Notice of Force Majeure re: Sundance 1, 2, and 6; Power Pool Council Decision

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."

n 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. . . ."

Under Section 5(1)(j) of the Balancing Pool Regulation (AR 169/99) the Balancing Pool Administrator and Power Pool Council have the responsibility to verify and assess the occurrence of an extraordinary event and the need for any payment to be made into or out of the Balancing Pool in respect of that event.

On August 14, 2002, Power Pool Council rendered its decision regarding these matters. Please see the attached for more details. Power Pool Council Decision: TransAlta's force majeure claim for Sundance 1, 2, and 6