TransAlta Corp (TAC) 2011 Q1 法說會逐字稿

Good morning ladies and gentlemen. Welcome to the 2011 first quarter results conference call. I would like to introduce Jess Nieukerk, Director of Investor Relations. Please go ahead.

Thank you Donna. Good morning everyone. I'm Jess Nieukerk, Director of Investor Relations. Welcome to TransAlta's first quarter 2011 conference call. With me are Steve Snyder, President and CEO; Brett Gellner, Chief Financial Officer; Dawn Farrell, Chief Operating Officer; Ken Stickland, Chief Legal Officer; and Hume Kyle, Vice President, Controller and Treasurer.

Earlier this morning we released our first quarter results. We hope you have had a chance to review them. Additional operating information will be posted on our website after this call. All information provided during the conference call is subject to the forward-looking statement qualification which is detailed in today's news release and incorporated in full for purposes of today's call. The amounts referenced in this review are in Canadian currency unless otherwise stated.

I also remind the audience that IFRS requires us to deconsolidate our Fort Sask, CE Gen and Wailuku facilities and report these results as part of finance lease or equity income or loss on the statement of earnings.

In addition, the non-IFRS terminology used in this call, including comparable earnings, comparable EBITDA, operating income, gross margin and funds from operations is reconciled in the MD&A. Per-share figures for the first quarter 2011 are based on an average of 221 million shares outstanding compared to 219 million shares in the first quarter of 2010. Please note, financial information has been rounded to the nearest whole number.

On this morning's call, Steve Snyder will provide an overview of operating results for the quarter. Brett Gellner will provide details on our cash flow, capital allocation and balance sheet items. And before going to questions and answers, Steve will provide commentary on what investors can expect for the remainder of 2011 as well as provide an update on our growth projects. Steve?

Good morning. Today I am going to cover our strong operational performance, provide a status update on the ongoing PPA processes for Sundance 1, 2 and 3 and conclude with what to expect for the remainder of 2011. Our strong first quarter results were driven by good performance across all of our operations, coupled with improvements in Alberta market conditions.

At the plant level, all of our facilities ran well and overall delivered on their availability and cost metrics. Wind resources were still a little low this quarter compared to historical standards, but we were able to offset this through higher than expected hydro levels. In Alberta, the latter translated into higher margins and in the Pac Northwest, similar strong hydro resources allowed us to economically dispatch our Centralia coal plant down, supply our contracted obligations with lower cost purchased power and still hold our gross margins steady despite the softer prices. As a result, we expect to meet all of our first half financial targets for our Centralia operations.

Overall, our strong operational performance delivered CAD0.34 in comparable earnings per share versus CAD0.27 per share last year. Generation gross margins were up CAD28 million, an increase of 8% over last year and availability was up to almost 93% versus 91% last year. This excludes Sundance units 1 and 2, which impacted availability up until we were able to determine economic destruction.

So, as you can see, we had a very solid first quarter and our numbers are up across the board. Brett will provide you with more details in his report.

Turning to the status of our Sundance units. I'll start with Sundance 1 and 2 and the progress we made with our claim for economic destruction. As we mentioned in our quarter four call, the buyer has disputed our claim. An arbitration panel has now been set and currently the arbitrators are dealing with procedural issues. We are hopeful the full process will start in May. The timeframe to complete the arbitration is still unclear at this time, but we will request that the panel try and expedite its resolution and we remain confident in our position.

In terms of Sun 3, the plant continues to run well, following the interim repairs made last year. The more permanent repairs are still scheduled for 2012 following delivery of the new equipment. The force majeure arbitration process is ongoing and is likely to proceed until these repairs are completed. We will update you once we have more information pertaining to either of these events.

Now, before I talk about what to expect for the remainder of the year, let me turn the call over to Brett.

Thanks Steve. Good morning everyone. As Steve mentioned, we achieved strong results this quarter both operationally and financially. Our comparable EBITDA for the quarter was up 15% or CAD38 million compared to last year, reaching CAD287 million. This was driven primarily by strong margins from our renewable assets, strong availability across our fleet and higher prices in Alberta. Our renewable assets contributed the largest year-over-year increase due to more production in both hydro and wind and higher margins in hydro.

Our cash flow measured as funds from operations, also increased quarter-over-quarter. FFO was up 17% or CAD32 million, reaching CAD226 million in the quarter. We remain on track to deliver CAD800 to CAD900 million in FFO for the year.

