the risks from each of our major businesses. This process involves analyzing both existing and emerging risks in defined categories and takes into consideration factors that work to mitigate our risks.

The AFRC is responsible for overseeing the Company’s processes and key policies for the identification, assessment and management of the Company’s principal risks and annually (or more frequently as required) reviews the Company’s risks with management and

reports to the Board. The AFRC also receives updates on management’s assessment of our principal business risks at every regularly scheduled quarterly meeting. The HRC is responsible for reviewing the Company’s compensation-related risks and undertakes an annual assessment of those risks, or more frequent assessment if required. The GSSC has overall responsibility with respect to the Company’s security practices and environmental health and safety policies and practices, and annually reviews with management the Company’s related policies and risks. The IPC provides oversight of

management’s significant investments and the execution of major Board-approved capital expenditure projects that are in furtherance of the Company’s strategic plans. The AFRC, HRC, GSSC and IPC each report to the Board following their respective meetings. The Board conducts an annual comprehensive review of the Company’s risk assessment in coordination with management. For each material risk that is identified, the Company assigns an executive officer as being responsible for monitoring and mitigating the impact of such risks.

An ongoing risk for the Company is related to cybersecurity. The Board plays an active role in ensuring the Company’s overall approach to cybersecurity is adequate and effective. The following are some of the key responsibilities of Board oversight in the cybersecurity program:

+Cybersecurity incident reporting: In 2024, the Company had no material or reportable cybersecurity incidents.

+Governance: The Board has generally delegated to the AFRC the responsibility of receiving a biannual system status update with respect to the Company’s core IT operating systems and an annual review of components of the Company’s cybersecurity program and their effectiveness.

+Reviewing risk assessments: The AFRC reviews regular assessments of the Company’s cybersecurity program to ensure that appropriate controls are in place to manage these risks.

+Reviewing incident response plan: The Board is informed and consulted on the organization’s incident response plan to ensure that it is comprehensive and well-rehearsed.

+Awareness and training: We place a strong emphasis on cybersecurity awareness and training for all employees, from frontline staff to the Board. This helps to ensure that everyone in the organization understands the importance of cybersecurity and their role in protecting the Company’s assets and data. The Board receives updates regarding the Company’s education and awareness campaigns and their effectiveness. The Board also receives cybersecurity education, which in 2022 included an education

session for the full Board in respect of the Company’s cybersecurity capabilities maturity model. In 2023, as new board members were onboarded, a dedicated cybersecurity training session was provided, in addition to ongoing cybersecurity program updates. In 2024, executive and technical cyber incident response table-top exercises were conducted to bolster our cybersecurity incident response readiness. We continue to deliver innovative methods to sustain a strong cybersecurity culture within TransAlta.

+Strategy: The Company aligns its cybersecurity strategy with its business objectives and risk appetite, following industry standards and frameworks. The cybersecurity strategy sets a three-year cybersecurity mandate, principles, goals, priorities, and roles. The Board approves and oversees the strategy and its key initiatives.

+Risk management: The Company uses a risk-based approach to identify, assess, prioritize, and mitigate cybersecurity risks, following its corporate enterprise framework. The Company evaluates its controls and gaps regularly, both internally and externally. The Company also monitors and proactively responds to cybersecurity threats and trends.

+Evaluating performance: The Board and AFRC, as applicable, regularly evaluate the performance of the Company’s cybersecurity program to ensure it is achieving its objectives and that resources are being used effectively.

Of the current director nominees, three out of the 11 director nominees (27.3 per cent) have expertise in cybersecurity, namely Ms. Folse, Mr. O'Flynn and Ms. Sharma. Ms. Folse ranks this as one of her top four

competencies, but all three director nominees have led or overseen cybersecurity-related functions and technological systems.

The Board, through the AFRC, obtains confirmation from management, internal auditors and the independent auditors that our internal control systems are operating effectively. The Board has also delegated to the AFRC the responsibility for reviewing our quarterly and annual financial statements and, as required, for recommending

them to the Board for approval. In addition, the AFRC is responsible for overseeing our internal audit function and our lead internal auditor meets regularly with the Chair of the AFRC without the presence of management.

The Board is responsible for the appointment of our CEO and other members of senior management. The Board believes that talent management and succession planning are critical to the Company’s continued success. The HRC assists the Board in reviewing senior leadership succession, including for the President and CEO. The HRC supports the Board in its review and development of succession plans for the President and CEO and other senior management roles, including through reviews of the Company’s organizational structure and policies and procedures relating to employment, succession planning and compensation.

In regard to the CEO position, the HRC establishes and reviews the succession plan for the CEO on an annual basis under a variety of scenarios, including in emergency replacement scenarios. The HRC works closely with the CEO and the full Board to develop, monitor and assess the Company’s succession plans, including reviewing the internal talent pool on a regular basis, selecting executive development opportunities, and evaluating performance and progress. Succession planning will continue to be an important area of focus for the Board and the HRC. The promotion of internal candidates to significant offices of the Company demonstrates the quality of internal development opportunities available to strong senior leaders in the Company.

Our management succession planning process also includes identifying high-potential employees. Included in this analysis is a review of skills, talent management and development needs. If required, independent consultants may be retained to help the HRC identify any skills gap or compatibility for the role.

High-potential employees are also given the opportunity to make presentations in front of the Board to gain experience at that level. The HRC provides oversight to ensure that we have appropriate programs for addressing employee retention and for overseeing human capital risk.

The independence of our directors is assessed and determined annually by the Board at the recommendation of the GSSC. The GSSC uses the definition of “independence” under National Policy 58-101 – Disclosure of Corporate Governance Practices and National Instrument 52-110 – Audit Committees. The independence criteria also conform to the applicable rules of the SEC, the NYSE and those set out under Sarbanes-Oxley. The criteria are also used to assess the independence of any new director appointed or nominated to the Board.

A director is independent if they do not have a direct or indirect material relationship with TransAlta. The Board believes that a relationship is material if it could reasonably interfere with a director’s ability to make independent decisions, regardless of any other association the director may have. The information required to make this determination is collected through the review of biographical material, discussions with the directors and questionnaires completed by the directors annually or before their appointment. In determining whether a director is independent, the Board reviews and analyzes the existence, materiality and effect of any relationships between the Company and each of our directors, either directly or through a family member or as a partner, shareholder or officer of another organization that has a relationship with the Company, and determines, in each case, whether the relationship could, or could reasonably be perceived to, materially interfere with the director’s ability to act independently of management.

Our independent directors do not receive remuneration in excess of their retainers and reimbursement of reasonable travel expenses and, to the extent applicable, travel and meeting fees. The Board has affirmatively determined that none of the director nominees (with the

exception of Mr. Kousinioris, our President and CEO), has a material relationship with TransAlta, either directly or indirectly, that could reasonably be expected to interfere with the exercise of independent judgment. Mr. Kousinioris is not independent because of his role as an executive officer of the Company.

In 2019, the Company entered into an investment agreement (the "Investment Agreement") with an entity affiliated with Brookfield Asset Management Inc. ("Brookfield"), pursuant to which Brookfield can nominate two directors to the Board. Mr. Baker is an Operating Partner and Mr. Reid is a former officer of entities affiliated with Brookfield, an entity that receives fees for having two representatives serve on the Company’s hydro operating committee, which is focused on optimizing the operations and maximizing the value of the Company’s Alberta hydro assets. The GSSC and the Board reviewed and considered this relationship and determined that it does not interfere with the exercise of Mr. Baker’s or Mr. Reid’s independent judgment in their roles as members of the Board. As a result, Mr. Baker and Mr. Reid are independent within the meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices and under the NYSE governance standards; however, as a result of Brookfield receiving an annual management fee of $1,500,000 for serving on the hydro operating committee, they do not satisfy the additional independence requirements for serving on an audit committee under National Instrument 52-110 – Audit Committees and NYSE governance standards, or for serving on the compensation committee under NYSE governance standards. As a result, Mr. Baker and Mr. Reid cannot serve on the Company’s AFRC or HRC.

