Canada: Mesa Power Brings Claim Under NAFTA Over Ontario's Green Energy Program

Copyright 2011, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on International Trade & Investment Group, July 2011

On July 6, 2011, by issuing a notice of intent, Mesa Power initiated the first step in a claim against Canada under Chapter 11 of the North American Free Trade Agreement (NAFTA). Mesa Power is a private Texas-based wind energy company owned by T. Boone Pickens, the famous American financier. The company argues that Ontario's Feed-In Tariff Program (FITP), created under the Green Energy Act, is a violation of Canada's NAFTA obligations because it allegedly gives preferential treatment to certain businesses and contains prohibited "buy local" requirements. The company also argues that, in general, the FITP is being implemented and administered in an arbitrary and non-transparent manner. Among the relief sought, Mesa Power is asking for C$775-million in damages. The company expects to file a formal notice of arbitration sometime after October 3, 2011.

The Feed-in Tariff Program

The FITP was created to encourage renewable energy production in Ontario. The program is administered by the Ontario Power Authority (OPA), a Crown corporation controlled by the Government of Ontario. The OPA is the body responsible for managing Ontario's energy supply. As part of the program, the OPA entered into power purchase agreements (PPAs), which are long-term fixed-price contracts, with renewable energy producers in order to purchase their renewable energy. In order to be eligible for a PPA, renewable energy producers have to satisfy certain domestic content requirements. The guaranteed market and premium prices offered by the PPAs are intended to act as strong incentives for businesses to produce renewable energy in Ontario.

Mesa Power's Arguments

In its notice of intent, Mesa Power presents four arguments in support of its claim that the FITP violates Canada's NAFTA obligations. First, Mesa Power argues that Canada allegedly failed to accord it a minimum standard of treatment as required under Article 1105. Originally under the FITP, wind power projects over 10 kilowatts were required to be evaluated under four components: expertise of wind power development, financial capacity, guaranteed access for wind supply and permitting. The evaluation resulted in a priority ranking that was to be used to award PPAs to applicants within a specified geographic region. Only a limited number of PPAs could be awarded because each geographic region had a capacity cap. Initially, two out of four of Mesa Power's wind projects were given priority rankings in the Bruce Region. On June 3, 2011, the OPA issued new rules for awarding PPAs. Among the important changes, projects in the Bruce or West London Region could now interconnect and build transmission lines into neighbouring regions. As a result of these changes, Mesa Power alleges that its two projects in the Bruce Region lost their priority rankings due to higher ranking projects in the West London Region coming into the Bruce Region and displacing it in the rankings. On July 4, 2011, when PPAs were awarded, Mesa Power was not awarded any PPAs. Mesa Power argues that the OPA's change in rules was capricious, discriminatory and unfair, and thus a violation of the requirement to accord NAFTA investors and their investments a minimum standard of treatment.

Second, Mesa Power argues that Canada violated the prohibitions against performance requirements contained in Article 1106 since the FITP allegedly contains various impermissible buy-local requirements. Under the FITP, wind power projects over 10 kW that have an operational date prior to January 1, 2012, are required to have 25 per cent domestic content, while those with an operational date after January 1, 2012, are required to have 50 per cent.

Third, Mesa Power argues that Canada failed to provide it with either National or Most Favoured Nation Treatment under Articles 1102 and 1103, respectively, since a Canadian and a non-NAFTA country competitor allegedly were treated more favourably under the FITP. With regards to National Treatment, Mesa Power alleges that Boulevard Associates Canada, a Canadian competitor with projects in the West London Region, was able to bring four of its projects over to the Bruce Region after the change in rules. Boulevard Associates Canada allegedly would not have been able to obtain PPAs in the West London Region because of the capacity caps. Mesa Power argues that the change in rules was enacted to benefit its Canadian competitor to the detriment of its own interests. In addition, Mesa Power argues that it was not accorded Most Favoured Nation Treatment because a competitor from a non-NAFTA country allegedly received preferential treatment from the Government of Ontario in the form of a guarantee that the competitor would receive "priority access" in parts of southern Ontario.

Lastly, Mesa Power argues that Canada is in violation of Article 1503(2), which requires a NAFTA party to ensure that its state enterprises do not act in a manner that is inconsistent with its Chapter 11 obligations. In this case, Mesa Power argues that Canada is responsible for not preventing the OPA from acting in a manner that Mesa Power alleges is inconsistent with Canada's NAFTA Chapter 11 obligations.

Final Remarks

We make two observations at this stage of the dispute. First, the FITP is also being challenged by Japan under the World Trade Organization (WTO). Japan argues that the FITP's domestic content requirements allegedly violate several of Canada's WTO obligations. On July 20, 2011, the WTO Dispute Settlement Body approved Japan's second request for a panel to be convened in regards to its WTO challenge against Canada. Second, we note that further to NAFTA Article 1108, procurements are carved out of the application of several provisions of the NAFTA Chapter 11 investment obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
26 Oct 2018, Other, Vancouver, Canada

Cybersecurity, including data privacy and security obligations, has become a critical chapter in every company’s risk management playbook.

30 Oct 2018, Other, Toronto, Canada

Please join us for discussions on recent updates and legal developments in pension and employee benefits as well as employment law issues.

12 Nov 2018, Other, Toronto, Canada

Stories aren’t falsehoods. Stories are the root of all effective human communications: they motivate, animate and clarify. If you aren’t telling stories, you probably aren’t getting your point across.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions