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President and CEO Dawn Farrell of TransAlta addresses shareholders during the company's annual general meeting in Calgary, Alberta, April 29, 2014. (TODD KOROL/REUTERS)
President and CEO Dawn Farrell of TransAlta addresses shareholders during the company's annual general meeting in Calgary, Alberta, April 29, 2014. (TODD KOROL/REUTERS)

Alberta’s green subsidies shouldn’t penalize existing producers, TransAlta CEO says Add to ...

Alberta’s plan to jump-start investment in renewable energy to replace coal-fired power should not come at the expense of the existing fleet of wind turbines, the head of a major generator says.

TransAlta Corp. chief executive officer Dawn Farrell said subsidies unveiled this week by the provincial government will help spur competition for new projects.

But new capacity should not disadvantage older assets that are not eligible for the same benefits under the government’s revised rules, she said. Calgary-based TransAlta currently operates 22 wind farms with capacity to generate about 1,500 megawatts of power, the majority in Alberta.

“I can’t see an outcome where you effectively hurt the old fleet in order to bring in the new fleet,” Ms. Farrell said on Friday on a conference call to discuss the company’s third-quarter results.

“So I do think there will be significant discussions with the [Alberta Electric System Operator] and the government on how to ensure that incumbent assets are not disadvantaged in this transition, and that includes our wind assets,” she said.

Environment Minister Shannon Phillips said on Thursday that bidding for the first 400 megawatts of new capacity will begin early next year, with contracts awarded a year from now.

Under proposed legislation, companies would get a set price per megawatt over 20 years, with the province making up the difference if market prices fall short of the agreed-upon amount. Power producers would refund the government should market prices exceed the contract price.

The Alberta Electric System Operator recommended that the government adopt this bidding format for the first round. A government official said the policy was specifically structured to benefit new projects rather than existing assets.

It’s a key piece of a sweeping overhaul of Alberta’s electrical grid that includes shuttering coal plants and boosting renewable capacity to 30 per cent by 2030.

Last month, Premier Rachel Notley said the coal phase-out would necessitate payouts to electrical companies. They have warned that the move could cost more than $2-billion, a figure the province disputes.

Ms. Farrell did not address the issue on Friday. However, she said the company requires assurances on the trajectory of provincial and federal carbon-pricing initiatives before converting existing facilities to run on natural gas.

In the third quarter, TransAlta reported a comparable net loss of $11-million or 4 cents a share, versus a year-ago loss of $33-million or 12 cents.

With a report from Carrie Tait

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