As TransAlta Corp. faces accusations it manipulated power prices to bolster profits, the company’s top brass insisted Monday it followed the rules set out by Alberta’s regulator and acted no differently than other electrical suppliers.
In February, Alberta’s Market Surveillance Administrator filed documents with the Alberta Utilities Commission alleging that on four occasions in 2010 and 2011, the company shut down coal-fired power plants during hours of peak operation to drive up electricity prices.
In a meeting with the Herald’s editorial board Monday, TransAlta president Dawn Farrell and board chair Gordon Giffin said all the shutdowns happened because units needed maintenance or repair.
The company maintains, however, that it was allowed under MSA rules to co-ordinate the timing of the shutdowns in a way that could affect the price.
“Every other power company in the province was doing the same thing. This is not TransAlta doing some weird scheme off on its own in a dark corner that nobody else does. Every single generator, everybody who bids into this market, has to have considered the same things in terms of how they bid into the market,” said Farrell, who described the company as “rule followers.”
“I don’t see that TransAlta stood out alone here. I don’t see that TransAlta did something just so it could fill its coffers. TransAlta worked hard to follow the rules and that’s what we’re going to show.”
Farrell said Alberta’s deregulated electricity market works to reach an optimal price that allows for companies to take in enough revenue to allow for further capital expansion to meet future demand.
“We don’t set the rules. We operate within the rules,” added Giffin.
“The morality of it, from a public policy point of view is an interesting question . . . you’ve got to relate all of the moving parts, because if you said to that person who felt like they paid too much on a given day, ‘Would you rather have it dark in January because there’s no capacity being built?’ The answer would be, well, no, now I see how the balance works.”
Giffin said under current rules, suppliers are still able to co-ordinate the timing of operations to affect price. In this case, the dispute is whether it could be done with customers under power purchase arrangements.
A former United States ambassador to Canada, Giffin said TransAlta’s integrity is under attack and it will fight to defend its reputation. The company has filed complaints with the AUC over the MSA’s handling of the investigation.
No one was available from the MSA to comment Monday.
But in its filings with the AUC, the electricity market watchdog alleges that the closure of three TransAlta plants on Dec. 14, 2010, garnered a $6.69-million profit, even taking into account penalties TransAlta had to pay the utilities that owned the rights to the power it produced.
The next TransAlta discretionary shutdown in February 2011 triggered an energy emergency alert in which the Alberta Electricity System Operator had to call on all other available generators to supply electricity to the grid to meet the demand to avoid rolling blackouts.
Documents allege the shutdown garnered TransAlta nearly $8.5 million over just three days.
When TransAlta took its plants and their committed power off-line, it left their competitors scrambling to purchase electricity from other sources at a price often higher than what they were selling it to consumers, the documents say.
The MSA has estimated potential damages from the shutdowns could run as high as $160 million, with the fight to be settled in an AUC hearing likely to be held later this year or in early 2015.
The Progressive Conservative government has kept mum on the allegations and Premier Dave Hancock said Monday “it would be inappropriate for me to get into the middle of it” when the issue is before the regulator.
But opposition parties say the alleged conduct shows the flaws with Alberta’s electrical market.
Wildrose MLA Joe Anglin said he doesn’t buy TransAlta’s argument it was operating fully within the rules, noting the MSA is in the best position to interpret the regulations.
“We’ll see the outcome of the hearing process but, clearly, what we have going on is a system that is to the disadvantage of consumers,” Anglin said.
Liberal MLA Kent Hehr said TransAlta may well have been following the rules, but it is up to the Tory government to ensure any such loopholes have been closed.
“The government has set up a policy of the day that allows economic withholding to occur and it appears that TransAlta used the strategy many times and the government remained mute on the issue and the watchdog remained mute on the issue,” he said.
— With files from Deb Yedlin, Calgary Herald