Energy trading delivered gross margins of CAD15 million which is in line with what we achieved last year. Our guidance for the full year for trading remains at CAD45 to CAD65 million in gross margins.

In terms of capital, in Q1 we spent CAD59 million in sustaining CapEx. For the full year we expect to spend between CAD310 to CAD365 million which includes the repowering of part of our hydro fleet and some productivity initiatives. This number is lower by CAD25 to CAD30 million from when we last reported as it now excludes our equity investments under IFRS. As it relates to major maintenance, the overall capital spend continues to be in the CAD180 to CAD210 million range for the year.

On growth capital we spent CAD34 million in the first quarter and we've updated our MD&A to reflect changes in our growth spend outlook for the remainder of the year. The full breakdown of both our sustaining and growth capital spend can be found in the MD&A.

Finally, our financial position at the end of Q1 remains strong and reflects our ongoing focus on maintaining investment grade credit ratings. On a trailing 12-month basis our cash flow to debt ratio increased to 20.7% from 19.6% at the end of December and our cash flow to interest coverage was 4.7 times compared to 4.6 times at the end of December. At the end of Q1 we also continued to maintain ample liquidity to support our business requirements and we had approximately CAD1 billion available under our CAD2 billion of committed credit facilities.

Before turning it back to Steve, I just want to comment on the non-cash, non-comparable after-tax mark to market gains we saw again this quarter. The gains are as a result of a number of hedges at our Centralia facility that no longer qualify for hedge accounting. These are non-cash gains and therefore do not affect our cash flow. Also while future reported earnings will be lowered as these hedges settle, they do not affect expected comparable earnings nor cash flows. With that, I'm going to turn the call back over to Steve.

Thank you Brett. As we look forward to the rest of the year, we have good momentum and will continue to drive our strategic initiatives. This means driving our base, growing our portfolio and repositioning coal by charting a new future for Centralia and for all of our coal units. First, let me talk about driving our base. Our coal operations are performing well and we will continue to focus on sustaining the strong availability performance we've achieved over the last 1.5 years. We are confident in being able to achieve our goal of 89 to 90% overall fleet availability for 2011. Drive our base also means continuing to control our operations, maintenance and administration costs through productivity initiatives and targeted cost savings. Here, we also expect to hit our goal of offsetting the impacts of anticipated inflation.

In terms of our markets, driving our base means we continue to be disciplined in our contracting strategy. We are over 90% contracted for the remainder of the year. That still leaves opportunity to take advantage of the Alberta market which is currently trading in the CAD65 to CAD70 per megawatt hour range.

In the Pac Northwest, while forwards are only in the US$25 to US$30 per megawatt hour, we are contracted well above these levels. In parallel, we continue to take advantage of the softer prices when optimizing production from our plant.

Let me shift now to talk about another key color of our strategy; growth. Just last month we announced the 66 megawatt New Richmond wind facility in Quebec. This is yet another really good project for TransAlta. It is low risk and has long-term 20-year contracts with Hydro Quebec at favorable prices. The addition of New Richmond brings our total wind portfolio to more than 1,100 megawatts and once completed it will bring our total renewable portfolio to over 2,200 megawatts, almost three times what it was just 10 years ago.

In addition, in Alberta we continue to accelerate our work on Sun 7 and we expect to complete equipment selection in early quarter four of this year. As it currently stands, we are targeting commercial operations with a 2015 timeframe for this 700 megawatt natural gas fired facility.

On our planned upgrades for our K1 and K2 units, these are expected to be completed during their major maintenance cycles in 2012. That said, the key turbine related parts are being sourced in Japan. It's too early to tell if their delivery schedules will be impacted, but we are already working on contingency plans. Once events in Japan have settled down, we will be able to finalize any required changes to our plans and will notify you at that time. Any delays should have minimal impact on our overall results.

At Sun 3 we do not expect to have any issues with the upgrades as parts are sourced from different suppliers. However, again, given the global supply impact of Japan, we will notify you of any potential change.

And finally in terms of Keephills 3, we expect to sync to the grid by the end of quarter two or early in quarter three. We are currently planning a full testing period to follow to ensure we are prudent and confident the plant will operate under a wide range of conditions before declaring that it is fully COD. That said, we expect to achieve full commercial operations in quarter three and the incremental cost impact of the test period is small at 2 to 3%.