Ms. Sharman is an executive officer of CIBC, a leading North American financial institution. The Company engages CIBC in the ordinary course of business to

provide banking and financial services, which includes CIBC being included in a syndicate of financial institutions that have made available to the Company a credit facility. In connection with the provision of these services, CIBC receives fees from the Company and certain affiliated entities, the aggregate amount of which each year is immaterial to both CIBC and the Company. The aggregate annual amount of such fees in each of the last two years was significantly less than 0.05 per cent of CIBC’s consolidated gross revenues in each year and is also significantly less than 0.5 per cent of the Company’s gross revenues in each year. In Ms. Sharman’s role as Senior Executive Vice President and Group Head, People, Culture and Brand, she does not work on any matters, directly or indirectly, related to the Company or its business nor is she responsible for originating any such business with the Company. Furthermore, Ms. Sharman’s compensation at CIBC is not impacted in any way by matters related to the Company. The Company understands that CIBC has established procedures to ensure that Ms. Sharman is not made aware of, or does not have information pertaining to, TransAlta in her decision-making authority at CIBC. Comparably, Ms. Sharman would recuse herself from Board discussions relating to matters involving CIBC and would not vote on any such matters. Nonetheless, as a result of the fees payable to CIBC, Ms. Sharman does not meet the additional independence requirements of National Instrument 52-110 – Audit Committees, as the payment to CIBC of compensatory fees of even one dollar would

result in her failing to meet such additional independence requirements.

The Board considered Mr. O'Flynn's independence in light of the Company's investment commitment to Energy Impact Partners' (EIP) Deep Carbonization Frontier Fund 1. Mr. O'Flynn is a former senior advisor to EIP. In that capacity, which ceased effective as of September 2024, Mr. O'Flynn did not have any decision-making authority, policy-making authority or a leadership role within EIP. When TransAlta invested in EIP's Deep Carbonization Frontier Fund 1, Mr. O'Flynn recused himself from the Board meeting and played no active or deliberate role in TransAlta's investment decision. In addition, Mr. O'Flynn did not receive any fee or compensation from EIP in respect of TransAlta's investment decision. Finally, Mr. O'Flynn's engagement with EIP is no longer active.

TransAlta remains committed to greater diversity at the Board level and does not consider it appropriate that Shareholders vote against the election of qualified and diverse candidates due to the technical application of an overly broad definition of independence that does not align with applicable legal or regulatory requirements. A commitment to diversity at the Board level should include a commitment to consider the totality of the candidate’s qualifications, capabilities and contributions along with any other practical considerations before voting against otherwise qualified individuals and diverse nominees.

The Chair of the Board, John P. Dielwart, is an independent director. He has never served as an executive officer of the Company and the Board has affirmatively determined that he is independent.

The Board has adopted guidelines which, subject to the discretion of the Board, provide that the Chair of the

Board shall be appointed by the Board and shall be responsible for the overall process involved in the work of the Board as well as the development and effective performance of the Board.

Diversity of talented individuals with different backgrounds, experiences, competencies and points of view is a strategic advantage that contributes to our success and will continue to move us forward.

Our Board and management are committed to diversity, equity and inclusion because it drives innovation, better

decisions, employee engagement and our ability to attract top talent. In 2015, the Board adopted a Board and Workforce Diversity Policy that recognizes that a diverse mix of skills, experiences, backgrounds and gender at the Board and senior management levels, as well as within our workforce, enhances our Company’s

competitive advantages. Our Board and Workforce Diversity Policy, including our ED&I Pledge which was adopted in 2020, is available under the "Policies" tab on our website at www.transalta.com/investors/governance, and specifically seeks to advance diversity at the Board and throughout the Company, including as it pertains to women, Indigenous peoples, persons with disabilities and visible minorities (each a “designated group”). By undertaking this pledge, the Company will

seek to remove systemic barriers that may prevent diverse employees from thriving, including visible minorities, Indigenous people, members of the LGBTQ+ community, persons with disabilities and women. The GSSC annually reviews the Board and Workplace Diversity Policy and its objectives to assess effectiveness.

The Board remains committed to maintaining and increasing the representation of women and visible minorities on the Board as turnover occurs, taking into account our skills matrix and the skills, background and knowledge desired at that particular time to fulfil the Board’s mix of skills and experience. If all nominees are elected at the Meeting, men will make up 63.6 per cent (seven male directors) and women will make up 36.4 per cent (four female directors) of the Board (excluding the Brookfield nominees, women nominees would constitute 44.4 per cent of the Board).

