(By Balachander) TransAlta Corp. (NYSE: TAC) said an arbitration panel has validated the company's operating practices and granted claim relief for derates and outages in 2010 and 2011 related to mechanical failure of critical generator components on unit 3 at Sundance power plant.
The Calgary, Canada-based non-regulated electricity generation company took unit 3 of the Sundance facility out of service in May 2010 due to the mechanical failure of critical generator components.
Consequently, TransAlta said it notified the Power Purchase Arrangement (PPA) Buyers and claimed force majeure relief under the PPA.
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"The PPA Buyer rejected this claim, which was then referred to a binding arbitration process under the dispute resolution process set out in the PPA and in accordance with the Alberta Arbitration Act," the company noted.
Sundance 3 comprises 353 megawatts (MW) of the 2,126 MW 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.
"This decision further validates our good operating practices," commented TransAlta CEO Dawn Farrell on Friday. "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."
The stock, which has been trading in the 52-week range of $13.92 to $21.93, closed at $14.87 on Wednesday on the NYSE.