Multi-million-dollar power contracts IESO style

Energy Sector Analyst Parker Gallant explains how the IESO could easily save rate-payers some significant future rate increases without impacting energy security, with a particular look at one recent project – wpd Canada Inc’s White Pines Wind Project in Prince Edward County – that completely defies all logic when it comes to one of their mission statements.

The following is an excerpt from Parker Gallant’s article. Or click here to read the whole article.

Or, how the IESO could have saved Ontario ratepayers more than $400 million by cancelling one wind power project, but didn’t.   …

So, the province has a surplus of power, and the costs of wind and solar have become more competitive. Why would the IESO then not seize upon the opportunity to deal with a high-cost industrial-scale wind power project, when they had the ability to cancel it due to non-compliance with the original contract? At the very least shouldn’t they have renegotiated the contract to reduce the impact on ratepayers?

They did neither.

The White Pines story is a curious exercise in contract law, to be sure. A successful appeal* to the Environmental Review Tribunal by the community group the Alliance to Protect Prince Edward County** resulted in the project being reduced from 59.45 MW to 18.45 MW last fall. IESO could have simply canceled it because it was clearly unable to meet a condition requiring delivery of 75% of the capacity agreed to in the contract. At the very least, IESO could have renegotiated the terms of the contract to fulfill the Energy Minister’s claim that “renewables are increasingly competitive”.

But the IESO amended the contract for the reduced project, and granted waivers to the original conditions of performance, it was learned in a Belleville courtroom recently.

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APPEC Report on APPEC vs. IESO and WPD – January 29, 2018

APPEC Report on

APPEC v. IESO and WPD

Belleville Superior Court

January 29, 2018

 

Mr. Justice Stanley Kershman presided over the hearing of final submissions at the Belleville Courthouse. The turn-out was excellent with Mayor Quaiff, Councillor Ferguson, Wind Concerns Ontario President Jane Wilson and about 75 County residents attending. In fact, the Court Clerk was forced to find a larger courtroom to accommodate the crowd.

 

APPEC Final Submissions 
Eric Gillespie began by pointing out that this case raises broader public policy issues of access of information from the IESO.  On June 12, 2017 APPEC contacted the IESO for information about the status of WPD’s FIT contract.  The IESO indicated in its reply that it could not disclose this information, citing confidentiality.  Mr. Gillespie argued that this information should have been disclosed for the following reasons: (1) the IESO describes the FIT program as a standardized, open and fair process; (2) APPEC and Ontario communities are affected by the FIT Program; and (3) the information APPEC was seeking, and the IESO withheld, could not have been confidential at all as it was ultimately disclosed to the Court in November 2017.

Mr. Gillespie clarified that contrary to what the IESO contends, this is not about how to interpret clauses in the FIT contract.  The clauses are negligent misrepresentation, in that APPEC was led to believe that the generation capacity of the White Pines project could not go below 75% of the generation contracted for in 2010, when the FIT contract was signed.  The central issue for APPEC is that information that became known to the IESO was not made publicly available.  The IESO had a choice, when it became clear that WPD could not meet the 75% condition in the contract.  It could have said that things had changed, that WPD’s FIT contract would need to be amended, that WPD was in default of contractual milestone dates, etc.  Mr. Gillespie noted that it’s what the IESO and WPD did with their choices that has brought us here today.  WPD’s first public announcement that it was proceeding with the 9-turbine project was September 21, 2017.  The IESO informed Councillor Ferguson that it had agreed to amend the FIT contract on October 12, 2017.  APPEC only obtained the information it had sought in June when the IESO disclosed it to the Court on November 30.

IESO and WPD Closing Submissions and APPEC’s Reply
Alan Mark, IESO’s legal counsel, criticized APPEC’s “assumption” that it has some right to insert itself into the contractual relationship between the IESO and WPD.   Mr. Mark stated that any rights are owed exclusively to WPD, the IESO’s contractual partner; there’s nothing in the statutory framework that gives APPEC “the right to anything”. Mr. Mark went on to suggest that a contract is just a statement at a point in time with no guarantee that it won’t change in the future and members of the public don’t need to know about that either.   Mr. Mark added that “with all respect to APPEC, APPEC is just made up of members of the public that feel strongly about wind power projects.”

Mr. Mark indicated that the IESO has made no representations to APPEC at any time, so it could not have made a negligent representation. When Judge Kershman asked whether APPEC’s allegation is that the IESO made a representation in 2010 that the Project would not be able to proceed if the project’s generation capacity fell below 75%, Mr. Mark responded that this isn’t the case APPEC is making.

