PPA lawsuit emerges from the mists of time

It must be the first time-travel lawsuit in Alberta history — one government suing a non-existent government 16 years after the fact. That is what the NDP government is doing in its legal fight involving Alberta’s big power companies and $2 billion in electricity contracts.

It is suing the Alberta government for entering into the contracts in 2000. Yes, this is the Alberta government suing the Alberta government. At least, that’s how it is legally. But politically speaking, it is not the NDP government suing itself. It is the NDP government suing the PC government of 2000.

The government is going to court to overturn the contracts — called power purchase arrangements, or PPAs, introduced by the Progressive Conservative government of Ralph Klein in 2000.

You’ve probably already heard about the kerfuffle involving PPAs and the “Enron clause” and the “balancing pool.” If you haven’t, I envy you your bliss.

This is a story with more twists and turns and dead ends than the Lacombe Corn Maze.

It goes back 16 years to when the Klein government deregulated electricity. Part of that deregulation involved the power purchase agreements where electricity companies such as Enmax in Calgary and Capital Power (then Epcor) in Edmonton bought 20-year contracts from power producers.

It turns out the contracts had a clause that said the companies could walk away from the contracts — giving them back to the Balancing Pool, a.k.a. consumers — if the government brought in laws that made the companies “more unprofitable.” This is an escape clause for electricity providers who, after making billions since 2000, now find themselves in a depressed market.

When the NDP government announced it would be doubling the carbon levy on large emitters of greenhouse gas emissions, such as electricity power plants, as of Jan. 1 this year, the electricity companies began to cancel their PPAs. The problem for the government is that it had no idea the escape clause existed. Then, early this year, the companies began to invoke the clause, leaving consumers with potentially $2 billion in losses to cover.

Opposition politicians began to press the government for answers in March. The government didn’t have any.

Finally, last week deputy premier Sarah Hoffman declared the government was launching the legal fight to overturn the escape clause. The government dubbed it the “Enron clause,” after the notorious U.S.-based power company that, according to the government, insisted on the sweetheart deal at the time. Hoffman said the clause had been slipped in secretly at the last minute, had never been vetted at public hearings, had never been made widely known, and was therefore null and void.

She said the companies should not be allowed to walk away, leaving Albertans holding the bag.

“When you talk of $2 billion of liability passed on to power consumers, we’re not just going to stand by and let that happen,” said Hoffman.

The government is not blaming the power companies who made $10 billion in profits from the PPAs and now want to bail when they’re looking at losses.

“They made $10 billion in profits and they don’t want to take two in losses,” said Hoffman. “I understand that. That’s their business. Our business is to protect Albertans.”

The government doesn’t want to attack the power companies because they’re the ones it wants to help it deliver green energy projects to reduce the province’s greenhouse gas emissions.

And the government doesn’t want to blame the bureaucracy for not alerting cabinet ministers to the so-called Enron clause.

“We’re not going to toss civil servants under the bus,” said one official, making it sound as if maybe some civil servants were at fault.

No, the NDP is once again attacking and blaming the old PC governments — this time reaching back 16 years.