Senior-level talks for Sarnia?TransAlta hopes to begin senior-level talks for Sarnia, Ont., power plant
February 1, 2005 - 14:16
By JAMES STEVENSON
CALGARY (CP) - Power generator TransAlta Corp. hopes to start "senior-level discussions" with the Ontario government in the next two months to bring its Sarnia power plant up to full capacity.
The $500-million Sarnia co-generation plant in southern Ontario is nearly two years old and still running at only about one-quarter of its 575-megawatt capacity because TransAlta doesn't have long-term contracts with the province and it's not worthwhile for the company to produce more power in the capped spot market.
"We continue to meet with Ontario government officials and press for a solution to our market-related problems," TransAlta president Steve Snyder told analysts Tuesday after unveiling a 42 per cent boost to fourth-quarter profits.
"There have been ongoing low-level discussions over the last three or four months . . . and we're hopeful to be in some more senior-level discussions in the course of this quarter," said Snyder.
Ontario's electricity market was in a state of flux after the former Conservative government retreated from plans to deregulate the industry and instead froze rates after residential bills rose too high.
The changing rules in the province have limited new investment in power generation despite a growing electricity crunch, and many private power companies are keeping a close eye on what happens with TransAlta's Sarnia plant.
The current Ontario Liberal government is trying to reform the electricity sector with new legislation that brings stability to the sector while seeking bids for new power facilities. It also created the Ontario Power Authority to ensure the province has an adequate long-term supply of electricity.
TransAlta said Tuesday it realized the Ontario reforms would take time. Still, the company is keen to resolve issues that have been plaguing it for years.
"We continue to be optimistic that there will be a resolution for this facility as we go forward," said Snyder.
Ontario Energy Minister Dwight Duncan was unavailable for comment.
Earlier Tuesday, TransAlta said it earned $62.1 million or 32 cents per share, in the final three months of 2004, up from $43.8 million, 23 cents per share, in the year-earlier quarter.
Revenue rose to $712.5 million from $661.5 million.
For the full year, net earnings were $170.2 million or 88 cents per share, down from $234.2 million or $1.26 a share in the prior year. Still, revenue increased to $2.84 billion from $2.52 billion.
"Our plants performed well, costs were tightly controlled and major maintenance work was completed as planned," said Snyder.
The company plans to continue reinvesting its capital in existing power plants with an aggressive maintenance schedule to improve productivity and strengthen its balance sheet by paying down debt.
The only growth plans include "modest amounts" of renewables like wind power, said Snyder.
Calgary-based TransAlta (TSX:TA) is a major non-regulated power generation and wholesale energy marketing company with coal-fired, gas-fired, hydro and renewable generation assets in Canada, the U.S., Mexico and Australia.
In early-afternoon trading on the Toronto stock market, TransAlta shares (TSX:TA) were up 26 cents to $19.25, just shy of the company's 52-week-high of $19.35.