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TransAlta plans outages review after AUC ruling

Alberta Utilities Commission said the utility deliberately triggered outages at power plants to raise electricity rates.


July 30, 2015
by CANADIAN PRESS

CALGARY — TransAlta Corp. says it will undertake an independent review following a ruling from the Alberta Utilities Commission that the company deliberately triggered outages at power plants to raise electricity rates, thereby manipulating the markets.

“Although we were surprised by the decision, we do recognize our responsibility to encourage confidence in Alberta’s electricity system,” CEO Dawn Farrell told a conference call Wednesday with investors and analysts.

“We clearly do not take anyone’s trust for granted, and we believe as a result of that decision, we really do need to work on rebuilding that trust.”

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The actions that led to the case before the commission were stopped almost five years ago, but the review will include looking at how effective those changes were, she said.

“It’s going to look at changes that we did make in 2011, and test them against the new decision that came out Monday (July 27).”

The company has not yet decided who will conduct the review, but it said it will make the findings public. Farrell said she expects the review to be complete in about six months.

The commission held hearings after Alberta’s Market Surveillance Administrator alleged TransAlta manipulated the electricity market by shutting down coal-fired power plants that were under power purchase agreements in late 2010 and early 2011 to drive up power costs during winter periods when demand was high.

TransAlta breached a regulation by allowing its energy trader to use privileged information related to plant shutdowns so that the company could benefit in the market, the commission concluded.

But it also found that the Market Surveillance Administrator did not prove allegations that TransAlta’s compliance policies, practices and oversight were inadequate and deficient.

The Calgary-based company said it is reviewing the 211-page ruling and will decide within 30 days whether to appeal it in court.

Farrell also said it’s estimated that TransAlta made $5 million to $10 million in profits from the outages and the company is considering whether to approach the Market Surveillance Administrator to secure a penalty settlement.

The Alberta Utilities Commission will consider what benefits TransAlta reaped from its outages and what penalties to impose in the second phase of hearings.

On July 28, Harry Chandler, head of the Market Surveillance Administrator, said he would be looking for a significant penalty, though he did not specify.

© 2015 The Canadian Press

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