November 28, 2016 – The Government of Alberta reports it has reached agreements with TransAlta, Capital Power and ATCO to end coal-fired emissions on or before December 31, 2030.

The electricity companies will receive annual payments until 2030, totalling $1.1 billion (2016 dollars), says the government, which will be fully funded by Alberta’s price on industrial carbon emissions.

The agreements will see the companies—which own several coal-fired electricity units originally slated to operate beyond 2030—provided with payments for investments that have been reduced in value by the transition away from coal-fired generation, says the province.

“We have reached a mutually beneficial agreement on the transition payments to enable the coal retirements in the post-2030 period and memorialized our intention to work collaboratively with the government in a manner that supports TransAlta’s future investment in Alberta,” said Dawn Farrell, TransAlta’s president & CEO.

Saying it is committed to converting Sundance Units 3-6 and the Keephills 1 and 2 to gas-fired generation on or before 2023, TransAlta adds it has 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.

TransAlta says it will receive annual cash payments of about $37.4 million, net to TransAlta, commencing in 2017 and terminating in 2030. Receipt of the payments is subject to a number of terms and conditions, including maintaining prescribed spending on investment and investment-related activities in the province and maintaining a significant business presence in Alberta.

As compensation for the capital invested in Sheerness, ATCO will receive cash payments from the government of $4.7 million annually for 14 years, commencing in 2017 and terminating in 2030. Sheerness Units 1 and 2 were otherwise scheduled to retire in 2036 and 2040, respectively.

In the near term, ATCO says it will assess the economic viability of converting some of its coal-fired generation to natural gas. In addition, it will work alongside the province in exploring the potential of hydroelectric power.

As compensation for the capital it invested in coal generating assets that will be stranded effective December 31, 2030, Capital Power will receive cash payments of $52.4 million annually for 14 years, commencing July 31, 2017, for a total of $734 million. Capital Power has agreed to continue to participate in the Alberta electricity market, support the local communities surrounding the coal facilities through 2030, and fulfil its pension and other commitments to employees, reports the company.

Capital Power also reports the province has agreed to discontinue its legal action against Capital, and to arrange for the Balancing Pool to accept Capital Power’s termination of its role as a Buyer of the Sundance C Power Purchase Arrangement (the Arrangement). In consideration of these actions, Capital Power and its syndicate partners have agreed to pay the Balancing Pool $39 million, of which Capital Power’s portion is $20 million ($15 million after tax).

The Government of Alberta says it will work with the companies, the feds and affected communities to explore options for the future, including coal-to-gas transitions, hydroelectricity and economic development initiatives.