Alberta NDP challenge coal power buying rule
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 coal-fired plants if actions by the government make them more unprofitable.
Deputy premier Sarah Hoffman said the government estimates these power purchasing arrangements could end up costing consumers up to $2 billion by 2020.
“Today our government is taking legal action to protect everyday 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 lobbied the Alberta Tories for the change as part of the government’s plan to deregulate the province’s electricity market. Enron declared bankruptcy in 2001 following an accounting fraud scandal.
Hoffman said the Tory government at the time told Albertans that the risks of a deregulated electricity system would be shared by power companies.
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.
Enmax Corporation has used the regulation to terminate its power purchasing arrangement. 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.
The NDP also wants a judge to quash a decision by a government agency called the Balancing Pool to accept Enmax’s decision to hand back its agreement.
Other companies that have served notice they intend to terminate such arrangements include Trans Canada Corporation (TSX:TRP), Capital Power PPA Management (TSX:CPX) and the ASTC Power Partnership.
Company officials were not immediately available for comment.
In March, Trans Canada and Capital Power both cited the increasing costs of CO2 emissions when serving notice of their intention to terminate their agreements.
Nigel Bankes, chairman of Natural Resources Law at the University of Calgary, said he is surprised by how the amendment was developed and handled by the then Tory government and regulators.
He wondered how officials at the time decided it was in the public interest.
“This amendment is not the sort of clause you would expect to see in any ordinary commercial arrangement because it really did provide an open-ended opportunity for companies to walk away from unprofitable arrangements having taking advantage for many years of very profitable arrangements,” he said.