The provincial government’s lawsuit against power companies demonstrates either incompetence or standing up for the rights of Albertans, depending on who you ask.
Barrhead-Morinville-Westlock Wildrose MLA Glenn van Dijken said the way the government has handled first the carbon levy and now the lawsuit demonstrates either incompetence or dishonesty. He accused the government of driving away business and putting additional costs on consumers.
“The bottom line is everyone’s power bills are going to go up at a time when Albertans can least afford it,” he said. “This government has to make sure they’re working in the best interest of all Albertans.”
St. Albert NDP MLAs Marie Renaud and Trevor Horne, on the other hand, said concerns about the both the carbon levy and the lawsuit are overstated, and fuelled in no small part by misinformation coming from the opposition benches.
The three MLAs were reacting to the ongoing discussion surrounding a recent government announcement that it would seek a court order to terminate the so-called “Enron clause” included in power purchasing agreements (PPAs) dating back 16 years.
The former Progressive Conservative government introduced the PPAs in 2000, at the same time the province was deregulating the electricity market. The change meant the former publicly owned utilities became PPA owners, and private companies could become PPA buyers. The PPA buyers paid the owners at auction for the right to sell that electricity to consumers. The move also created the so-called “Balancing Pool” to manage the buying and selling, and to hold and operate unsold power purchase agreements.
According to media reports deputy premier Sarah Hoffman, in announcing the province’s lawsuit filed July 25, said the way the Enron clause was included in the contracts was illegal because there wasn’t proper public consultation. The clause allows companies holding the agreements to revert them back to the Balancing Pool – essentially the Alberta taxpayers – if the contracts become “more unprofitable.”
She said the government wasn’t aware of the clause until March 2016, after the government had drafted its carbon levy legislation; something van Dijken said is preposterous.
“The fact they claim they did not know about it until March or so, it shows me they were either grossly incompetent, or if they did know they’re being dishonest about it,” he said.
He suggested that had the government “done its homework,” it would have realized the clauses were in place and that their “ideological” carbon levy would cause companies to abandon their PPAs using the Enron clause.
The province is asking the court to strike down the clause, preventing companies from backing out of the agreements. Several companies have applied to pull out of the agreements since the carbon levy came into effect in January this year, including Enmax and Capital Power Corp., which are owned by the citizens of Calgary and Edmonton respectively. If they turn those agreements back to the Balancing Pool, Albertans will be responsible for any losses.
Hoffman said this could potentially leave Albertans on the hook for $2 billion in losses from those agreements, although others, including economists Trevor Tombe and Andrew Leach have said the potential losses are much less, as little as $600 million.
For Horne, the precise figure of the potential loss to Albertans is less important than the principle of determining the validity of the clause.
“I can’t speak for the government,” he said. “Personally, even if it was just a few million, I might still think saving any amount of money and getting rid of the clause we don’t agree with is a worthy cause.”
Both Horne and Renaud said their biggest concern was the amount of misinformation coming from opposition parties about this.
Renaud argued that linking the issue of the lawsuit with the carbon levy and the province’s Climate Leadership Plan is wrong, and suggested if agreements are becoming less profitable it’s due to natural market forces.
“It’s due to historically low prices for electricity, new generation plants coming online, and the price of natural gas which has continuously dropped creating a surplus,” she said.
Horne said he was concerned about how many people thought the government was suing the former government or suing the power companies, which he said was not the case. He clarified while the government had launched a civil suit naming several power companies as respondents, it’s not seeking any money directly from the companies but rather looking to prevent the companies from passing their losses on to the taxpayers.
A hearing on the province’s application is scheduled for Nov. 2 in Edmonton.
