By SHAWN MCCARTHY
Thursday, July 12, 2018
OTTAWA -- A German-owned wind-power developer said on Wednesday it will pursue at least $100-million in compensation after Ontario's new Progressive Conservative government announced it is killing the firm's contract for a nineturbine project in Prince Edward County.
After years of battling local opponents, wpd Canada Corp. received approval to proceed with construction of the 18.5-megawatt White Pines project in May, a few days after the election campaign began.
Local MPP Todd Smith, who is also the new PC House Leader, said this week the government would be introducing legislation next week to invalidate wpd's contract. Further details are expected in the Speech from the Throne that will be delivered on Thursday.
Many residents in Prince Edward County - a rural tourist mecca on Lake Ontario - were jubilant over the announcement that the White Pines wind project would be axed, Robert Quaiff, mayor of the municipality of Prince Edward County, said on Wednesday.
"There was a huge sigh of relief," said Mr. Quaiff, who spearheaded opposition to the project.
Mr. Smith represents the Bay of Quinte riding and campaigned on a pledge to cancel the wind project despite its contract having been approved by the Independent Electricity System Operator, an arm's-length government agency.
Wpd Canada president Ian MacRae warned on Wednesday the company will defend its contract and seek up to $100-million in damages if the new government follows through on its pledge to cancel the project.
"We have a fully valid contract with the IESO; we have been developing this project for 10 years; we believe we have every right to expect we would be able to build this project and to sell power into the grid as prescribed by the contract," Mr. MacRae said.
"There's no off-ramp at this stage and we have every right to believe that we could recuperate our costs and make a reasonable profit. So that's where we're coming from at this stage."
Construction is well under way at the site, with one turbine erected and the rest due to be fully installed in the next few weeks.
The parent company - which operates in 17 countries - issued a statement on Wednesday, saying the cancellation would jeopardize the province's international reputation and "would send out a fatal signal to the entire economy."
A spokesman for Premier Doug Ford argued the contract is being invalidated because it was finalized during an election period, when government decisions are traditionally put on hold.
"This project was quietly granted a notice to proceed in the middle of an election campaign when government was supposed to be functioning in a caretaker capacity," Simon Jefferies said in an email.
"This breaks with convention in how government operates in an election period. ... Cancelling this project will be a net benefit and result in savings for Ontario ratepayers, after they will no longer be on the hook for this overpriced wind power."
He said the government would be introducing legislation that not only cancels the contract but prevents it from being sued in domestic courts.
The move to cancel energy projects is fraught with financial and political risk.
The previous Liberal government sparked a major scandal and a $1.1-billion price tag after cancelling two planned gas-fired power projects before the 2011 election. The Liberal government also paid $28-million to an American firm after putting a moratorium on development of offshore projects.
Wpd Canada argues IESO's issuance of the notice to proceed was a routine matter, essentially a formality in which the regulator acknowledges that the company has satisfied several preconstruction conditions laid down in the contract.
Under a directive issued by the Liberal government in 2011, the IESO had no discretion in issuing the notice once those conditions were met.
The new government is facing further financial implications over its decision to roll back Liberal energy and climate-change policies. It will also introduce legislation to kill the provincial capand-trade carbon levy.
The previous government had sold $2.8-billion in emission allowances for the period 2017 to 2020, and companies may be stuck with worthless permits and demand compensation.
It is eliminating programs that the cap-and-trade plan would have financed, including $100million to refurbish aging Ontario schools.
As well, federal Environment Minister Catherine McKenna has warned that Ontario's refusal to adopt a carbon price would result in a loss of $420-million in funding for energy efficiency programs and other climate-related efforts.