July 23, 2012 / 2:30 PM / in 6 years

TransCanada, TransAlta power deal to come back online

(Reuters) - TransCanada Corp (TRP.TO), Canada’s biggest pipeline company, said an independent arbitration panel has asked TransAlta Corp (TA.TO) to limit force majeure at its coal-fired power station in Alberta to a reasonable period and upheld an agreement between the two companies.

TransAlta took its Sundance 1 and 2 units, with a capacity of 560 megawatts, out of service in December 2010 following problems with the boiler tubes. The company later cited force majeure provisions to end the power purchase agreement with TransCanada.

TransCanada said on Monday that the arbitration panel has ordered TransAlta to rebuild the units and limited its force majeure claim from November 20, 2011, until a period of time that the units can reasonably be returned to service.

TransAlta said it will immediately start work to repair the units at an estimated cost of about C$190 million ($188.1 million).

TransCanada said it would record a C$50 million charge in the second quarter earnings.

($1 = 1.0103 Canadian dollars)

Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Don Sebastian

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