As of March 7, 2025, 50 per cent (two out of four) of the committees of the Board are chaired by women. The director nominees also include one member (nine per cent) that self-identifies as being a visible minority. There are no nominees to the Board that identify as Indigenous or as having a disability. With respect to executive officer positions, as of March 7, 2025, we have 30 per cent women (three women), 70 per cent men (seven men) and no executive officers who self-identify as visible minorities, Indigenous or as having a disability.

In 2024, we continued our strategic focus to attract diverse talent to our organization by leveraging our internal programs including our Women in Trades Scholarship Program and the Generation Gender Diversity Program. These have both been extremely

successful programs for women in the technical trades. As of Dec. 31, 2024, women made up approximately 28 per cent of our total workforce, a one per cent increase over 2023 levels.

TransAlta has been and remains committed to diversity as is exhibited by the addition in 2023 of a visible minority Board member, the number of women on our Board, women chairing committees of the Board, and women in senior management positions. Although the Company has adopted a goal of advancing gender diversity throughout the Company, the Company and its material subsidiaries have not adopted a target number or percentage of Indigenous peoples, persons with disabilities and visible minorities. Rather than adopting diversity targets beyond gender at the Board and workforce level, the Company is focused on applying the Company’s Board and Workforce Diversity Policy to promote employment and advancement opportunities for individuals within a designated group throughout the Company rather than being focused only on the most senior levels of the organization. The Company believes this is a more meaningful and sustainable approach to improving diversity and inclusion throughout the Company’s workforce, which should over time result in individuals that identify with a designated group being promoted internally to more senior positions, including executive officer positions.

The Board approved a comprehensive five-year ED&I strategy in August 2021. The first phase, implemented in 2021 and 2022, focused on raising awareness to build a foundation and common understanding, enabling meaningful conversations among co-workers to learn about one another. The second phase, in 2023, reinforced and embedded inclusive behaviours across the organization. In 2024 and beyond, we continue to build on and fully embed ED&I and inclusive leadership practices within our culture. In alignment with our sustainability targets adopted in 2021, all employees across the Company's operating geographies completed mandatory Indigenous cultural awareness training by the end of 2023. We believe that education is fundamental to fostering respectful and strong relationships with Indigenous peoples. In 2024, TransAlta contributed more than $320,000 to support Indigenous youth, education and employment programs, representing 11 per cent of TransAlta’s total community investment.

At the management level, through our development process, TransAlta has committed to providing employees with diverse backgrounds internal opportunities for growth within our operations to enhance our pipeline of talent available for succession. As part of the Company’s employment practices, we work to ensure gender diversity in our executive succession as well as in candidate slates for all open executive officer positions, which is evident in the recruitment of two accomplished women executives in 2018, the appointment of one woman as the Corporate Controller in 2021, an increase in the accountabilities of two women executive officers in 2023, and the recruitment of a female executive officer in 2024. To monitor our progress on the advancement of diversity and to develop a healthy pipeline of diverse talent, we also:

+Ensure that any list of potential director nominees includes at least 50 per cent women;

+Ensure that any list of potential director nominees includes diversity beyond gender;

+Maintain a list exclusively of highly qualified women director nominees;

+Identify top talent and implement development plans for high-potential women;

+Ensure pay equity between men and women. For example, we have proactively adjusted pay throughout the Company to align pay between men and women that perform similar roles on several occasions over the past five years, including in 2020 and 2021;

+Actively seek recruitment of women in key roles within the Company;

+Monitor the number of women in senior leadership roles and those in the pipeline as emerging leaders;

+Hold ongoing communications and conversations throughout the year to celebrate and commemorate important diversity milestones and encourage people to come together to advance ED&I; and

+Connect female talent with senior leaders to accelerate the development and advancement of high-potential women.

As well, female advancement in the Company, psychological safety and unconscious bias are topics specifically addressed by the HRC.

The Board has not adopted guidelines setting the specific number of other boards and committees on which a director may serve. However, each director’s position(s) on outside boards or committees is taken into account as part of the annual robust assessment of each director’s individual contributions and effectiveness; as a general principle, our directors recognize that Board and committee service requires significant time and attention in order to properly discharge their responsibilities, and that service on boards or committees of other organizations should be consistent with that principle, as well as the Company’s conflict of interest standards set out in our Code of Business Conduct for Directors.

