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TransAlta to face public hearing on alleged price manipulation

A pedestrian walks past the TransAlta building in downtown Calgary in this file photo.

Jeff McIntosh/The Canadian Press

Allegations that TransAlta Corp. manipulated Alberta power prices during the winter of 2010 and 2011 will go to a public hearing this summer in front of the province's utilities regulator.

The Market Surveillance Administrator (MSA) – the province's electricity market watchdog – alleges that TransAlta engaged in "anti-competitive conduct" in 2010 and 2011 by taking three coal-fired power plants off line on four cold days, during high-demand hours and in periods when other players in Alberta's competitive power market were the least likely to be able to pick up the slack. This, the administrator alleges, drove up electricity prices and allowed TransAlta to reap as much as $16-million in additional profits, a figure the company disputes.

"They say $16-million, we say zero," said TransAlta spokeswoman Stacey Hatcher. "We followed the rules on how we were supposed to make money and bid into the market, and we dispute the MSA's allegations."

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Late Thursday, the Alberta Utilities Commission announced that a hearing based on the MSA's investigation will begin Aug. 5. "The public hearing is the way this needs to be done," said commission spokesman Jim Law. "It's a fair process, it's an efficient process."

The company has lodged a complaint against the MSA saying guidelines on discretionary outages – when power generating units are shut down for repair – are confusing, new rules have been applied retroactively and TransAlta is being unfairly singled out among power generators. In an earlier submission to the commission on the allegations, TransAlta said that in 2010 the MSA suggested in a discussion paper that "economic withholding" to maximize profits was allowable. What was "onside" at one point was "completely offside" a number of months later, the company argued.

On Thursday, the commission also dismissed this complaint about the conduct of the MSA from the company, and two other complaints from executive employees named in the allegations.

Complaints about the MSA were filed by the company, TransAlta employee Nathan Kaiser and former employee Scott Connelly earlier this year. This week the commission said it believes the complaints and the MSA's allegations ultimately concern the same circumstances, "[that is] the discretionary outages and the forward trading … the MSA's application and the complaints are, in effect, 'two sides of the same coin.'"

In a news release on Friday, the company reiterated "we stand behind our employees, their decisions and actions, and we will vigorously defend TransAlta's conduct in the marketplace." Of the AUC's decision to dismiss the complaints, Ms. Hatcher said the public hearing will allow the company to present its case. "The AUC was very clear that their decision is not an assessment of the merits of our case."

TransAlta's share price has consistently declined in recent years, and has traded below $14 on the Toronto Stock Exchange this month from above $20 in 2011. The Canadian Press reported that at last month's TransAlta AGM, shareholders raised concerns over a recent dividend cut, executive compensation and a separate dispute with TransCanada Corp. over coal plant closures.

In 2012, the company was also fined $370,000 for power price manipulation but said at the time the rules were unclear.

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