Enmax suing Balancing Pool over power purchasing

In a new lawsuit, Enmax is ramping up its electricity dispute with the NDP government, accusing the province of interfering with Alberta’s Balancing Pool, an armslength agency.

The utility, owned by the City of Calgary, also insists the independent agency has the ability to cancel money-losing power agreements at the heart of its conflict with the province — a move that could save consumers up to $336 million.

The Notley government and Enmax have been at loggerheads for more than a year over the issue of how to best manage power purchase arrangements (PPAs).

Enmax filed a legal action with Court of Queen’s Bench in mid-July, suing the Balancing Pool, the provincial agency responsible for handling the power contracts.

It wants the Balancing Pool to complete its assessment of Enmax’s return of the PPAs for the Keephills and Battle River power generating units.

Under Alberta’s deregulated power system, PPAs were created to give buyers such as Enmax the right to buy electricity from power plants and resell it to consumers.

Alberta’s electricity prices slumped badly in the past two years and the contracts have been losing millions of dollars.

Enmax contends the NDP government triggered an opt-out clause within the deals by hiking the province’s carbon levy on large industrial greenhouse gas emitters.

Under the agreements, if the government changes the law and makes the deals unprofitable buyers can hand the PPAs back to the Balancing Pool, which must pass along losses to consumers.

After several PPAs were returned last year, the organization posted more than $2.5 billion in operation losses and needed a government loan. In its lawsuit, Enmax states the Balancing Pool is supposed to assess and verify the termination of any PPAs and participate in arbitration if the two sides disagree.

While provincial rules requires this to happen “within a reasonable period of time,” Enmax says it’s waited 14 months for a final response.

“The Balancing Pool has failed to act in a manner that is responsible and efficient as required under the (legislation),” says the statement of claim.

Statements of claim include allegations that have not been proven in court.

Balancing Pool CEO Bruce Roberts said the legal matter has been adjourned until September and the agency is reviewing its options.

In its new statement of claim, Enmax also alleges there’s been “interference by the government of Alberta in the Balancing Pool’s statutory mandate.”

Documents obtained under freedom on information indicate the government’s interference with the organization’s mandate to “independently review, assess and verify the PPA terminations,” the lawsuit claims.

Enmax notes the documents suggest the Balancing Pool expected, at one point, to be in a position to assess and verify the returned PPAs within four to six weeks.

But the internal documents indicate “the government of Alberta’s desire to ‘forestall these PPA terminations,’” the suit claims.

The utility is seeking an interim injunction directing the Balancing Pool to complete and communicate the results of its assessment without delay.

Officials with Enmax declined to comment. A statement from the government called the litigation “a matter between Enmax and the Balancing Pool.”

“The Balancing Pool is an independent agency and makes its own decisions about how to manage the Power Purchase Arrangements it holds,” it said.

United Conservative Party MLA Don MacIntyre called the new lawsuit another twist in the battle between the power sector and the NDP government.

MacIntyre said internal e-mails the official Opposition obtained last year indicate the Notley government has meddled in the Balancing Pool for months.

“I would say the government of Alberta is busted badly, because now Enmax’s lawyers believe they have enough documented evidence from the government’s own files to make their claims stick,” he said.

The conflict between the two sides began after Enmax and three other utilities notified the Balancing Pool last year of their intention to return their PPAs due to the optout provision.

The Notley government filed suit to block that move, saying the change in law clause was unlawfully added to PPAs almost two decades ago, at the prompting of now-defunct Enron Corp.

Settlements were reached with the other three utilities, but not Enmax.

In a recent report, the Balancing Pool said it can’t formally accept Enmax’s PPAs and take further steps to minimize future losses by terminating the agreements until the province’s lawsuit is resolved.

Cancelling the two Enmax agreements would save the agency — and consumers — up to $336 million in expected losses, it said.

In a statement on its website, Enmax insists the Balancing Pool is “legally free” to cancel the outstanding PPAs to save consumers money, but the Balancing Pool says the initial lawsuit must be resolved first.

“There is a lawsuit that affects these two PPAs launched by the attorney general,” Roberts said. “Our board has been of the mindset that we should allow that to play out.”