Robert Hemstock, BComm, LLB
ENMAX vs The Balancing Pool PPA Lawsuit
In this lawsuit, ENMAX sued the Balancing Pool after the Balancing Pool refused to take steps to investigate, assess and verify ENMAX's termination of the Keephills PPA as it was required to do by law. ENMAX turned to the Courts as it was facing the prospect of considerable commercial risk and uncertainty if there was a delay of many months and even years in achieving finality of both its Battle River 5 PPA and its Keephills PPA terminations.
The Balancing Pool is a Government agency and the Minister of Energy appoints its Board members.
This case is relevant to the Attorney General's lawsuit component of the Government's PPA Advocacy Plan because the reason the Balancing Pool gave to ENMAX, and to the Court in the lawsuit, for delaying its PPA termination investigation, assessment and verification work was it wished to wait for the outcome of the Attorney General's lawsuit.
In her Decision dated November 22, 2017, the Honourable Justice K.M. Horner ruled in paragraphs 23 and 24 that the Balancing Pool did breach Section 2(1)(g) of the Balancing Pool Regulation which requires the Balancing Pool, upon receipt of a PPA termination to "conduct any investigation the Balancing Pool determines appropriate". It is significant that a Government agency was found by the Court found to have broken the law by delaying the assessment of the Keephills PPA termination.
The most noteworthy part of this case was the evidence submitted by ENMAX to substantiate its assertion that senior members of Government directed or pressured the Balancing Pool to delay its PPA termination assessment work. At this point, the precise reasons why the Government did this are not known.
There were suggestions the Government had relevant information on the PPA terminations that it wished to provide to the Balancing Pool that may be relevant to the Balancing Pool's assessment work. If this was the reason, it would appear that it was within the discretion of the Balancing Pool to wait for a reasonable amount of time for this information from Government. However, if one of the reasons was the Government had a desire for the Balancing Pool to delay its PPA termination investigation work until the Attorney General's lawsuit was complete then this would be problematic for the Government because Justice Horner ruled that this was not a justification for the Balancing Pool to delay. Albertans are entitled to understand precisely why the Government asked the Balancing Pool to delay its PPA termination work.
So, what is the key evidence in this case? In the Affidavit of ENMAX Vice-President Chris Joy he provides a number of documents received through FOIP requests. These include details of communications between senior members of the Balancing Pool and Government, including the Minister of Energy and the Chairman of the Balancing Pool Board, that shows the Government did discuss its desire for the Balancing Pool to delay or defer its assessment and verification work on the PPA terminations.
Paragraph 20 and Exhibit "C" of the Chris Joy Affidavit references an email between a senior employee of the Balancing Pool and a Government of Alberta, Department of Energy employee in which the Balancing Pool cites the PPA change in law provisions and tells Department of Energy officials in January 2016, in relation to the Battle River 5 PPA termination, that "This appears to be a rock solid out for ENMAX".
Despite this, the Balancing Pool dragged the PPA termination process out for months before it finally informed ENMAX by way of a letter dated September 16, 2016 that it would now be putting "pens down" and would not be completing further work on both ENMAX's Battle River 5 PPA termination and its Keephills PPA termination until the Court had issued it decision in the Attorney General's lawsuit. Chris Joy describes this letter in paragraph 34 of his Affidavit and the letter from the Balancing Pool is provided in its entirety in Exhibit "M" to the Chris Joy Affidavit.
Chris Joy also provided evidence in his Affidavit of what he asserted was "Ongoing Interference of the Balancing Pool's Mandate by the Government of Alberta". Paragraph 37(c) and Exhibit "P" of the Chris Joy Affidavit refers to communications from the President of the Balancing Pool to a senior official in the Department of Energy where he wrote; "Given the desire on the part of the GofA to forestall these PPA terminations in the short term...". Paragraph 37(d) and Exhibit "Q" describes a letter from the Minister of Energy to the Chairman of the Balancing Pool Board in which the Minister advises the Chairman that "we need more time" regarding the Battle River 5 PPA termination. Paragraph 37(f) and Exhibit "S" refers to a letter from the Balancing Pool Board Chair to the Minister of Energy dated July 12, 2016 in which he states: "We are currently in the untenable position in which the Department has requested we defer on key decisions, but has not provided a revised mandate or written instructions. Meanwhile the PPA termination process is held in abeyance and the Balancing Pool is fast approaching insolvency".
The law in Alberta, as stated in the Balancing Pool Regulation, is the Balancing Pool is responsible for conducting an investigation of a PPA termination to assess and verify if it is justified in the circumstances. Nowhere in the Balancing Pool Regulation, or in any other law in Alberta, does the Government have the authority to direct the Balancing Pool on the timing of its PPA termination assessment work.
It's not surprising that Department of Energy officials, including the Minister of Energy were quite interested in the work of the Balancing Pool on the PPA terminations. If the Minister of Energy or others in Government either directed or pressured the Balancing Pool to make a decision to delay its investigation, assessment and verification work on any PPA termination pending the outcome of the Attorney General lawsuit that would be tantamount to the Government directing or pressuring one of its agencies to break the law. Albertans deserve more information on this issue to determine if this happened or not.