At least two of companies whose long-term power purchase agreements were ripped up under the December 2008 expropriation bill will still get all their cash under long-term power purchase arrangements, according to natural resources minister Kathy Dunderdale.
Abitibi is not included in the arrangements, apparently.
Dunderdale told the House of Assembly on Thursday that:
…we made a commitment to both of those companies [Fortis and ENEL] that regardless of what happened with Abitibi, at the end of this process we would ensure that they were kept whole, that they were properly compensated for fair market value for the assets. The PPAs that they have with Abitibi would also be honoured, Mr. Speaker.
Dunderdale said that the provincial government’s energy corporation - NALCOR - is still discussing arrangements with the two companies. The power purchase arrangements date from 1997 and 2001. The exact duration is currently unknown to your humble e-scribbler but would typically be in the range of 20 to 30 years.
ENEL partnered with Abitibi on the Star Lake project to supply electricity to Newfoundland and Labrador Hydro. Bill 75 seized all the generating and transmission assets of the Star Lake partnership and revoked all the agreement related to it, as listed at Annex E of Bill 75.
Dunderdale made no reference to the other companies also affected by the seizure:
- Clarica
- Sun Life Assurance
- Mutual Life Assurance
- Standard Life Assurance, and
- Industrial Life Assurance.
Fortis – the other company Dunderdale discussed – was a partner in the Exploits Hydro Partnership. Under a long-term power-purchase agreement, Exploits partnership sold power to Newfoundland and Labrador Hydro.
Dunderdale also admitted what Bond Papers readers already knew: the provincial government is paying for a long-term loan for the Exploits partnership. The outstanding balance on the loan is $59 million. The provincial government paid the 2009 instalment.
The hydro-electric assets are likely the only ones seized in 2008 that could generate any reliable revenue to offset the costs of environmental clean-up at former Abitibi sites in the province. Payment of loans and royalties to the companies other than Abitibi as if the expropriation never happened would significantly reduce any revenue NALCOR could gain from the assets.
Dunderdale’s admission today could also further undermine any legal cases the provincial government is pursuing. One of the problems government faced in recent Quebec court decisions on the Abitibi bankruptcy protection proceedings is that its environmental clean-up actions appeared to be aimed solely at Abitibi and were not part of the routine administration of provincial environmental laws.
Dunderdale’s admission makes it pretty clear that the government is treating some of the companies affected by the expropriation very differently from Abitibi.
Colouring the expropriation as aimed solely against Abitibi could also colour the move and undermine any defence of Abitibi’s NAFTA challenge.
-srbp-
