10 December 2010

Conservatives to give back seized hydro assets

Natural resources minister Shawn Skinner gave notice on Thursday of a bill that is part of the compensation for two companies caught in the crossfire of the Williams administration’s expropriation bill in 2008.

In giving notice of motion, Skinner only gave the title of the bill - An Act To Amend The Abitibi Consolidated Rights and Assets Act – but Bond Papers has learned that the bill will restore assets seized from Fortis and ENEL two years ago.

Last spring, then natural resources minister Kathy Dunderdale said that Fortis and Enel would have their power purchase agreements restored as part of the settlement. In August, Danny Williams said the companies would receive cash compensation, a long-term power purchase agreement or some other combination of arrangements as compensation for the government’s action.  The only reason to amend the expropriation bill would be to restore to the two companies the assets the provincial government seized under the December 2008 law. 

With the assets restored, the provincial government’s energy company – Nalcor - could then also make a new long-term power purchase agreement with ENEL and Fortis to supply power to the island grid.  There’s no indication at this time whether or not Nalcor will retain any interest in the hydro-electric generation operations or simply act as a customer for the power.

There’s also no word on what other compensation the companies might be receiving from taxpayers for Williams’ blunder.

The provincial government is already paying a $60 million loan for Fortis that the company defaulted on as a result of the seizure.

In December 2008, Danny Williams’ Conservative administration introduced legislation in the House of Assembly that seized hydro-electric assets from three companies -  AbitibiBowater, Fortis and ENEL – supposedly because AbitibiBowater reneged on a 1909 commitment.

The legislation also quashed a court case Abitibi brought against the provincial government over an earlier dispute and stripped the company any right to compensation.

The expropriation bill also set the provincial cabinet as sole arbiter of any compensation to be paid. 

While the bill was met with cheering at home, it met with condemnation across the country. Bond Papers was one of the few voices in the province that questioned the bills’ purpose, its motivation and its assault on the rule of law.

AbitibiBowater sued the Government Canada under the North American Free Trade Agreement.  The company reached a settlement with the federal government in August 2010.

Earlier this year, the people of Newfoundland and Labrador learned that the provincial government had accidentally expropriated  the former Abitibi paper mill at Grand Falls along with all the environmental liabilities associated with it.

Premier Kathy Dunderdale, the minister responsible for natural resources at the time, learned of the massive error several months after the expropriation but failed to disclose the mistake to the public.

- srbp -