The following table outlines other public company directorships our nominee directors hold, including the committees on which they serve. The GSSC reviews each director’s other public company directorships and considers whether any such directorships would have an adverse impact on the director’s commitment to the Company. The GSSC has no concerns with any Board member's other public company directorships.

Prior to any new appointments to the Board, nominees are given a clear indication of the workload and time commitment required to serve on the Board. Individual meetings between nominees are scheduled with each executive officer in order to allow them to familiarize themselves with the management team and to receive an orientation on TransAlta’s strategies, operations, generation technology, business development, legal, finance, investor relations, and human resource capital and cost and efficiency programs. This orientation also includes providing nominees with the following:

+An online director’s manual containing information about a director's duties and obligations, the Board, each committee (including the charter for each committee), the Company’s constating documents, the Code of Business Conduct for Directors, the Corporate Code of Conduct, the Supplier Code of Conduct, our Disclosure Policy, our Insider Trading Policy, the Company’s other key policies, and a summary of our business and operations;

+Access to materials and minutes from recent Board and committee meetings; and

+At the beginning of the term, participation in all committee meetings to obtain an understanding of each committee’s function, oversight responsibilities and the overall workings and responsibilities of the Board.

New directors are also provided with targeted orientation sessions, carried out over several hours, to address multiple topics that are critical to understanding our business, including with respect to the energy and utilities industry, strategy, operations, financial matters, legal compliance, cybersecurity, risk management and assurance, and various other topics. Depending on the circumstances at the particular time, new directors may also receive presentations and analyses from our outside legal and financial advisors and other consultants on aspects of our business, strategy, strategic alternatives, financial matters, legal and compliance, compensation programs and other matters.

Our continuing education for directors seeks to instruct directors regarding the Company and industry, which includes the following:

+A comprehensive package of information before each Board and committee meeting;

+Presentations and tours of our principal operations on a periodic basis, often in conjunction with Board meetings, to maintain directors’ familiarity with TransAlta’s operations, operational staff and the communities in which we operate;

+Focused strategy sessions and deliberations, including presentations from management and outside advisors, reviews of strategic alternatives, and testing of strategies and alternatives;

+Presentations from outside financial advisors, legal counsel and other consultants;

+Access to an online secure site where management posts updates relating to our operations and other topics of interest to the Board to keep the Board

current and up to date on matters being dealt with by management;

+Presentations by management to provide directors with information pertinent to our business;

+Information sessions on topics suggested by management or directors;

+Reports on the work of Board committees following committee meetings;

+Full access to our senior management and employees;

+Professional development courses (e.g., our Board subscribes to both the Institute of Corporate Directors and the National Association of Corporate Directors organizations, which promote the continuing education of directors); and

+Encouraging directors to participate in other available educational opportunities that would further their understanding of our business and enhance their Board performance.

The Board also regularly holds evening dinner sessions before the day of regularly scheduled Board meetings. Board dinners are treated as an opportunity to accomplish a number of important governance objectives, including building collegiality by meeting as directors in a less formal atmosphere, meeting high-potential employees in order to advance the succession planning for the Company and holding educational sessions on important topics for the Company’s business and strategic direction. In 2024, the Company held four evening dinner sessions before four regularly scheduled Board meetings.

In addition to these education sessions, during 2024, Mr. Dielwart attended an Indigenous awareness training session hosted by Veren Inc., Ms. MacGibbon attended several training sessions and webinars, Mr. Pinney attended various information sessions presented by the Institute of Corporate Directors and other professional services organizations, Mr. O'Flynn attended two multi-day Independent Director conferences to review issues and trends important for directors and Ms. Sharma attended the following: Future Scenarios for AI, AI Tsunami Event, Boardroom Innovations from the Fortune 500, 2024 Tax and Federal Budget Webinar and Audit Committee Forum.