Let me conclude today's call by updating you on the environmental legislation progress in both Canada and Washington State, as this directly affects our key third strategic pillar repositioning coal. In Canada with the federal actions now underway, the federal government's 45-year proposal which we had anticipated would be presented in the April timeframe, is now on hold. We remain confident however that the new government will come back with this regulation once the election process is over.

In Washington State the bill to transition our Centralia plant has passed through the state legislature. In fact, I will be traveling to Centralia this Friday to be with Governor Christine Gregoire at our plant as she officially signs the bill into law. This bill is important because it provides certainty and opportunity for our shareholders and our employees. It enables us to enter into long-term contracts for the power produced from Centralia over the next 15 years, lifting the previous five-year cap on contracts. This bill also provides the clarity and clear targets we need to grow in Washington State and across the Pac Northwest and it provides us with competitive advantages for long-term transitioning to natural gas.

The first quarter has provided us with a strong start to the year. I fully expect for that performance to continue and despite a busy agenda, that we can deliver on all of our targets for 2011. With that, I will turn the call back over to Jess for our question and answer period.

Thank you Steve. So that we may rotate through callers, we shall take one question and one follow-up from each caller before moving down the queue. We shall answer questions from the investment community first and then open the call to the media. We shall then respond to individual investors, so please identify yourself when asking a question. I remind you, we do not provide guidance and that we shall answer your model related questions offline after the call. Donna, we'll now take questions please.

(Operator instructions) Our first question is from Linda Ezergailis from TD Newcrest.

I have a question about your growth strategies. Some of the maybe less direct ways to participate in renewable power growth that some companies are considering would be investing in all the electric transmission that's needed in North America to facilitate all this renewable power build, and I'm just wondering if that's something that TransAlta has considered?

We continue to look at that. We don't have any plans at all to enter into the transmission business. All we said in the past and I would say we're consistent with that is that if we need to put transmission to hook up a plant in order to get it to market and there's no other way of doing it and it looks like it makes economic sense, we might consider it. But overall at this point we think there's enough opportunities in the generation business to fund all of our growth.

That's helpful. And just as a follow-up; when in the third quarter, what might we expect K3 to enter commercial service?

As I said in my presentation, we expect to sync somewhere late this quarter or early third and then I expect somewhere in the third quarter we'll go full COD. It's too early to tell exactly when. It will depend on the testing period. But for now, somewhere in the third quarter; hopefully sooner than later.

Okay, so anywhere from weeks to--?

Somewhere realistically in the August-September period. We'll see how the testing period goes.

Was it just a number of things that caused the small timeline delay or is there anything specific?

No, it's a 4.5 year project and we're down to the last month and I think at the end of the day there was some slight disruption because of [Apache] suppliers during the Japanese earthquake situation and that was a bit frustrating. But the end of the day, we're within weeks, after 4.5 years so I'm not particularly worried about it. There's still really no cost impact. And I think right now what we just want to do, when we declare a plant COD we want to be quite confident that it's fully commercially ready to operate and we're just going to make sure we do all the proper testing under all circumstances before we fully declare that. But the plant will be up and operating, once it's synced it will be producing power and it's just a matter of when we test after that.

Your next question is from Sam Kanes from Scotia Capital.

I'd like to stay on Keephills 3 again, simply because it's so close. The power production Steve, out of Keephills 3 that's net to you, has that been presold at all with respect to your 90% plus 2011 contracting?

No, it has not.

Okay. In terms of the accounting, Brett to start off with Keephills 3, will it be unit production in some fashion to get going as you tee through into your COD level or some other format? We heard from your partner, by the way, on their thoughts about impact to earnings at their more conservative assumption of power prices it would be below breakeven, but you have some views on that for us please?

Just on the accounting, the way it works is when we declare COD that's when we start booking it to the P&L so not when we're sinking. And in terms of earnings impact, again, we don't comment specifically on any of our plans, but you know, obviously we see prices move up a bit here since about four or five months ago in the back end, but modest impact to the delay.

Sam, just a quick one, if I look at the prices today, they're quite in line with what we used when we did the original project economics, so I'm quite comfortable that our economics will be fine as we go through, prices are in that CAD60 to CAD65 range.

Thank you, that was helpful. One follow-up; depreciation change, was that related to Centralia now that you have certainty around that asset?

