Transalta Utilities Corporation Business Information, Profile, and History

History of Transalta Utilities Corporation

TransAlta Utilities Corporation is the largest investor-owned electric utility in Canada. TransAlta supplies electric energy to over 630,000 customers, which amounts to approximately 70 percent of Alberta's electricity consumption. Its principal subsidiary, TransAlta Resources Corporation, handles the company's non-utility investments, which include oil, computer hardware and software, and technological research.

The forerunner of TransAlta Utilities, Calgary Power Company, was founded by banker W. Max Aitken in 1903. Aitken, who later became Lord Beaverbrook, reorganized a number of utilities as a subsidiary of his Royal Securities Company. He was joined in this venture by his friend and mentor R. B. Bennett, who served as Canadian Prime Minister from 1930 until 1935. Some business leaders felt that Aitken and Bennett were an unlikely team, since Bennett was known as an upstanding young man, while Aitken had earned a reputation as something of a renegade. Nonetheless, the pair joined several other prominent Canadian businessmen on Calgary Power's initial board of directors. Among these board members were: A. E. Cross, one of the founders of the Calgary Exhibition and Stampede; Herbert S. Holt, a Montrealer who was later knighted; and C. B. Smith, president of Calgary Power's forerunner, Calgary Power and Transmission Company Limited. Aitken soon became Calgary Power's first president.

Beginning as early as 1887, there were numerous small, privately owned firms that supplied towns across the province of Alberta with electricity. However, service was often inconsistent--limited to a select number of businesses and provided only for a few evening hours. In an attempt to meet people's energy needs more fully, Bennett negotiated a contract to supply the city of Calgary with electricity. Calgary Power's first major project became the construction of the province's first large-scale hydroelectric plant, located at the Horseshoe Falls. The Horseshoe Falls Plant's opening on May 21, 1911, allowed Calgary Power to meet the needs of the city. According to the Morning Albertan, Calgary mayor J. W. Mitchell was aroused from a Sunday nap to flip the switch which officially opened the plant and connected the city with its first large-scale source of electricity. By 1913, Calgary Power had constructed the Kananaskis Falls Plant as an additional source of power.

In 1911, Calgary Power supplied 3,000 horsepower of electricity to the city at a cost of $30 per horsepower. By way of comparison, Calgary required 1.3 million horsepower in 1986 at a cost of $170 per horsepower. There were 44,000 people who called Calgary home in 1911, and the emerging need for mass transportation was met by the booming streetcar industry. Streetcars accounted for a significant share of the city's electric usage.

Aitken, the company's founder, left Calgary Power and sold Royal Securities in 1919, after he moved to England to pursue other business interests. The buyer was financial wizard Izaak Walton Killam, who started his business career as an innovative 15-year-old paperboy. Killam soon acquired the franchises from the five daily newspapers that supplied his hometown of Yarmouth, Nova Scotia, and hired other paperboys to deliver for him. Killam remained owner and chairman of the board of Calgary Power until his death in 1955. During Killam's tenure, Calgary Power developed a close professional relationship with another company he owned, Montreal Engineering Company, which eventually became one of the largest engineering firms in Canada. The two companies participated in a mutually beneficial system of exchanging management personnel for many years, which led to increased opportunities in both firms.

The 1920s became a decade of expansion for Calgary Power. In 1927, the same year that Charles Lindbergh flew solo across the Atlantic Ocean, the team of Geoffrey Gaherty and Harry Thompson travelled the province in a Model T, signing city electric franchise agreements for Calgary Power. Gaherty was an engineer and visionary who provided the technical expertise. Thompson was a businessman with an ability to deal well with people. The pair signed franchises with fifteen towns and villages, including Claresholm, Nobleford, Stavely, Taber, and Vulcan. Gaherty eventually earned a spot on the company's board of directors.

