TransAlta could pay $56M settlement for inflating Alberta energy prices

TransAlta has agreed toa $56-million settlement for inflating electricity bills in Alberta.

• TransAlta power manipulation ruling shows system flawed, critics say

The Alberta Utilities Commission (AUC) found inJuly that TransAlta had manipulated prices by shutting down six coal-fired generators during periods of peak electricitydemand in 2010, and again in 2011.

The province's Market Surveillance Administrator whose mandate is to help ensure fair, efficient, and openly competitive electricity and retail natural gas markets in Alberta said TransAlta's profit during the shutdowns was $16 million and that consumers paid between 10 per cent and 60 per cent more for their power.

David Gray, anelectricity consultant who is organizinga class-action lawsuit, says the proposed settlementis a lot of moneybut "the trouble is none of that will go back to consumers."

"Consumers don't get a cent of this settlement money and they were still harmed byTransAlta'sactions, so our view is that yes there's still a very good case to be made for compensation to consumers fromTransAlta."

TransAlta is Canada's largest investor-owned power producer and wholesale marketer.

In a news release, the company states it will "pay a total amount of $56 million, including approximately $27 million as a repayment of 'economic benefit'under the legislation, $4 million to cover the MSA's legal and related costs, and a $25-million administrative penalty."

Agreement still needs AUC approval

The company said it will make the payment in two instalments the first of $30 million will be paid a monthafter the deal is approved and the remainder would be paid one year later.

"This is a proposed settlement.It's our job now to take a careful look at this and determine given all the factors around the original contravention whether in fact this number is the one that's in the public interest," said AUC spokesmanJim Law.

The agreement will be reviewed at a hearing later this year, and Law says any money recouped will go into Alberta's general revenue fund.

"It is important that government allows the AUC to evaluate the proposed settlement independently, so we won't be commenting further at this time," said Alberta's Energy MinisterMarg McCuaig-Boyd."We will continue to watch the process closely."

Last year, TransAltapaid a nearly $150-million US settlementafter allegations were raised that it manipulated the electricity and natural gas markets during California's energy crisis 15 years ago.

In 2011, the companyalso admittedit had manipulated electricity imports, driving upprices so thatconsumers had to pay an extra $5.5 million for power.