No, it's just we always ongoing look at our depreciation for our assets and so it was just tweaking that. But no, it does not reflect the Centralia asset stage.

Okay, so it was just across a broad spectrum of assets?

Yes.

Your next question is from Juan Plessis from Canaccord Genuity.

Congratulations on the strong quarter. With regard to Centralia, just wondering if you can comment on the progress, if any, being made on a long-term contract with utilities in Washington State and your expectations with respect to timing of that?

Now that the bill has passed we'll start that process next week. They'll get the bill passed on Friday; that allows us to have those discussions and at this time we're confident that demands in the area for secure supply will ensure that we're able to contract the plant. I think we'll give you a better update at the next call, once we've been out and chatted with people, but right now the early signs are we're comfortable we'll be able to contract that plant.

Okay and as a follow-up; would you expect that you would be able to continue your economic dispatching of that plant under long-term contracts?

I think we'll have opportunity for that and that will all be part of the factors when we look at this contracting, what percentage that we contract, the type of contracts we do, the length of time and what units contingent, which ones aren't, so there's a fairly complex equation there. Net-net I feel quite good about the package in terms of our ability to manage that.

Your next question is from Matthew Akman from Macquarie.

I guess probably these questions are for Brett and they relate to ongoing costs. First on the operating costs for the plants, there's a note that mining expense is rising and we obviously have diesel prices moving up and I guess there are other things. I'm just wondering Brett if you could talk a little bit about whether that impact could be significant over the next year or so?

Well, clearly as you know Matthew, we have both our own mining and then what we do at Centralia in terms of purchased coal. But no, I wouldn't say it's significant; it's just in line with what we see generally in overall inflation, both in Alberta here and then the demand for coal down there. We are contracted out in Centralia for a bit. As we start optimizing the plant under the new bill, we'll look to how we manage that coal supply going forward. But yes, I wouldn't say it's anything too significant other than kind of normal inflationary pressures that we see.

If you go back, the PPAs actually recognize it over time, there would be increase in coal cost, mainly due to the overburden as we get further from the plant and there's higher levels of overburden. I would say the inflationary costs are probably higher than anticipated in the PPAs and we'll have to work to offset some of that, but the actual overburden levels and that's the main driver of the exterior mining costs, are fairly stable and well known for the next five to 10 years.

Thanks for that. And then is there a positive cost savings coming in? In corporate there's a mention of higher costs for Q1 because of productivity initiatives which presumably will be paying off going forward.

Yes, as we indicated last year, we've been very focused on productivity initiatives across the company and done a lot of that in the plants and I think we're just going to keep carrying on with that in both corporate and in the plant. So, I would say our main goal Matthew is to obviously offset inflationary pressures, especially in Alberta and that's one of the key drivers that we're trying to do with some of these initiatives then.

So then on a run-rate basis though, we'd expect corporate to be lower going forward, even though it was higher year-over-year in the quarter?

Well certainly our target is to offset inflation, so I would say at minimum flat and then obviously we're going to target to improve that over time.

Your next question is from Michael McGowan from BMO Capital Markets.

Just wondering if you could provide any insight on the level of earnings that you booked with respect to Sundance 1 and 2 this quarter?

We indicated we don't first of all report specifics on any plant, but under the PPA we're entitled to our capacity payments and that's essentially in line with what we're booking for those two facilities and those two units.

Okay. I'm taking a look at the reconciliation on page 10; it looks like the disclosure here suggests that your gross margin was helped by about CAD16 million due to some of the unplanned outages at the CPA facilities; does that reflect your ability to capture higher prices or does the CAD16 million there relate to some other gain?

It is and these things you have to go back to Q1 versus last year and this year and look at the penalties and incentives, how they work and how they flow through. So, it captures all of that activity so Sun 1 and 2 is part of that but it also just measuring our unplanned outages compared to last year to this year and what route prices were.

Your next question is from Andrew Kuske from Credit Suisse.

Just in relation to Sundance 1 and Sundance 2, obviously the positions that you've taken and the PPA counterparty have taken are really diametrically opposed, so just curious as to right now the accounting treatment from a TransAlta perspective, how do you think about potential liabilities and penalties if you were to lose in the arbitration process?

From our perspective we are booking this as normal course under the PPA which means we continue to receive our capacity payments and able to bill and collect that, so we are not providing for the possibility of not winning, because that's not our position.

