TransAlta Executives Approved Intentional Power Plant Shutdowns to Increase Profits
According to documents filed with the Alberta Utilities Commission (AUC), 3 top TransAlta executives approved the strategy of deliberately shutting down its power plants during peak periods of demand to drive up electricity prices for millions of dollars in profits. To make matters worse, company officials congratulated each other about how well the strategy was working.
The Alberta Market Surveillance Administrator (MSA) has claimed that, in 2010 and 2011, TransAlta Corp. “undermined the integrity of the Alberta wholesale electric energy market by engaging in anti-competitive conduct.” The MSA claims that on 4 occasions involving 6 of its power plants, TransAlta’s “…corporate strategy entailed improperly timing discretionary outages in order to maximize TransAlta’s profits in both the power pool and the forward market, while impairing the fair, efficient and openly competitive operation of the market.” When TransAlta took its plants off-line, it left their competitors scrambling to purchase electricity from other sources at a price often higher than what they were selling to its customers. TransAlta has refused to release about 850 documents related to the allegations, claiming they are privileged.
At the same time, the MSA is seeking to ban a former TransAlta employee and a current employee from energy trading in relation to the charges against TransAlta. Last year, one of the employees was fined $15 million for allegedly manipulating electricity prices in California and other western U.S. markets.
Canada’s only fully deregulated electricity market has been widely criticized in Alberta, where customers pay some of the highest electricity prices in the country. Wildrose Utilities Critic Joe Anglin said Alberta’s system is “…a complete disaster” ; however, Premier Redford continues to defend the embattled deregulated system. Anglin went on to say, “I’m saying it is not right to gouge Albertans – and they know it’s wrong.” NDP Leader Brian Mason has little faith in the MSA investigation or the AUC’s ability to adjudicate the TransAlta matter, saying, “They are basically trying to manage a system that’s virtually unmanageable.” Liberal Energy Critic, Kent Hehr, said, “This is ridiculous to allow corporations to be gouging Albertans on their power bills.” Even a Tory backbencher, Ken Lemke, said his constituents want to know “What the heck is going on?”
Joe Anglin has called for the RCMP to investigate TransAlta’s alleged manipulation of the deregulated system, arguing that the MSA’s allegations are in effect allegations of fraud, theft and destruction of evidence, all of which are criminal in nature. PC Associate Minister of Electricity, Donna Kennedy-Glans, responded weakly by saying she wants the AUC to hear the case and “We cannot prejudice the outcome of this case.” TransAlta has denied the allegations, and took out expensive full-page advertisements today in Alberta newspapers, in an attempt to defend itself.
Sources for this story include: Edmonton Journal 1, Edmonton Journal 2, Edmonton Journal 3, Calgary Herald, Edmonton Journal 4. (TransAlta was fined $370,000 in November 2011 by the MSA for breaking market rules, which most Albertans thought was just a “slap on the wrist”, considering the estimated cost of TransAlta’s infraction to consumers in that case was a whopping $5.5 million.)