Notice of Force Majeure; Balancing Pool proceeding with assessment

In letters dated October 15, 2001, TransAlta Utilities Corporation advised the Balancing Pool and Buyers of Power Purchase Arrangement (PPAs) for the Keephills and Sundance generating units, of an alleged "Event of Force Majeure. "

In the letters, TransAlta Utilities Corporation stated: "The Event of Force Majeure is due to a legal strike at the Highvale Mine which provides coal" to these plants. "Luscar has strike contingency plans to continue to operate the Highvale Mine and TransAlta has enabled a contingency plan to utilize in-pit coal from the mine site and from stockpiles located near the power plants. However, even with these contingency plans, coal quality has been compromised as a result of the labour dispute which in some cases has caused or could cause unit derates. . . ."

The Balancing Pool is assessing and verifying this matter and has not yet made a decision on whether this is an Event of Force Majeure as defined in the PPAs and as submitted by TransAlta Utilities Corporation. The Balancing Pool has requested clarification from TransAlta on a number of items in order to conduct its assessment.

Under the PPAs, owners are obligated to exercise all reasonable efforts to continue to perform or comply with their obligations under the PPA and to use all of their reasonable efforts to mitigate or limit the effect of an Event of Force Majeure.

In the event of verified Force Majeure, the Balancing Pool is required to make capacity payments on behalf of the PPA Buyer.

More information will be posted to this web site in the future.