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Setting Payment Amounts for Output from OPG’s Prescribed Generation Assets

Setting Payment Amounts for Output from OPG’s Prescribed Generation Assets. TransAlta’s Presentation to the Ontario Energy Board. File number EB-2006-0064 TransAlta 110-12 th Ave SW, Calgary, AB T2P 2M1 Phone: 403-267-7638 Email: sandy_o’connor@transalta.com Fax: 402-267-2575.

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Setting Payment Amounts for Output from OPG’s Prescribed Generation Assets

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  1. Setting Payment Amounts for Output from OPG’s Prescribed Generation Assets TransAlta’s Presentation to the Ontario Energy Board File number EB-2006-0064 TransAlta 110-12th Ave SW, Calgary, AB T2P 2M1 Phone: 403-267-7638 Email: sandy_o’connor@transalta.com Fax: 402-267-2575 September 15, 2006

  2. TransAlta’s Experience with CoS, RC’s and Market-Based Investment • TransAlta was a vertically integrated utility with a monopoly service area, subject to a CoS analysis, and public review of same. • TransAlta had to change, as did the regulation of TransAlta. • TransAlta underwent a transition from a traditional utility to a competitive generation company, operating in both regulated contracts and market-based investment environments. • TransAlta believes that a similar transition will be required for OPG for the Ontario hybrid market to succeed.

  3. Investor Confidence is Critical to the Hybrid Market • As an existing Ontario generator/investor TA is concerned with: • OPG issues including • New investment • Mitigation of market power. • Market policy • Ontario investor confidence requires more certainty, and stability. • Market issues • How will OPG be incented and regulated with respect to its participation in the HOEP, DAM and forward markets? • Level playing field – all generators should be governed in a similar transparent fashion.

  4. Regulatory Contracts – Strengths and Advantages • Regulatory contracts provide: • A balanced focus on all of the major cost, revenue and operational behavior issues which are key for customers and markets. • Customer protection – cost overruns are at the risk of the generator, not rate payer. • Public review of the major contract elements and procurement process can occur. • Flexibility to address market issues and efficiencies. • Investor confidence – investors understand the methodology and relative certainty of a contract. • A relatively level playing field between generators.

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