In 1928, Calgary Power bought out its chief competitor, the Calgary Water Power Company, for the price of $600,000. Calgary Water Power had supplied electricity to a section of downtown Calgary. In the same year, Calgary Power opened its Ghost River Hydro Plant and continued its power-line expansion that would eventually provide electricity to rural areas. The 1920s also brought Calgary Power its first female employee, Margaret Collett. She was originally hired to emboss customer addresses during the company's first attempt to send out bills by machine. Collett stayed with the company until 1963, when she retired from her last-held position as an arrears clerk.

The stock market crash of 1929 brought Calgary Power's period of rapid growth to an end. The 1930s saw poverty and unemployment rise across Canada. Breadlines formed, and relief camps became necessities. The prairie provinces were hit particularly hard by the Great Depression. Wheat sold for as low as 25 cents per bushel and steers sold for just three cents a pound. Calgary Power, however, managed to maintain its entire staff throughout the Depression. In order to avoid losing their jobs, employees volunteered to take a 10 percent pay cut. As a result, there were no layoffs or staff reductions made. Calgary Power actually hired in a handful of engineers straight out of college in 1935. The company did so anticipating future need, despite the fact that few other companies in Canada were hiring at this time. The immediate need, however, was in areas besides engineering, so Calgary Power set its new employees to work at a variety of menial tasks--like scrubbing floors and digging holes for power poles.

If fighting the Depression wasn't enough, fire nearly brought Calgary Power to its knees in 1936. A brush fire blazed just west of the city of Calgary and wiped out three of the company's main power lines. Calgary Power was limited to its Victoria Park Steam Plant and a power line from Lethbridge as its only supply sources until the fire was contained and the downed lines could be replaced.

The most positive aspect of the 1930s for Calgary Power was the anticipation of the coming acceptance of electric appliances. The company put together its 'Modern All-Electric Kitchen' as a travelling exhibit to showcase such innovations as a range, refrigerator, mix-master, dishwasher, and coffee maker. The exhibit provided an abundance of publicity for the company, including winning the Mercantile Section of the Calgary Stampede in 1937.

When Canada entered World War II in 1939, public utilities alerted their employees to the possibility of sabotage. Prisoner of war camps were set up near Calgary to house German and Italian soldiers. The Canadian army issued Calgary Power employees handguns and rifles to defend themselves and the utility against escaped prisoners, though the need never arose. Since many employees were sent overseas in the armed forces, the company experienced a temporary manpower shortage during the war years. Demand for electric services also increased at this time, particularly with the development of large refrigeration plants to store food.

What the company did find itself fighting in 1940 was another fire. All of Calgary Power's employees were awakened and called into action on a September night when the Horseshoe Falls Plant caught fire. The blaze was eventually controlled and the plant was only temporarily out of service.

In 1947, two years after the war ended, Calgary Power moved its head office from Montreal--then the nation's largest city and prime business center--to Calgary, reorganized, and incorporated as Calgary Power Ltd. At that time, Calgary Power supplied the province of Alberta with 99 percent of its hydroelectric power. Also in 1947, Calgary Power built its Barrier Hydro Plant and used it to test the use of a newly developed remote-control operation system. The automation efforts worked well enough that Calgary Power soon converted all of its plants to the Barrier Plant system. A control center that could operate the company's entire system was built in Seebe in 1951. The company continued its string of innovations by testing 'mobile radio' communications in its line patrol trucks.

Although electricity had begun to spread to rural areas in the 1940s, only 5 percent of farmers in the province had electricity of any kind. The majority of farmers were hesitant to adapt until it became obvious that electric service could increase farm production as well as provide modern conveniences. The main problem for utilities in supplying farms was a financial one: at the time, it was estimated that it would cost $200 million--or twice the provincial debt--to expand service and supply all of the farms with electricity. This dilemma led to an unprecedented cooperative effort between Calgary Power, farmers, and the provincial government. Calgary Power established a subsidiary, Farm Electric Services, as the company's rural branch. Farm Electric Services kept separate records and made an extra effort to keep costs low. Farmers joined together to form Rural Electrification Cooperative Associations. With funds provided by farmers themselves, supplemented with government loans at a small rate of interest, these co-ops eventually brought electricity to Alberta farms and new customers to Calgary Power through its Farm Electric Services. Former Calgary Power employees interviewed for TransAlta Utilities: 75 Years of Progress recalled the excitement and joy that seemed to surround each farm as they turned on the electricity for the first time.

