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TransAlta Corp. has acknowledged that it took profit into account when deciding when to fix mechanical failures at some of its power facilities about five years ago, but rejects findings by Alberta's utilities watchdog that this was improper.

The Alberta Utilities Commission earlier this week released a report that accused the company of rigging prices on four occasions between November, 2010, and February, 2011. In a report released Monday, the AUC alleges TransAlta chose to perform maintenance during "peak or superpeak hours" to constrain supply and drive up electricity prices.

TransAlta executives Wednesday argued the rules at the time gave it discretion to consider its bottom line when taking down power plants for maintenance.

"In making those decisions, based on our understanding of the situation and in light of what we saw others doing in the marketplace, we factored in financial impacts to the company in making those decisions," John Kousinioris, TransAlta's chief legal and compliance officer, said during TransAlta's second-quarter conference call Wednesday. "We had discretion on when we could take the time."

The window of opportunity was limited and TransAlta weighed other factors, such as safety, he said. The AUC alleges TransAlta could have "deferred" the outages.

TransAlta chief executive officer Dawn Farrell, noting the company is considering challenging the allegations in the Alberta Court of Appeal, said the company has since altered its strategy around forced outages.

"Almost five years ago, when this case began and we became aware that the market rules governing forced outages were in dispute, we immediately changed our compliance procedures," Ms. Farrell said in an open letter to Albertans Tuesday. "The actions that led to this case have not been repeated."

The letter, however, did not provide details regarding changes to the company's internal policies. TransAlta has pledged to conduct an independent review of its "current compliance procedures" around forced outages.

"The findings will be made public. We will ensure that this kind of event cannot happen with the highest standards in our industry," the letter said.

AUC also alleges TransAlta traded in Alberta's electricity market using information that was not public. The company and the two accused traders dispute that they did anything wrong or had information that was not available to others.

Ben Pham, an analyst at Bank of Montreal, said in a research note the potential penalty could hit about $20-million. TransAlta, on its conference call, said it has not yet made any financial provisions tied to a potential fine.

Mr. Pham expects investors to shy away from the company until the financial consequences are clear.

TransAlta said it lost $131-million or 47 cents a share in the second quarter, compared with $50-million or 18 cents in the same quarter the previous year. The company's shares closed at $8.34 on the Toronto Stock Exchange on Wednesday, down 2.46 per cent.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 0:36pm EDT.

SymbolName% changeLast
BMO-N
Bank of Montreal
+1.36%97.69
BMO-T
Bank of Montreal
+1.21%132.35
TA-T
Transalta Corp
-1.14%8.65
TAC-N
Transalta Corp
-0.78%6.4

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