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Dawn Farrell, president and CEO of TransAlta.TODD KOROL/Reuters

TransAlta Corp. has joined forces with Warren Buffett's MidAmerican Energy Holdings Co. in a partnership that will aim to build natural-gas-fired power plants in Canada, targeting multibillion-dollar investments to help meet electricity demand from the oil and gas sector.

The U.S. billionaire's Berkshire Hathaway Inc. controls MidAmerican, which has co-operated with TransAlta on projects on a smaller scale in the United States since 2001 through CE Generation LLC, with notable power operations in Arizona, Texas and New York. The new arrangement under a yet-to-be-named umbrella company will tap into a power-generation market in Canada that is forecast to require $200-billion of investment over the next two decades.

Gas-fired generation plants will be needed to produce electricity in the oil sands and for liquefied natural gas export terminals on Canada's West Coast, say executives with Calgary-based TransAlta and MidAmerican.

"We have been seeking an entry point to the Canadian electricity generation market, where we see strong potential for growth," MidAmerican chief executive officer Greg Abel said in a statement Friday from his company's head office in Des Moines, Iowa. "The partnership will bring two strong development teams together to deliver clean, highly efficient power."

During a conference call, TransAlta CEO Dawn Farrell said it is too early to provide details on the size and scale of the strategic partnership's planned investments as the two firms combine their expertise and financial clout to press ahead with projects. But she said the focus will be on Western Canada, and one example of co-operation will be TransAlta's planned Sundance 7 gas-fired project in Alberta.

"I'm particularly bullish on the West," Ms. Farrell told industry analysts on the call. "I think that the best way to get a partnership on the ground is to be very focused in our approach so that we can aim at a few projects and see what we can bring home for the partnership."

But TransAlta and MidAmerican will be open-minded about other Canadian opportunities. "Initially, we'll tend to be focused here in the West, but it doesn't preclude us from going across Canada," Ms. Farrell said.

MidAmerican and TransAlta will be sharing development costs 50-50 in their Canadian ventures, while TransAlta will oversee construction and maintenance, said BMO Nesbitt Burns Inc. analyst Ben Pham. The proposed 800-megawatt Sundance 7 project will cost an estimated $1.2-billion to $1.4-billion, he added.

TransAlta also announced Friday that it posted third-quarter profit of $56-million or 24 cents a share, up from $50-million or 22 cents in the same period of 2011. Quarterly revenue fell to $538-million from $629-million.

Mr. Pham said the earnings were held back by losses in energy trading, and the company said it got hurt by lower power prices in Alberta and the in U.S. Pacific Northwest.

TransAlta emphasized that it has completed most of this year's major maintenance for its coal-fired operations. Despite higher planned outages, the capability of power plants to service customers improved in the latest quarter, compared with a year earlier, Mr. Pham said.