TransAlta has agreed to a $56-million settlement for inflating electricity bills in Alberta.

The Alberta Utilities Commission (AUC) found in July that TransAlta had manipulated prices by shutting down six coal-fired generators during periods of peak electricity demand in 2010, and again in 2011.

The province's Market Surveillance Administrator — whose mandate is to help ensure fair, efficient, and openly competitive electricity and retail natural gas markets in Alberta — said TransAlta's profit during the shutdowns was $16 million and that consumers paid between 10 per cent and 60 per cent more for their power.

David Gray, an electricity consultant who is organizing a class-action lawsuit, says the proposed settlement is a lot of money but "the trouble is none of that will go back to consumers."

"Consumers don't get a cent of this settlement money and they were still harmed by TransAlta's actions, so our view is that — yes — there's still a very good case to be made for compensation to consumers from TransAlta."

TransAlta is Canada's largest investor-owned power producer and wholesale marketer.

In a news release, the company states it will "pay a total amount of $56 million, including approximately $27 million as a repayment of 'economic benefit' under the legislation, $4 million to cover the MSA's legal and related costs, and a $25-million administrative penalty."

The company said it will make the payment in two instalments — the first of $30 million will be paid a month after the deal is approved and the remainder would be paid one year later.

"This is a proposed settlement. It's our job now to take a careful look at this and determine given all the factors around the original contravention whether in fact this number is the one that's in the public interest," said AUC spokesman Jim Law.

The agreement will be reviewed at a hearing later this year, and Law says any money recouped will go into Alberta's general revenue fund.

"It is important that government allows the AUC to evaluate the proposed settlement independently, so we won't be commenting further at this time," said Alberta's Energy Minister Marg McCuaig-Boyd. "We will continue to watch the process closely."

Last year, TransAlta paid a nearly $150-million US settlement after allegations were raised that it manipulated the electricity and natural gas markets during California's energy crisis 15 years ago.

In 2011, the company also admitted it had manipulated electricity imports, driving up prices so that consumers had to pay an extra $5.5 million for power.