By 1949, Calgary Power's service area reached from the United States border to as far north as 60 miles past Edmonton. The extensive service area brought the need for a substation near Edmonton to supplement Calgary Power's control center in Seebe. The substation was fully operational in 1954. Also in 1954, Calgary Power began construction on the Bearspaw Plant near Calgary. It was the first of three major projects--Pocaterra and Interlakes hydroelectric plants were the others--that were undertaken in the mid-1950s. By 1955, Calgary Power boasted 540 employees, and its subsidiary, Farm Electric Services, employed 166 workers. There were more than 25,000 farms receiving power through Calgary Power by this time. This was also the year that longtime owner Killam died, prompting the company to offer stock first to employees and then to the general public.

The Alberta economy had received a tremendous boost in February of 1947 when oil was discovered in Leduc. By the end of the year, there were 30 wells producing 3,500 barrels of oil per day. Calgary Power supplied much of the needed electricity for pipeline pumping installations, oil refineries, and natural gas processing plants. The entire province benefitted from the oil industry boom. By 1956, Alberta's population had grown enough to support four television stations and five daily newspapers. There were 250,000 cars registered that year in the province, up almost 100,000 from 10 years earlier.

Calgary Power continued to expand through the 1950s and 1960s, developing its first underground distribution lines and building dams on the Brazeau and North Saskatchewan rivers. The reservoir built on the North Saskatchewan project, Lake Abraham, became the largest man-made lake in the province. Also at this time, Calgary Power began exploring thermal energy generation, since few sites remained that were suitable for hydro power development. The company built its first thermal generating plant in 1956 near Wabamun Lake, west of Edmonton and near large coal reserves.

The recession of the 1970s slowed the growth of Calgary Power. Food prices in Alberta had increased by 96 percent from 1961 to 1972. Housing costs were up 70 percent. In 1972, Calgary Power held a hearing to increase its rates for the first time in the company's history; until then, all rate changes had been decreases. Despite the dire economic situation, the company still managed to finance a new thermal energy station, the Sundance Generating Plant. Construction began in 1967, and the final unit was completed in 1980. Following the increased environmental concerns that surfaced in the 1970s, Calgary Power instituted a new electrostatic method to catch the byproduct fly ash produced at the two thermal generating plants.

Following an unsuccessful 1980 takeover attempt by a fellow Alberta company, ATCO Ltd., Calgary Power changed its name to TransAlta Utilities in 1981. With a service area that had outgrown Calgary decades earlier, the company's new name reflected its province-wide operation. By 1985, TransAlta provided 81 percent of the province's electricity needs. Along with its name change, the company formed a wholly owned subsidiary, TransAlta Resources, to handle its non-utility investments. TransAlta Utilities also used technology to improve efficiency and productivity in the 1980s. New systems implemented ranged from office computers to automated facility planners to hand-held meter readers. In 1985, the plant remote-control center at Seebe was retired, and a new System Control Centre in Calgary took its place.

TransAlta has remained Alberta's leading supplier of electricity through the Depression, World War II, various recessions, and into the 1990s. The firm looked southward for expansion in 1991, entering into a contract to supply power to the Bonneville Power Administration in the northwest United States. The contract was expected to generate $25 million in net revenues for TransAlta over a four-year period. The company also began exploring exports to British Columbia as part of its ongoing effort to expand its operations.

Principal Subsidiaries: TransAlta Resources Corporation; TransAlta Fly Ash Ltd.; Kanelk Transmission Company Limited; Farm Electric Services Ltd.