Government unmoved by lawsuit complaints
Says power companies’ demands would add $2 billion to power bills
Deputy premier Sarah Hoffman is brushing away criticism from power companies — and Calgary Mayor Naheed Nenshi — a day after the NDP government launched legal action aimed at stopping the corporations from ditching moneylosing contracts with the province.
On Monday, the government filed suit asking the Court of Queen’s Bench to declare void a provision in Alberta’s power purchase arrangement (PPA) regulations that allows companies to terminate contracts if there has been any change in law that makes the deals “more unprofitable,” with the province arguing the clause was unlawfully enacted by the previous Tory government.
The government also wants the court to block Enmax’s termination of its Battle River PPA, which was accepted by the Balancing Pool, an arm’s-length government body.
Enmax issued a statement Monday saying it was “very disappointed” by the government’s attempt to make retroactive changes to wellestablished regulations and that it had broad concerns about the approach and “the signals it sends for future investment in Alberta.”
TransCanada and Capital Power also issued statements raising concerns about the Rachel Notley government’s attempt to undo an agreement they entered into in good faith.
But in an interview Tuesday, Hoffman gave little ground to the companies as she reiterated that allowing the terminations to proceed will cost Albertans an additional $2 billion on their power bills.
“Their job is to make money,” said Hoffman. “They made $10 billion because of these PPAs and now they’re looking at having to cut into that profit by $2 billion.”
“Our job is to protect Albertans. I get why they’re frustrated. I get why they are not keen on having to potentially pay this, but neither are Albertans.”
PPAs are contracts set up during the deregulation of Alberta’s electrical system in 2000 that see buyers purchase power from generating companies and then resell into the open market.
The government says the PPAs were originally written to allow for their termination in cases where a change in law made a contract unprofitable. It alleges that was improperly altered, at the behest of now-bankrupt American electrical operator Enron, to also allow ending contracts if a change in law made the PPA “more unprofitable.”
Since December, Enmax, TransCanada, AltaGas and Capital Power have announced their intention to terminate all of their PPAs for coalfired electricity, citing the NDP government’s Jan. 1 increase to the carbon levy on large emitters, the Specified Gas Emitters Regulation.
Nenshi said he fully supports Enmax, which is owned by the City of Calgary, in its fight with the provincial government. “This suit is outrageous,” he said. “We have the spectacle of the provincial government suing itself because, apparently, it didn’t know its own policies that have been in place for 15, 16 years and that Enmax has been abiding by.”
Hoffman said she respects the mayor’s opinion but believes he wouldn’t countenance the City of Calgary handling an issue the way the PPA policy was developed under the former Progressive Conservative government.
“I really think Nenshi’s on the wrong side,” she said.
The legal action comes as the NDP prepares to implement its sweeping climate change plan, which will require significant capital investments as coal-fired power is phased out on an accelerated timetable and new renewable power sources are brought online.
Capital Power spokesman Martin Kennedy said the impact on investment from the NDP’s move remains to be seen.
“It obviously raises some anxieties,” he said. “If the action was successful … it would put into question to what extent you could rely on any arrangement or contract you enter into with government.”