NDP claim Alberta PC govt had ‘secret deal’ with utilities

Alberta Government claims it’s protecting consumers from a secret backroom deal with previous government called the “Enron clause”

Sarah Hoffman, Deputy Premier, Alberta Government

EDMONTON AB – Were power purchase agreements entered into by the previous PC Alberta government part of a secret deal called the “Enron Clause”?

The NDP-led government thinks so, and has begun litigation to prevent the purchase agreements from being offloaded back into the balancing pool, just because they aren’t profitable anymore, according to an Alberta government press release. If the PPA’s are terminated, the losses would be transferred to a financial account called the Balancing Pool, which is wholly funded by residential, commercial electricity consumers.

The government contends that this attempted offload of PPAs is being implemented through a regulatory clause that was unlawfully enacted when the province’s electricity system was deregulated in 2000.

The clause was lobbied for by Enron, a discredited and now bankrupt US electricity operator at the centre of numerous other controversies and questionable business practices, according to the press release.

Capital Power Corporation, which is attempting to terminate its role as buyer of the Sundance C Power Purchase Arrangement, issued its’ own statement, says it is not backing down and plans to fight the Alberta government every step of the way.

“We will exercise every legal avenue at our disposal to ensure that the Government of Alberta honours the terms of the PPAs,” said Capital Power CEO Brian Vaasjo.

Under the terms of the PPA, as drafted and then sold at auction by the Government of Alberta, Capital Power had earlier given notice to the Balancing Pool of its intent to terminate its role as buyer of the Sundance C PPA, effective March 24, 2016.

“We believe the legal claim is without merit, and we will look to the courts to ensure that the Government of Alberta cannot retroactively amend an arrangement for which Albertan companies paid and upon which they have been relying in good faith for 16 years,” said Vaasjo.

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“The previous government sold deregulated electricity as a way to transfer financial risk to the private sector in return for giving them the chance to earn greater profit. In secret, they did the opposite – setting up a system where consumers bear all the risk. Albertans should not be on the hook for these backroom deals,” said Sarah Hoffman, Deputy Premier for the Alberta Government.

Vaasjo says government claims that the PPA terminations will result in consumers bearing up to $2 billion in costs between now and 2020 is misleading because it is incomplete.

“Based on available public information, the Balancing Pool can reduce its liability to an estimated $950-million by terminating the PPAs that were recently turned back to them, or to an estimated $635-million by terminating some PPAs, and retaining and managing others,” said Vaasjo.

The court action began with an originating application for judicial review and declaratory relief.

The application seeks an order declaring the Enron clause void in law and an order quashing a recent decision by the Balancing Pool to accept the return of Enmax’s now money-losing Battle River 5 PPA  to the Balancing Pool.