And then subject to any actual decision from the arbitrator or a negotiated agreement between yourselves and the PPA holder, that's when we'd actually see the finalization of the accounting treatment or a potential unwinding of what you've already done?

Yes, that's correct.

If I may just ask one bigger, broader question. As it relates to Washington State and the bill and Washington, do you see that as a bit of a template for some markets transitioning out of coal into natural gas fire generation to a greater degree?

I would say in the US it potentially could have that role. The Canadian situation is different; we're going with the 45-year rule or the length of PPA which I think works well in the Canadian environment. I do think the process we were able to accomplish in Centralia with the State of Washington and with all of the stakeholders, does provide a template for perhaps other generators in the US but that will be up to them.

Your next question is from Robert Kwan from RBC Capital Markets.

First on Centralia, the ability for the utilities to return or earn a return on the contracts is a pretty interesting concept; I'm just wondering how you then foresee that to roll out? Do you see getting better pricing? Do you think maybe there's just going to be greater willingness to contract for longer terms or possibly you're looking at the negotiations about dovetailing Centralia into a longer-term contract involving a replacement gas plant?

The way I see it, all of the regulated utilities in the Pac Northwest have long-term resource plans to meet their requirements for their customer load and what we would try to do is obviously match our contracts to their customer load requirements and provide them with an opportunity to source that power through the Centralia facility. The legislation allows them to do that and I think that's a basis for the discussions with any of the US based utilities.

Okay and do you have any sense as to how you're going to be looking at that and helping them meet that load? Is it Centralia in isolation or are you going to try to dovetail it with a gas replacement?

It would be the whole facility at Centralia, which would be the coal facility, the gas facility and potentially any new facilities that we may build going forward, including renewables. We'll provide a full spectrum of opportunities for them and put them up against their opportunities to fill their resource plan and we think we can do that at lower cost than building of new facilities and that should be the basis for a good positive discussion with them.

Okay. Just my last question on the Sundance process; you have two processes; you have the notice of termination and the force majeure, just how that's being pursued here, is that being on two separate processes with the balancing pool determination of force majeure or is the contemplation here that everything will be wrapped up under a single process with kind of a single answer at the end of the day?

Those issues are currently being sorted out with the arbitration panel here and there's obviously some pros and cons of doing it one way or the other. From our perspective, we'd like to try and expedite this thing, so that will play into our decision making around that, but that is something that is before the arbitrators right now.

Your next question is from Mark Barnett from Morningstar.

Two quick questions; you mentioned where power prices were sort of in the range of CAD65 to CAD70 per megawatt hour over the quarter and then I heard you a little bit later mention that your guidance maybe assumes a CAD65 run-rate for the rest of the year?

For the quarter in Alberta, they actually were higher than that on a spot basis. Obviously we were contracted through the quarter for a significant amount. But the Pac Northwest was very low, given the low gas prices and strong hydro conditions. But the outlook that you read out, kind of that CAD60 range for 2012 on, is about where the market is.

And just switching gears real briefly, with the New Richmond project, obviously you managed to get a 20-year PPA; just wondering about the appetite for PPAs in both Eastern and Western Canada and sort of the dynamic there and how that's shifted from last year? Obviously we've seen a lot of US utilities kind of back off on the wind development but you still seem to have a pretty strong portfolio.

We are seeing some reduction obviously in demand as all of these contracts tend to be subsidized through various levels of government and clearly in the financial condition they're in, there's less ability to do that. There's been less impact in Canada than in the US, so we've seen a faster response in the US to reducing that. So bottom line is, I think we'll see a reduction, but I think there will still be opportunities here in Canada. There are some arising in Saskatchewan; there may be additional ones in East Coast and we're going to certainly look at those. I guess our growth plans going forward assume a bit less opportunity in that side, but increased opportunity perhaps on the run-of-river hydro side.

Your next question is from Michael McGowan from BMO Capital Markets.

Just a follow-up question on the Quebec wind facility. You did announce that you're moving ahead with the New Richmond project, but I haven't seen an update on Saint-Valentin; where does that stand?

Michael, we're still evaluating that opportunity so nothing to update you on at this stage and we'll just keep you posted. But we wanted to move forward with New Richmond because everything was good to go there. So we'll just keep you posted as we progress.

Okay. And just in respect to Sundance 7, it sounds like you're moving forward with that project. I remember at your Investor Day you talked a lot about some of the risk mitigation strategies you looked to put in place before building a large-scale gas plant. Has any of your thinking there changed? Would you build that facility purely to sell spot or do you still need to contract a portion of the output or fix your gas prices?

Again, at this stage we're really focused on the engineering and the permitting and so as we kind of think it through, clearly we'd like to be able to contract some of that output. It's further out in terms of when COD will happen so we have time to think that through. The market just as you can appreciate here in Alberta is growing quite strong. We've seen very strong load growth this year. And so there's going to be a need for new capacity when that facility is ready to come on line. We're also building out our CNI business to target customers. So too early to give you any more clearer thoughts around that, but our main focus is around the capital, the permitting and the engineering work.

(Operator instructions) Your next question is from Juan Plessis with Canaccord Genuity.

You have a statement in your MD&A that for the balance of 2011 you have some generation hedged at between CAD60 and CAD65 per megawatt hour in Alberta and CAD50 to CAD55 for the Pacific Northwest and this is down about CAD5 per megawatt hour from what you had in your MD&A at the end of Q4. Can you tell us what's going on there?

Again, as hedges roll off obviously we recalculate what the averages are and got adjusted for that.

And as a follow-up, you mentioned in the MD&A there's a gain on the sale of property and your equity losses; can you tell us how much that was?

It was small and immaterial, if you will. So, I'm not sure we release that specific information on our assets. It was very small. (Inaudible) to our Meridian transaction.

Your next question is from Sam Kanes from Scotia Capital.

Brett, it's for you, it's to do with tax rate. You're giving us a range for 2011 of 17 to 22%. I'm just a little curious if you're over 90% contracted, is that somewhat wider of a range than one might otherwise think, at least I'm thinking that way. Is it to do with the timing of when Keephills may come on and the tax shield availability of that or is it something else?

Again, that's an average for our company which reflects not only our Canadian operations but also significant operations in the US and Australia, so it's a blend of that, hence that's the range I provided.

(Operator instructions) The first question is from Jeff Jones from Reuters.

This is for Mr. Snyder. I just had a question about your comments about repositioning coal and I understand some of the potential legislation you're dealing with here, but I'm just wondering if you might want to just kind of expand a little bit on that? When you say reposition, what does that mean in practical terms?

What it means in practical terms is that we believe that long-term there will be technology that will allow coal to be used as fuel that is not emitting on CO2; that's probably out into the post 2020-2025 period for commercialization, so the interim period is that we want to focus on renewables and natural gas to fill the demand void until that is available to use. So the way you see this unfolding is that's why we've been doing our negotiations in Washington State, that's all part of the transition. In that case off of coal. In the case of Alberta in Canada it's using technology to find an ability to use the very low cost coal that's available here and particularly in Alberta. So that's essentially it. It's to reduce the CO2 emissions and continue to supply our customers during that period.

Okay. What's the current status of the carbon capture project?

That's still in what we call the feed study or engineering and development study phase and our team continues to look at the ability to scale up existing technology and the cost of doing that and they're also looking at the project in light of the fact that at this point in time there's no price for carbon, either in the US or Canada and those also underlying assumptions of carbon capture. But essentially it's in the engineering and design and development stage and at this point tracking to the timeframe to do that that we felt it would take, which would be somewhere in 2011 we hope to complete that.

Just one more if I may. There's been quite a bit of discussion in the last week or so about capital and trade in the context of the federal election campaign and I'm just wondering what your thoughts are on that?

We believe that ultimately there will need to be a price on carbon at some point in order to encourage technologies to reduce CO2 emissions and to impact on the supply as well as the demand side. Clearly in today's economy it's not a good thing to be having it right now, but ultimately we'll need to have it. So I think what you see are just discussions around that reality; at some point we need to get back onto discussions around how carbon will be priced, whether it's capital and trade or carbon tax or some other mechanism. And I think the actual time to do something like that is somewhere several years in the future and we'll have to wait and see how that unfolds. I think it's just talk around ultimately it has to happen but it's not the right time right now.

(Operator instructions) There are no further questions from the media; we will now go to private investors. Mr. Nieukerk, there are no further questions registered.

Thank you Donna. That concludes TransAlta's Q1 2011 conference call. I am available after this call for any follow-up questions. Thank you.

Thank you Mr. Nieukerk. The conference has now ended. Please disconnect your lines at this time and thank you for your participation.