Alberta government fights secret coal power loophole

‘ENRON CLAUSE’

JOHN COTTER EDMON TON • The Alberta government is going to court to challenge a regulation it says will saddle consumers with billions of dollars in losses from coal-fired power agreements.

The NDP says last-minute changes to a regulation passed secretly by the Progressive Conservatives in 2000 allows power companies to hand back agreements to buy electricity from coalfired plants if actions by the government make them more unprofitable.

Deputy premier Sarah Hoffman said the government estimates these power purchasing arrangements (PPAs) could end up costing consumers up to $2 billion by 2020.

“Today our government is taking legal action to protect ever yday Albertans from having to pay for the business losses of Alberta’s biggest and most profitable power companies,” Hoffman said Monday. “We think this is not only unfair to Albertans, it is also unlawful.”

Hoffman said U.S.-based Enron Corp. lobbied the Alberta Tories for the change as part of the government’s plan to deregulate the electricity market. Enron declared bankruptcy in 2001.

Hoffman said the Tory government at the time told Albertans the risks of deregulated electricity would be shared by power firms. She said the “Enron clause” did the opposite — it set up a system where consumers bear all the risk.

“Our government believes that regular Albertans should not be on the hook for secret backroom deals between companies and the previous PC government.”

Hoffman said the clause was not included in more than a year of public hearings and the government took steps to hide the clause by exempting it from standard public disclosure.

City of Calgary-owned Enmax Corp. has used the regulation to terminate its PPA. Earlier this year Enmax said the government’s decision to charge companies a higher tax on carbon dioxide emissions this year and in 2017 made the agreement unprofitable.

The government contends the Tories had no legal right to create such a legal loophole and is seeking a court order declaring the regulation to be void.

On Monday, Enmax questioned facts in the filing.

“These legal agreements with the government have been in place and relied upon for 16 years, and were intended to be respected for a 20-year period by an industry that has invested billions of dollars in Alberta during this time,” said the release.

“We are very disappointed that the government is retroactively challenging fundamental aspects that have been in place in these agreements since their inception.”