The Alberta government recently filed a court action to prevent
Enmax, TransCanada, AltaGas and Capital Power from ending Power
Purchase Arrangements (the "PPAs") with coal fired power
plants in Alberta.
As we previously wrote, the companies rely on a provision in
the PPAs which allows a party to terminate where a change in
provincial law makes the arrangement unprofitable or "more
unprofitable." The companies cited increased costs associated
with CO2 emissions over the life of the PPAs as a result of recent amendments to the province's Specified
Gas Emitter Regulation (SGER) as a change that could make their
PPAs "more unprofitable."
The government argues in its court filing that the
SGER amendment is not a change in law sufficient to trigger the PPA
termination clause and, further, that the CO2 pricing is not
driving the anticipated unprofitability of the PPAs, rather it is
falling electricity prices. The government
also alleges that the phrase "more unprofitable" in the
termination provision is null because proper procedure was not
followed by the Alberta Energy and Utilities Board (now the Alberta
Utilities Commission) and the government of the day when the phrase
was added to the PPAs.
Alberta's deputy premier, however, recently commented to The Canadian Press that
the government is open to negotiating a settlement to the court
challenge, but noted that changes to its climate-change plan were
not open for discussion.
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