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TransAlta settles California power-price dispute

People walk through the plaza of the TransAlta headquarters in Calgary, Alberta, April 29, 2014.


TransAlta Corp. can finally put the California power crisis of 2000-2001 behind it.

The U.S. Federal Energy Regulatory Commission has approved a settlement between the Calgary-based power generator and several California utilities and regulatory bodies. TransAlta will pay $149-million (U.S.) to end the long-running dispute over power prices during the state's costly electricity crunch.

The settlement will be funded in part by $51-million in receivables still owed to TransAlta, as well as interest on those receivables of $45-million. The company will also make two payments to the California entities of $26-million each, according to the FERC.

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The company said the settlement is not an admission of wrongdoing.

"We're pleased to move forward and focus on positive commercial relationships in the state of California," TransAlta chief executive Dawn Farrell said in a statement. "It was in the best interests of our company to settle this matter."

Hit by drought and with rolling blackouts crippling the state in the summer of 2000, California utilities faced surging prices when they bought power on the wholesale market.

TransAlta was one of numerous companies that supplied the electricity at the time, at prices that were the highest in the state's history. Two California utilities were driven into bankruptcy and the state was forced to step in to buy power at the sky-high prices to keep the lights on.

Enron Corp. played a leading role in the energy crisis and in 2002 former officials pleaded guilty to fraud and criminal conspiracy for manipulating the market. The company went bankrupt in 2001.

Two years after the crisis, the California Public Utilities Commission investigated "anomalous bidding behaviour and practices" and ordered TransAlta and numerous other companies to prove they had not gamed the system.

TransAlta is one of the last companies to conclude a settlement in the dispute. The parties reached the agreement in March, according to the FERC.

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"When California called and asked us for power, we provided it and obviously at the market price at the time. So with what they then uncovered with regard to some of the other companies, we've had to go back and try to come to an arrangement on pricing," TransAlta spokeswoman Stacey Hatcher said.

Ms. Hatcher said there are no parallels between the California situation and a recent allegation by the Alberta Market Surveillance Administrator that the company manipulated prices in the province in 2010 and 2011 when it took power plants off line.

TransAlta faces a public hearing over that dispute starting Aug. 5. The company maintains it followed all the market rules and it stands by its employees that were involved.

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