Editor’s note: As part of Alberta’s Climate Leadership Plan, developed by a Calgary-based climate change panel and Shannon Phillips, who was elected to the Legislative Assembly of Alberta in 2015 and named the minister responsible for the Climate Change Office, the province has levied a carbon tax that would be implemented in two steps, a $20/ton economy-wide tax in January 2017, escalating to $30/ton in January 2018. Alberta’s economy is based heavily on oil, oil sands and coal.
Enmax, which provides electricity throughout Alberta, has used the regulation to terminate its PPA. Earlier this year, Enmax said the government’s decision to charge companies a higher tax on CO2 emissions made the agreement unprofitable. Other companies that have served notice and said they intend to terminate such arrangements, include TransCanada Corp., Capital Power PPA Management and the ASTC Power Partnership.
“These legal agreements with the government have been in place and relied upon for 16 years, and were intended to be respected for a 20-year period by an industry that has invested billions of dollars in Alberta during this time,” Enmax said in a statement. “We are very disappointed that the government is retroactively challenging fundamental aspects that have been in place in these agreements since their inception.”
“We will exercise every legal avenue at our disposal to ensure that the government of Alberta honors the terms of the PPAs,” said Capital Power President and CEO Brian Vaasjo. “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.” Capital Power also questioned some of the government’s assertions as far as costs.
Spokesman Mark Cooper said TransCanada has always operated in a fully open and transparent manner and will defend its right to terminate the arrangements. “We properly exercised our termination rights under provisions in the PPAs that were clear 16 years ago and that remain clear today,” he said in a statement. “The government of Alberta through its regulator the AUB clarified the intent of these provisions for all parties during a fully public process back in 2000. We relied on the termination provisions in the PPAs as fundamental to the commercial decision to participate in the PPA auction and would not have participated without them.”
In March, TransCanada and Capital Power both cited the increasing costs of CO2 emissions when serving notice of their intention to terminate their agreements. The court action is to be heard in November.