An individual is defined as financially literate if they can read and understand financial statements that are generally comparable in breadth and complexity of issues to those found in our financial statements. The Board has determined that all current and nominee directors are financially literate according to this definition. As well, Mr. Pinney, Mr. Fohrer, Ms. MacGibbon, Ms. Sharma and Mr. O’Flynn qualify as “audit committee financial experts” as defined by the U.S. Securities Exchange Act of 1934, as amended.               

This determination is based on an analysis of each director’s education, skills and experience. Designation as an “audit committee financial expert” does not impose on such person any duties, obligations or liabilities that are greater than the duties, obligations and liabilities imposed on a member of the AFRC and/or Board in the absence of such designation.

The GSSC maintains an evergreen list of potential Board candidates. Potential Board candidates are drawn from diverse sources, including referrals from and the networks of our directors, unsolicited inquiries by potential director candidates, references provided by our Shareholders and, in some cases, from third-party recruiting organizations. The GSSC reviews the list of candidates to identify top candidates and requests that the CEO, the Chair of the Board or the Chair of the GSSC conduct an initial meeting with such candidates. As the next step, candidates deemed to be most suited for the Board meet other members of the Board and, if deemed appropriate, other members of the executive team. This process effectively provides for an orderly succession of directors by allowing the Board to plan Board appointments with Board retirements with a view to maintaining an appropriate composition of skills and experience.

When recruiting new directors, the GSSC considers the merit of each individual, taking into account the vision and business strategy of the Company, as well as the diversity and skills needed on the Board and having regard to the Company’s skills matrix, required competencies and the Board and Workforce Diversity Policy. The evergreen list of potential Board candidates is regularly reviewed by the GSSC to ensure a diverse set of skills is represented. The GSSC also considers prospective candidates’ relative executive leadership, diversity, legal and entrepreneurial backgrounds, and experience with public company directorships, all of which are valued but not determinative skills for any new Board members.

In addition, regard is also given to self-identified gender, identification with a designated group, age, business experience, professional expertise, personal skills, stakeholder perspectives and the geographic background of any potential candidate. In the Company's most recent active recruitment of new director nominees undertaken in late 2022 and early 2023, the GSSC engaged in very targeted recruitment focused exclusively on diverse candidates, including women and members of ethnic and racial groups.

Specifically, the GSSC actively evaluated four candidates for nomination to the Board, all of whom were women and two of whom were members of ethnic and racial groups. All of these factors were then considered with the goal of creating a diverse Board that together can provide effective insight, oversight and foresight to benefit the Company. These considerations culminated in the nomination and appointment of Ms. Sharma and Ms. MacGibbon to the Board in early 2023.

Pursuant to the Investment Agreement, for so long as Brookfield holds exchangeable securities, Brookfield is entitled to designate two nominees for election to the Board at each annual meeting of Shareholders. Each nominee must (i) be an individual acceptable to the GSSC, acting reasonably and applying the Company’s skills matrix and governance guidelines, and (ii) meet the requirements of and be eligible to serve as a director of the Company pursuant to applicable law. Mr. Baker and Mr. Reid are the Brookfield nominees to the Board.

The Company is required to use commercially reasonable efforts to ensure that the Brookfield nominees are elected to the Board at each annual Shareholder meeting, including soliciting proxies in support of their election and taking the same actions taken by the Company to ensure the election of the other nominees selected by the Board for election to the Board. Each Brookfield nominee must be an individual of high quality and integrity who has significant experience and expertise in business or that is applicable to business; has served in a senior executive, leadership or entrepreneurial position; has broad exposure to and understanding of the Canadian business community; and

has the skills for directing the management of a company, motivation and the availability, in each case, to the extent requisite for a business of the complexity, size and scale of the business of the Company and on a basis consistent with the highest standards for directors of similarly situated Canadian publicly listed companies.

If either of Brookfield’s nominees to the Board is not elected at the Meeting or any subsequent meeting of the Shareholders, Brookfield’s obligation to increase and maintain its holding of common shares at nine per cent and its standstill, voting and lock-up obligations under the Investment Agreement may be suspended until the date that both of its nominees are elected or appointed to the Board. As previously disclosed by the Company, the Investment Agreement includes standstill and voting obligations that largely expired in 2022, and provided that for so long as there are Brookfield nominees on the Board, Brookfield will not solicit proxies, request a special meeting of Shareholders, propose a shareholder proposal, or seek to obtain representation on the Board other than pursuant to the Investment Agreement.

