"We are unwilling to passively accept unfounded allegations," board chairman Gordon Giffin told investors at the company's annual general meeting.
"If you will give us the benefit of the doubt, I believe that we will establish that confidence is justified."
Alberta's Market Surveillance Administrator alleges TransAlta (TSX:TA) manipulated the province's electricity market by shutting down power plants to drive up prices in 2010 and 2011.
TransAlta undertook an internal review of the matter, Giffin said.
"While we determined that certain process improvements could be made, we did not find that the assertions by the MSA were accurate, appropriate or justified," Giffin said. "Accordingly, the board fully supports management in disagreeing with what appears to be an effort to change the interpretation of the rules after the fact."
CEO Dawn Farrell said the company is confident it acted within the rules and that it intends to play a "leadership role" in making sure Alberta's power market is transparent and well understood.
"The Alberta power market is very complicated and hard to understand and many consumers don't really know how it works and what it looks like and what it means for them. And so we believe that the industry and ourselves have to be much more straightforward about how the market works, how pricing happens, what it looks like," Farrell told reporters following the meeting.
"We just have to build trust with consumers. I think that's just more education."
During the meeting one shareholder raised concerns over there being a "culture problem" at TransAlta, citing a recent dividend cut and a separate dispute with fellow utility company TransCanada Corp. over coal plant closures.
"These are really big things that are piling up and don't really point in a positive direction. I know you say great things every year, but these red flags are big flags," the shareholder said.
Another shareholder, Marijke Knipscheer, told the meeting she was "disgusted" with the board's "poor" performance.
The stock is off about 18 per cent from where it was at this time two years ago.
"And you are asking us to vote for you ask directors? What planet are you living on?" she said.
In February, TransAlta cut its quarterly dividend from 29 cents to 18 per share.
"First, you should know that you were all top of mind when we made this decision. We know who owns these shares and we know your expectations of us. We also recognize that for many of you, it's your income," Farrell told shareholders. "But we also know the healthier we are as a company, the better we are in the longer term."
Earlier Tuesday, TransAlta posted net earnings of $49 million, or 18 cents per share, reversing a net loss of $11 million, or four cents per share, in the same period last year.
Comparable net earnings were $47 million, or 17 cents per share — beating the average analyst expectation of 11 cents, according to estimates compiled by Thomson Reuters.
A year earlier, comparable net earnings were $32 million, or 12 cents per share.
Revenues were at $775 million, up from $540 million year-over-year.
Follow @LaurenKrugel on TwitterSuggest a correction