TransAlta reaches agreement with government of Alberta on transition payments
TransAlta announced that it has entered into an agreement with the Government of Alberta on transition payments for the cessation of coal-fired emissions from the Keephills 3, Genesee 3 and Sheerness coal-fired plants on or before December 31, 2030. Additionally, TransAlta announced that it has reached an understanding with the Government pursuant to a Memorandum of Understanding to collaborate and cooperate in the development of a policy framework to facilitate the conversion of coal-fired generation to gas-fired generation, facilitate existing and new renewable electricity development through supportive and enabling policy, and ensure existing generation and new electricity generation are able to effectively participate in the recently announced capacity market to be developed for the Province of Alberta. The successful development of a future policy framework will set a clear path for the investments that TransAlta will make in its existing coal, hydro and wind fleets and will allow the company to make additional investments in gas conversions, hydro and wind development in the province. TransAlta is committed to converting Sundance Units 3 to 6 and the Keephills 1 and 2 to gas-fired generation on or before 2023. TransAlta has also commenced the development of a pumped hydro project at its existing Brazeau facility and expects to begin stakeholder consultations in the near future. The company is targeting 2021 for the commencement of construction of the project, subject to receiving a long-term contract. Under the terms of the Off-Coal Agreement, TransAlta will receive annual cash payments of approximately $37.4M, net to TransAlta, commencing in 2017 and terminating in 2030. Receipt of the payments is subject to a number of terms and conditions, including that TransAlta maintains prescribed spending on investment and investment related activities in Alberta, maintains a significant business presence in Alberta, maintains spending on programs and initiatives to support the communities surrounding the plants, and the employees of the company negatively impacted by the phase-out of coal generation and fulfills all obligations to affected employees. The Off-Coal Agreement requires TransAlta to cease all coal-fired emissions at the affected plants on or before December 31, 2030. The affected plants are not, however, precluded from generating electricity at any time by any method other than the combustion of coal. TransAlta also entered into a Memorandum of Understanding with the Government pursuant to which they committed to cooperate and work collaboratively to advance the objectives of the Alberta Climate Leadership Plan. The MOU does not create any legally binding obligations between the Government and TransAlta and does not impose any obligations on, or constrain the discretion and authority of, the Government.