TransAlta wins arbitration ruling in dispute over coal unit

TransAlta Corp. (TSX:TA)(NYSE:TAC) reported Nov. 23 that an independent arbitration panel granted it force majeure relief for derates and outages in 2010 and 2011 related to mechanical failure of critical generator components on the coal-fired Sundance Unit 3.

This decision validates that the mechanical failure was beyond TransAlta’s reasonable control, the company said.

“This decision further validates our good operating practices,” said Dawn Farrell, TransAlta President and CEO. “The circumstances of the failure were unforeseen; we did what was necessary and prudent to return the unit to service, maintain safe operations, and support the reliability of the Alberta system.”

TransAlta took Unit 3 of the Sundance facility out of service in May 2010 due to the mechanical failure of critical generator components. TransAlta then notified the Power Purchase Arrangement (PPA) buyer and claimed force majeure relief under the PPA. The PPA buyer rejected this claim, which was then referred to binding arbitration under the dispute resolution process set out in the PPA and in accordance with the Alberta Arbitration Act.

Sundance Unit 3 has a capacity of 353 MW out of the 2,126 MW of total capacity at the Sundance power plant, which has six individual units and serves as a baseload facility for the Alberta electricity system. TransAlta commissioned Unit 3 in 1976. Located about 70 kilometers west of Edmonton, Sundance is the largest power plant in Alberta and the largest coal plant in Western Canada.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.