Mr. Baker and Mr. Reid were not directors of the Company at the time the Brookfield Investment was

approved and entered into by the Company. For further details concerning the Brookfield Investment and Brookfield’s nomination, voting, standstill and lock-up rights and restrictions, and other key terms and provisions of the investment, refer to the Company’s material change report dated March 26, 2019, filed under the Company’s profile on SEDAR+ at www.sedarplus.ca

and on EDGAR at www.sec.gov. A complete copy of the Investment Agreement, together with copies of the exchangeable debenture issued to Brookfield on May 1, 2019, and the registration rights agreement entered into with Brookfield in respect of common shares held in TransAlta are also available on SEDAR+ and EDGAR.

The Board believes that it is important to have regular and constructive engagement directly with its Shareholders. This includes allowing, encouraging and facilitating Shareholders to express their views on strategic, governance and other matters directly to the Board. The Board encourages Shareholder participation at the Meeting, where the Chair of the Board will be available to respond to Shareholder questions. Between annual meetings, the Company supports an open and transparent process for Shareholders to contact the Board, including the Chairs of the Board committees, through the office of the Corporate Secretary or at the email listed below. It is the practice of the Company for the Chair of the Board and the Chair of one of the standing committees to meet with large institutional Shareholders on an annual basis.

Appropriate topics for discussion between the Board and Shareholders may include oversight of the Company’s strategy, corporate governance, risk management oversight, executive performance or compensation, financial oversight, Shareholder proposals, Board or committee composition, performance, diversity, tenure and succession planning. The Board Chair, with the assistance of the Corporate Secretary, determines which Shareholder engagement requests are properly addressed by the Board; typically, topics that are operational in nature or relate to financial results, transactions or Company performance will be referred by the Board to management. In addition to responding to Shareholder requests for meetings or inquiries, non-executive directors also engage in proactive Shareholder engagement events, including one-on-one in-person, virtual or telephone meetings with our significant Shareholders.

The Company’s Shareholder Engagement Policy is subject to applicable law and the Company’s disclosure

policies, which prohibit the selective disclosure of undisclosed material facts or material changes. The Shareholder Engagement Policy is intended to promote and facilitate an interchange of views about governance and other corporate matters that are within the public domain. The GSSC oversees this policy and reviews it annually to ensure that it is effective in achieving its objectives and continues to be representative of sound corporate governance practices. The Shareholder Engagement Policy can be found under the "Policies" tab on the Company’s website at www.transalta.com/investors/governance.

The Board will endeavour to respond to all appropriate correspondence in a timely manner.

Shareholders may communicate with the Board, care of the Corporate Secretary, either by mail addressed to the Board (marking the envelope “Confidential – Board-Shareholder Engagement”) or email (marking the subject line as “Confidential – Board-Shareholder Engagement”) as follows:

Or via email to: corporate_secretary@transalta.com

Shareholder engagement requests sent to the Board will be reviewed by our Corporate Secretary. Shareholders and other stakeholders are also encouraged to contact us through our Ethics Helpline at 1-855-374-3801 (Canada/US) or 1-800-40-5308 (Australia) or by emailing the Ethics Committee (composed of members of management) at ethics_helpline@transalta.com.

As a general rule, the Company does not provide loans to its directors and officers and there were no such loans advanced or outstanding during the 2024 fiscal year. The Board must approve any loans that may be made to directors and officers.

As of Dec. 31, 2024, no indebtedness was due from any associate of any director or executive officer of the Company.

The Company has purchased, at its expense, directors’ and officers’ liability insurance policies to provide insurance against possible liabilities incurred by its directors and officers in their capacity as directors and officers of the Company and its subsidiaries. The premium for these policies for the period from Dec. 31, 2023, to Dec. 31, 2024, was US$1,655,267. The policies                      

provide coverage of up to US$150 million per occurrence to a maximum of US$150 million per annum. There is no deductible for directors and officers and a US$ 3-million deductible for each claim made by the Company. The insurance applies in circumstances where the Company may not indemnify its directors and officers for their acts or omissions.

