Alberta’s “incompetent” NDP government can only blame itself if it loses up to $2 billion on returned electricity purchase arrangements, interim Progressive Conservative leader Ric McIver said Tuesday.
“If they want to mess with things, government has the authority to do that,” McIver told CBC’s Edmonton AM.
“But they also have the responsibility to do their homework and know what the risks are, and the government was completely negligent and incompetent by not doing that homework.”
The NDP government has launched legal action to protect consumers from $2 billion in liability in additional utility costs if energy companies are allowed to opt out freely from Power Purchase Arrangements that weren’t set to expire until 2020.
The government alleges that 16 years ago, during the process to deregulate Alberta electricity markets, a last-minute clause was forged in secret by the Progressive Conservative cabinet of the day under pressure from defunct and disgraced energy giant Enron.
Defunct energy giant Enron lobbied for the clause allowing buyers Power Purchase Arrangements to opt out if a change in law made them “more unprofitable.” (Andy Kropa / Getty Images)
The Enron clause gave power companies a loophole to bail out of Power Purchase Arrangements — or PPAs — with the government-created Balancing Pool, by adding the words “or more unprofitable” to the provision.
New documents released by the government over the weekend point to a close relationship between Enron and the government in the days leading up to the clause being approved.
Deputy premier Sarah Hoffman said again Monday the deal was never in the public interest.
“They lobbied to have the risk turned back to consumers, to ordinary Albertans, and the government did so through this backroom deal,” Hoffman said of the former PC government. “And then later not even publicizing it in the way that regulations traditionally are, so that the public could have an opportunity to voice any concerns.”
Since the NDP government increased the Specified Gas Emitters Regulation on large emitters Jan. 1, Enmax and three other power companies have applied to terminate their arrangements to buy electricity from coal-fired power plants, citing the change-in-law provisions. The government has said this could cost taxpayers up to $2 billion.
McIver said the NDP is in trouble now because it didn’t understand the implications of the “or more unprofitable” clause before it changed the emissions rules.
The clause had been in place since 2000 without causing any problems, he said, “because the government of the day paid attention to the contracts and the clauses and the things that were in place and managed them, because that’s what a government actually gets paid to do.
“They’re on the hook for up to $2 billion because the NDP government are incompetent and didn’t read the contract and the clauses before they changed them. They didn’t even talk to industry before they changed it.”
‘Nothing nefarious happened’
The official Opposition Wildrose issued a statement Monday that said the latest documents released by the NDP prove that “nothing nefarious happened” during the lobbying efforts for the Enron clause, which went into effect on Aug. 1, 2000, the day before the PPA auction began.
The Wildrose pointed to a letter in the documents package in which the head of an independent assessment team that had drafted the PPAs in 1999 told a government official on July 31, 2000, that the team’s “intention was to provide an exit provision … in the event a change of law rendered a PPA unprofitable or more unprofitable.”
Don MacIntyre, Wildrose electricity and renewable energy critic, said “all the evidence shows the independent experts did their jobs and acted in the best interests of Albertans.”