TransAlta puts Alberta investments ‘on hold’ ENERGY

CALGARY • TransAlta Corp. said Thursday future investment in Alberta is “on hold” as its CEO vented her frustrations that the prov- ince has yet to pick a negotiator for the phase out of coalfired power.

“We thought we’d have a negotiator appointed by the end of January; it’s now the end of February and we don’t have a time frame for that and we have no indication on who that will be or what that process will be,” TransAlta president and CEO Dawn Farrell said on a conference call to discuss the company’s fourth quarter earnings.

The Calgary- based power company learned in November that coal- fired power plants would be forced to shut down or be emissions-free by 2030 as part of Alberta Premier Rachel Notley’s climate change policies.

Coal power companies in Alberta are looking for compensation from the government for the early shutdown of their facilities, which they say would create “stranded capital.” In the meantime, Farrell said, new investments in the Alberta market have been paused.

TransAlta is evaluating the construction of new hydroelectric, wind, solar and natural gas co-generation facilities in Alberta, but it won’t sanction any projects until the details of the climate change plan are clarified and it has worked out a deal on its coal assets with the province, which Farrell said is “priority No. 1.”

“We cannot make any major investment decisions in this market until we have more clarity around the policy environment and the policy recommendations turn into actual law and we know what the market is actually going to be like,” she said.

Ernst and Young power and utilities leader Gerard McInnis said working out the details of the climate change policies and working out a deal with affected utility companies is urgent because “uncertainty and capital markets don’t go well together.”

“The concern is how do we attract new plants while investors would look with a skeptical eye at a market that would put capital at risk,” he said.

TransAlta has established a renewable energy subsidiary company, TransAlta Renewables, but coal continues to make up the largest segment of its earnings.

In 2015, the company’s Canadian and U.S. coal segments generated $ 401 million for the company, accounting for roughly 40 per cent of its $945 million in annual EBITDA.

To prepare for the transition away from coalk TransAlta slashed its dividend by 78 per cent to 16 cents per common share in January. The move is expected to save the company $160 million per year.

On Thursday, the company reported a $7-million net loss in the fourth quarter, compared with $148 million in net earnings in the same period a year earlier. Its revenue also declined 17 per cent to $595 million in the fourth quarter, compared with $718 million in fourth quarter of 2014.