CALGARY – Power producer TransAlta Corp. said Wednesday it expects its profits to take a hit of up to $25 million from an extended outage at its jointly owned Genesee 3 power plant near Edmonton.
The big Calgary-based electricity generator (TSX:TA) said the plant was shut down in November because of turbine and generator problems.
TransAlta had initially expected to have the plant in service by mid-December, but now it says the outage will last until Jan. 1.
As a result, TransAlta’s fourth-quarter production is expected to be cut by 275 gigawatt hours, and net income is likely to fall by between $20 million and $25 million.
The company still expects its funds from operations to be between $800 and $900 million for all of 2011.
The power plant is a joint venture between the company and Capital Power Corp. (TSX:CPX). It is located in Genesee, a community in central Alberta about 71 kilometres southwest of Edmonton.
In its most recent quarter, TransAlta earned $50 million, or 22 cents per share, compared with $40 million, or 18 cents, in the third quarter of 2010.
Excluding hedging accounting impacts, comparable profits would have been $61 million, or 27 cents per share, compared to $40 million, or 18 cents per share. Revenue was $629 million, down from $651 million.
Meanwhile, an arbitration panel hearing into the shutdown of TransAlta’s Sundance 1 and 2 units is scheduled for March and April of 2012.
About a year ago, the Calgary-based power generator (TSX:TA) took two units out of service temporarily for testing, and in February said they could not be repaired for a reasonable price and must be shut down permanently.
The move irked TransCanada Corp. (TSX:TRP), because it ended a power purchase agreement about six years before it was supposed to wrap up. The pipeline and utility giant has said TransAlta has not adequately proven that the units could not be repaired economically.
Sundance 1 was originally commissioned in 1970 and Sundance 2 in 1973. The power purchase arrangement for both units was supposed to expire in 2017.
The two Sundance units have about one-quarter of the generation capacity of Alberta’s largest power plant, about 70 kilometres west of Edmonton. Sundance 1 and 2 accounted for 560 megawatts of the 2,126 MW at the facility.
TransAlta is a power generation and wholesale marketing company with geothermal, wind, hydro, natural gas and coal-fired power assets in Canada, the United States and Australia.
The company’s earnings warning came after the close of stock trading Wednesday. Earlier, TransAlta shares rose 29 cents to close at $21.99, a gain of 1.3 per cent on the TSX.
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