There were no material interests, direct or indirect, of any director or executive officer of the Company, any proposed director of the Company, any other “informed person” (as such term is defined in National Instrument 51-102 – Continuous Disclosure Obligations), any person who, to the knowledge of the directors or officers of the Company, beneficially owns or exercises control or direction over securities carrying more than 10 per cent                                                   

of the voting rights attached to any class of outstanding voting securities of the Company, or any associate or affiliate of any of the foregoing, in any transaction since the commencement of the Company’s most recently completed fiscal year or in any proposed transaction that has materially affected or would materially affect the Company or any of its subsidiaries.

Except as otherwise disclosed above under “Interests of Informed Persons in Material Transactions” and elsewhere in this Proxy Circular, no person who has been a director or officer of the Company at any time since the beginning of the 2024 fiscal year, no proposed nominee                                           

for election as a director of the Company, and no associate or affiliate of any of the foregoing, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

The Board is responsible for developing, implementing and overseeing the directors’ compensation program and has delegated to the GSSC responsibility for evaluating and making recommendations to the Board regarding director compensation. The compensation practices for directors take into consideration:

+The Company’s strategic plans and priorities;

+The complexity of the industry and size of the business;

+The retention and attraction of qualified individuals to serve as directors on the Board;

+The provision of competitive compensation; and

+The importance we place on aligning directors’ compensation with the interests of Shareholders.

Director compensation does not include retirement benefits, change of control or severance provisions, health-care coverage, pensions, charitable  donations,                      

vehicles, club memberships or other such perquisites. In addition, non-management directors are not eligible to participate in the Company’s long-term incentive plan (consisting of restricted share units and performance share units) or stock option plan.

The GSSC annually reviews the market competitiveness of directors’ compensation against companies of similar size and scope in Canada. It also considers the time commitment and experience required of members to serve on our Board and to ensure it attracts and retains qualified directors. The Company benchmarks its compensation to the median of Canadian companies of our peer group, which generally are of similar size on a revenue, asset and market capitalization basis.

Each deferred share unit (DSU) is a notional share that has the same value as one TransAlta common share. DSUs may not be redeemed until the director leaves the Board. As a result, directors maintain an ongoing equity stake in the Company throughout their service on the Board.

DSUs are allocated to each director’s account on the 16th day of the last month of each compensation quarter (the “Accrual Date”), being March, June, September and December, based on the volume-weighted average price

(VWAP) of a TransAlta common share on the TSX for the five trading days preceding the Accrual Date. The DSU account of each director is also credited with DSUs equivalent to cash dividends declared based on the market value preceding the date dividends are paid on our common shares.

Following retirement from the Board, the retiring director will receive a cash amount equal to the number of DSUs held in the director’s account multiplied by the then market value, less applicable taxes.

The Board believes that directors’ compensation should align with Shareholders’ interests. As a result, a portion of each director’s annual retainer must be paid in common shares of TransAlta (which are purchased on behalf of the director in the open market) or in DSUs, as described above. Each independent director is required to acquire and hold a minimum value of three times the annual retainer   within   five   years   of   joining   the   Board. New

directors are also required to acquire and hold the equivalent of one times the annual retainer within two years of joining the Board. Following an increase in director compensation, a director will have two years to acquire and hold the equivalent of one times the amount of the increase to the annual retainer and five years to acquire and hold a minimum value of three times the amount of such increase.

Consistent with director compensation best practices, a flat fee compensation system for the independent directors applies to director compensation. The flat fee provides each independent Board member an annual retainer of $195,000 and the Chair of the Board an annual retainer of $330,000. The flat fee includes up to 10 Board meetings and for every Board meeting after 10, a meeting fee of $1,750 is paid. The per meeting fee applicable to meetings in excess of 10 is designed to reflect the significantly increased time, attention and responsibilities that directors will face if more than 10 meetings per year are required.

The fees are determined in recognition of the significant time and energy required of the directors in the performance of their duties. Directors are expected to prepare for and attend all Board meetings and ensure that they stay informed about the Company’s business and the rapidly changing industry, business and regulatory environment. In addition, the Board believes that the Company must offer a competitive compensation package to attract and retain experienced, skilled and knowledgeable directors who are willing and able to meet these expectations. Please see the tables below that provide further details of the fees and share-based awards for directors.