prior instalment considered the changes that the Comprehensive
Economic Trade Agreement ("CETA") will have on
procurement by public utilities. We will now look at the extent to
which the obligations imposed by CETA on procurements by public
utilities will be limited by minimum monetary thresholds and
certain special exceptions.
Under all procurement treaties including CETA, only procurements
which exceed a certain monetary value are subject to the
treaty's obligations. Under CETA, only those procurements
by a covered public utility that exceed $630,000 will be
subject to its requirements.1 Procurements by utilities
below that threshold will not be subject to CETA. Splitting
procurements into smaller bundles is prohibited under CETA (as is
the case under all procurement treaties). This means that a covered
utility could not beak a procurement with an overall value of $1
million into two procurement of $600,000 and $400,000 in order to
circumvent the provisions of CETA.
Procurements by utilities will also be subject to special
exceptions set out in the text of the treaty itself. For example,
one major special exception for all procurement is the so-called
"National Security Exemption" that is present in other
agreements, such as NAFTA. In addition, public private partnerships
for the utilities sector will be exempt from CETA
requirements. There will also be additional carve-outs for
certain procurements conducted by power generators and hydro
The government has been incredibly tight-lipped as to what these
exceptions will be; only stating that 20-30% of all subject
procurements by a covered public utility are likely to be subject
to these special exceptions.
And that has, largely, been the story of CETA and the
procurement provisions in particular. The Canadian government has
been reluctant to provide any material information that can be used
by industry to begin planning out how they will implement CETA once
it is officially enforced. As such, the treaty remains a 'work
in progress'. However, we will continue to bring you
information as it becomes available, continuing our series with the
next installment – Obligations: What Must the Utilities Do to
1. Some sharp observers may wonder why an international
treaty states thresholds in Canadian dollars. Those who are even
more astute may wonder if this number will account for inflation or
exchange rates. In reality, this number is an approximation. Like
most international treaties involving amounts of currency, the
threshold is given in "Special Drawing Rights" or
These SDRs are a product of the International Monetary
Fund – which uses a basket of various worldwide currencies to
determine the "value" of an SDR. This helps keep the
threshold value constant in real terms despite currency
fluctuations in nominal value. You can find more on SDRs here.
Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
The Government of Alberta recently announced a number of policy changes that will impact the Alberta Electricity Market, composed of its generators, transmitters, distributors, retailers, electricity consumers and wholesale electricity market.
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).