A majority of the cuts will come from its Calgary office.
The Calgary-based company said the move will strengthen the company's competitive position.
"We extend our gratitude to our departing colleagues for their important contribution to TransAlta and wish them well as they move to the next chapters of their careers," said Dawn Farrell, president and CEO of TransAlta.
"We expect these changes will improve our competitive position in the Alberta and Canadian power markets."
The company expects to book a one-time $10 to $15 million after-tax charge in the fourth quarter related to the downsizing.
But it also expects annual cost savings of about $25 to $30 million, as a result of the realignment, by the end of 2013.
TransAlta announced last week it is partnering up with a U.S. company to build new natural gas-fired power plants that will help meet burgeoning electricity demand driven by growing energy development in western Canada.
The Calgary-based power generator announced the agreement Friday with Iowa-based MidAmerican Energy Holdings Co., a subsidiary of billionaire Warren Buffett's company, Berkshire Hathaway.
Meanwhile, TransAlta said net income attributable to common shareholders in the third quarter was $56 million, or 24 cents per diluted share, compared to $50 million, or 22 cents per share, in the same 2011 period.
Revenue fell to $538 million in the three months ended Sept. 30 from $629 million in the same year-earlier period.
Comparable earnings were $41 million, or 18 cents per share, down from $61 million, or 27 cents per share, in the 2011 period.
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