You’ve probably been hearing a lot about Power Purchase Arrangements, or PPAs, lately.
This latest NDP debacle is tricky, but it is also important, as it will likely result in power prices surging for families like yours and mine.
The NDP is looking to point fingers at former governments and power companies, but the real culprit here is this government’s habit of pushing ahead with ideological policies without first considering the consequences.
It’s time for some clarity on this entire ordeal.
Just weeks after being elected, the NDP made the rash decision to increase the existing carbon levy on Alberta’s electricity generators. This was done as part of the NDP’s anti-coal agenda. The power companies say they were not consulted and because the change was made by Cabinet behind closed doors, it was not publicly debated in the Legislative Assembly.
As you can expect, this decision sent costs soaring for power companies who were holding PPAs to sell power to Albertans that they had purchased in the Balancing Pool. (The Balancing Pool is an arms-length organization that was established in 1999 by the government of the day in an effort to bring competition to electricity pricing and to protect the process from political interference. PPAs are bought and sold here in an auction format.)
PPAs are essentially a three way agreement between the Balancing Pool, the generator and the consumer. The terms within the PPAs protect companies from rash politics through a clause that states that if a government introduces a change in law that makes the contract “unprofitable,” or “more unprofitable” they are allowed to return their agreements to sell power back to the Balancing Pool.
This clause was added specifically to protect companies from governments like the NDP – who frequently put ideology above common sense.
As you can expect, these companies cited this clause after the NDP increased the carbon levy, and applied to the Balancing Pool for permission to return their contracts.
So what does this mean for Albertans like you and me?
It means we’re stuck holding the bag for a very lengthy and expensive litigation and potentially billions in contractual liabilities contained in these contracts – liabilities we will ultimately have to pay for either through higher power prices or more tax hikes. And worse yet, the entire business and investment community has come to realize this government cannot be trusted to keep their word.
Because the NDP didn’t do its homework and read or understand these agreements and the clauses in them, we as Albertans will be paying more.
Deputy Premier Sarah Hoffman recently said they [the NDP] “weren’t aware” of the “change in law” clause in these agreements that allowed for these companies to return their PPAs. But that claim barely holds up.
Not only did Wildrose Shadow Electricity and Renewables Minister Don MacIntyre grill the government about the consequences of meddling with the electricity market in Question Period, but we obtained several internal documents through the Freedom of Information process that show government bureaucrats were sounding the alarm over these changes as well.
This is yet another case of the NDP failing to consult, failing to conduct any assessment before enacting changes in our laws, and failing to act in the best interest of Albertans.
But it is not too late for the NDP to do the right thing for ratepayers and families.
The government must drop its lengthy and costly court case, get back to the table with these companies and focus on returning reliability and stability to our electricity sector.
Brian Jean is the Leader of the Wildrose Official Opposition