UPDATE 2-TransAlta suffers Alberta power plant outage

Mon Jun 7, 2010 6:34pm EDT

* Sundance 3 shut until June 20

* to run at reduced rate until 2012

* no material impact on net income expected. (Adds price of equipment, stock quote)

CALGARY, Alberta, June 7 (Reuters) - TransAlta Corp (TA.TO) said on Monday that a unit at its largest electricity generating station, the Sundance plant in Alberta, suffered a mechanical failure that will force it to run at reduced capacity for as long as two years.

The 353 megawatt Sundance 3 plant, located west of Edmonton, will stay off line completely until June 20, requiring TransAlta to declare force majeure, the company said.

It is not expected to return to full capacity until TransAlta completes a major maintenance outage in 2012 because of the 18-24 month lead time required to acquire new equipment.

The gear, called a generator stator winding, costs C$30 million to C$35 million ($28 million to $33 million), spokeswoman Tanis Fiss said.

The incident is not expected to have a material impact on full-year net income, TransAlta said. Including the impact of the Sundance 3 unit, the company expects the availability of its fleet of power plants to be 89 percent to 90 percent for the full year.

The unit is part of the 2,126 MW coal-fired Sundance plant.

TransAlta said it will keep receiving its power purchase agreement payment through the force majeure and will not have to pay availability penalties.

The company's shares rose 10 Canadian cents to C$20.70 on the Toronto Stock Exchange. It announced the outage after the market closed. (Reporting by Jeffrey Jones; editing by Rob Wilson)

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