Wildrose urges auditor to probe NDP's handling of electricity file
JAMES WOOD, CALGARY HERALD, CALGARY HERALD 12.22.2016
power_plant_web / CALGARY HERALD
Alberta Energy Minister Marg McCuaig-Boyd. / CALGARY HERALD
The Wildrose is calling on Alberta’s auditor general to investigate what it says is interference by the NDP government with an independent agency that has potentially cost taxpayers millions of dollars.
Opposition electricity and renewables critic Don MacIntyre said in a letter to auditor general Merwan Saher Thursday that documents obtained by the Wildrose through freedom of information requests show the government improperly meddling with the work of the Balancing Pool, an agency formed to manage power agreements in Alberta’s deregulated electricity market.
The Balancing Pool has been at the centre of an ongoing dispute over the last year as utilities returned money-losing power purchase arrangements (PPAs) to the agency in response to the NDP’s increase of the province’s carbon levy on large emitters last Jan. 1, prompting legal action by the province.
The internal documents and emails obtained by Wildrose show Balancing Pool officials repeatedly warning that the organization would become insolvent by the end of the year because of the PPAs. While the agency wanted to scrap the existing consumer allocation — a monthly payout to Alberta residents and business — and implement a consumer charge to avoid default, officials in the documents discuss the NDP government preventing them from taking that action, at a $17-million monthly cost to the agency.
“The underlying theme is that the minister’s office and the premier’s office knowingly interfered in the conduct of the Balancing Pool, who have a legal mandate to operate in a certain way,” said MacIntyre in an interview.
“They specifically interfered and stopped the Balancing Pool from carrying out its fiduciary responsibility. And there is a question in my mind of even potential illegality — not just the unethical side of it — but is it even legal for the government to do that.”
In an Aug. 12, 2016, letter to Energy Minister Marg McCuaig-Boyd, Balancing Pool chair William Stedman noted the agency had repeatedly received verbal instructions from the government on issues such as the consumer allocations, “which cause us to be unable to fulfil our mandated duties.”
“The board is deeply concerned regarding the Balancing Pool’s ability to fulfil its mandated duties as set forth in the Electric Utilities Act, the Balancing Pool Regulation and under the PPAs,” wrote Stedman, who has since resigned from the board.
“Accordingly, we respectfully request that, if we are to deviate from our stated mandate, Minister provide clear written instructions to that effect.”
Another email sees an official saying they are awaiting a decision from Premier Rachel Notley herself on the consumer allocation.
Other documents discuss the Balancing Pool wanting to accept the terminations of the PPAs but the government asking it to refrain.
The government ultimately authorized a $70-million grant to the Balancing Pool to underwrite its losses and subsequently passed legislation this fall to allow the agency to borrow to cover its losses. Balancing Pool president Bruce Roberts said the organization did not need to use the initial $70 million loan but borrowing — along with a new monthly charge as of Jan. 1 — will be required in 2017 to remain financially solvent.
Roberts declined to comment further on the Wildrose allegations.
Kimberley Nishikaze in the auditor general’s office said Saher will determine whether the investigation fits within his resources and mandate.
No minister in the NDP cabinet was immediately available to respond but Notley’s press secretary, Cheryl Oates, issued a statement saying the government had stood up for Albertans to ensure they weren’t stuck paying higher rates.
“We are proud of the work that we’ve done and we’re confident it will stand up to the scrutiny of the Auditor General,” she said in an email.
The NDP government launched legal action in August to void the regulation under which the utilities, including the City of Calgary’s Enmax, relinquished the PPAs. It said the relevant clause, which allows companies to return the PPAs if a change of law makes them unprofitable or “more unprofitable” had been unlawfully enacted and the Balancing Pool has improperly interpreted its rules.
The NDP has now settled its cases with AltaGas, TransCanada and Capital Power. Talks with Enmax are ongoing but the utility has shown no indication it intends to settle with the government.
Gary Reynolds, a former CEO of the Balancing Pool who is now an electricity industry analyst, said despite the settlements the NDP government’s handling of the PPA issue will still cost the Balancing Pool — and Albertans — hundreds of millions of dollars.
He said Albertans should be concerned the government, including Premier Notley, appear to have interfered in the workings of the Balancing Pool.
“It’s ridiculous and in my view it’s all been done in order to downplay the fact that the PPA terminations, which were triggered by the introduction of higher carbon tax levels, created this whole debacle,” said Reynolds.