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The government’s legal battle on Power Purchase Agreements supports the public interest

Last month the Alberta government announced that it would be taking legal action to ask the courts to declare illegal and invalid a clause inserted 16 years ago by the Klein government into the Power Purchase Agreements (PPAs) by which electricity sales in the province were deregulated.

The contentious part of the clause consists of adding the words “or more unprofitable” to describe the conditions under which an energy company could simply walk away from their PPA and leave consumers holding the bag for financial losses. Specifically, the way the clause has been interpreted thus far by the Balancing Pool (the folks deciding whether it’s valid or not for a company to step away from their PPA) is that, even if PPA is already unprofitable because of market conditions they can say that government policy will make them “more unprofitable” and dump their money-losing PPA back onto consumers.

The Alberta government says that the clause is invalid because it was inserted behind closed doors at the behest of Enron after the public consultation process had wrapped up, after the final order was issued approving the PPAs, and without any formal notice to consumers. The government’s application is currently scheduled to be heard by a judge in chambers on November 2.

As has been the case far too often with this government, the announcement of the legal action was quickly followed by the province’s radical right and the mainstream media completely losing their minds and the government completely losing control of the framing and communications around the issue. The Conservatives stepped up quickly to defend the integrity of their brand and the PPAs suggesting the government should simply have “done their homework” and looked harder to find the buried clause.

The Wildrose has used this as an opportunity to once again attack the government’s carbon levy and Climate Leadership Plan (CLP), while oddly working to defend the rights of power companies not to lose money over the rights of consumers not to be left holding the bag for an unprofitable industry.

They have also, in a spectacular display of inaccuracy and misrepresentation, worked to frame the court action as the government wasting taxpayer dollars to sue itself.  The only suggestions they have offered up for resolution thus far have been to scrap the carbon levy and CLP, or to meet with these corporations and strike a deal with them behind closed doors, apparently forgetting that’s how this mess was created in the first place.

Most media, on the other hand, has chosen to focus their interventions on the questions of who knew what when, and even trotted out a former Enron executive to protest loudly that they were just protecting their interests and did nothing wrong—a strategy which failed miserably for the company in the US.

The government, for its part, has just kept loudly repeating that they are working to protect the interests of electricity consumers and undo a wrong perpetrated against Albertans by Klein and Enron, despite the fact that the message has been almost completely drowned out by the loud voices of the right and the mainstream media.

What has unfortunately been lost in all of this is the larger set of values and principles at play in this process. Beyond their impact on Alberta’s electricity market, the three words in question, “or more unprofitable”, are hugely symbolic of one of the most dangerous and insidious aspects of the extreme neo-liberalism that has been allowed to run rampant across North America, and much of the world, over the last 20 to 30 years.

That clause is the regulatory manifestation of the belief that the only role of governments is to do everything they can to help maximize corporate profits, and that any action to defend or promote the public interest should be forbidden if it interferes in any way with that profit motive. Imagine what a clause like “or more unprofitable” would have meant for governments trying to ban child labour, slavery, or the 40 hour work-week.

In the end, it shouldn’t matter who knew what when, or how much the legal action will cost Albertans, or if leaving the PPAs as they are will mean $2 billion in extra costs to consumers or $1 billlion. This court action should not just be seen within the context of electricity sales in Alberta, but rather as a government working to assert its fundamental democratic right to enact policy in the public interest regardless of the impact on corporate profits. And in that context the move should be applauded and supported by every Albertan who believes that, in a democracy, their well-being should take precedence over the bottom line. V

Ricardo Acuña is the executive director of the Parkland Institute, a non-partisan, public policy research institute housed at the University of Alberta. The views and opinions expressed are his own and do not necessarily reflect those of the Institute.

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