Mr. Mark noted a statement in the Skypower Decision that the FIT contract is a bilateral commercial contract between two parties. Mr. Gillespie noted that in the same Skypower Decision, Judge Nordheimer rejects this characterization of the FIT program, and says that the suggestion that this is a commercial nature entirely and not a matter of public policy is fictional.

Mr. Mark said that APPEC had all the information it needed and ignored this information at its peril.  In reply, Mr. Gillespie asked why APPEC would base its ERT appeal rights on a complete unknown, i.e., would the IESO amend the FIT contract, or not?

Patrick Duffy, legal counsel for WPD, also took up the argument that APPEC had no right to insert itself into the contract between the IESO and WPD. Mr. Gillespie replied that if that was so, then why did the IESO make FIT contracts available on its website for public viewing in the first place? Mr. Duffy stated that the terms “open” and “transparent” only apply to FIT Program Applicants, not to members of the public to which Mr. Gillespie replied that we still have not been told what there was about the information APPEC sought that was privileged. Mr. Duffy noted that FIPPA (Freedom of Information and Privacy Act) is the law that applies to disclosure.  However, Judge Kershnan reminded Mr. Duffy that Mr. Gillespie had already noted in his submissions how long the FIPPA process takes. Mr. Gillespie also noted that there was nothing in any of the other Party’s materials about FIPPA.

Mr. Gillespie concluded by noting the right of County residents to natural justice and procedural fairness. The IESO has not told the whole story to the community that will be affected by the White Pines wind project.

Justice Kershnan thanked the Parties and stated that he would reserve his decision. The hearing was adjourned at about 5:30 p.m.

 

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ERT Hearing on Feb 12, 2018 – Cancelled

The Tribunal granted motions from WPD White Pines Wind inc. and the MOECC Director with reasons to follow. The ERT decision was to strike APPEC’s Notice of Appeal in its entirety and dismiss the appeal. We are still waiting on the Tribunal to provide the reason.

As a result, there will be no ERT meeting on Feb 12, 2018 as previously scheduled.

 

 

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Upcoming Court and ERT dates/times/locations

APPEC legal action against the Independent Electricity System Operator (IESO) and WPD White Pines Wind Inc. will be heard on January 29, 2018 at the Belleville Court House starting at 2:00 pm.

Additionally, the hearing dates for the APPEC appeal to the Environmental Review Tribunal (ERT) have been confirmed as follows:

 

Pre-hearing Conference 
January 24, 2018 at 10:30 a.m. at the Sophiasburgh Town Hall, 2771 County Road 5, Demorestville.

The purpose of the Pre-hearing Conference is for interested persons who would like speak at the hearing to apply for status either as a Party, a Participant or a Presenter.  Please click here if you are interested in finding out more about seeking status at the hearing and click here to view the ERT Notice of Pre-Hearing Conference.

ERT Main Hearing     
February 12, 2018 at 10:30 a.m. at the Sophiasburgh Town Hall.

The most effective way of showing the Superior Court and the Tribunal of the level of community concern with the White Pines wind project is with your presence.

Posted in Uncategorized, White Pines ERT

White Pines ERT Hearing Delayed

The Preliminary Hearing for APPEC’s appeal to the ERT (Environmental Review Tribunal) has been set back a week or so.  We will let you know the new date as soon as we can.  If you would like to find out more about our ERT appeal please click here.  This link will take you to the Environmental Registry EBR # 013-1862 Amendment to the Renewable Energy Approval for WPD White Pines Wind Inc., which was updated earlier this week to include APPEC’s grounds for appeal.

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Hearing Date Delayed

The hearing at Picton Court House on November 17, 2017 was adjourned with a new date being discussed. Our legal counsel is currently negotiating a new court date for our legal action against wpd White Pines Inc. and the IESO (Independent Electricity System Operator). Both wpd and the IESO needed more time to prepare and an adjournment was granted on consent. However, the date of the rescheduled hearing was unsatisfactory to APPEC.  Mr. Gillespie is pressing hard to get an earlier court date even if this necessitates a change of venue to Toronto.  As we all know, time is of the essence, with wpd aggressively constructing its wind project.  The APPEC Board acknowledges that the delay caused by rescheduling the hearing is a concern.  We are anxiously awaiting news of the new court date and will relay this information to members as soon as it’s known.

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APPEC has commenced legal proceedings

Picton Court House

MEDIA RELEASE

11/10/17

Picton, Ontario – The Alliance to Protect Prince Edward County (APPEC) has commenced legal proceedings naming the Independent Electricity System Operator (IESO) and WPD White Pines Wind Inc. (WPD) as respondents. APPEC alleges that the Feed-In-Tariff (FIT) contract between the IESO and WPD should have been terminated as soon as it became evident that WPD would be unable or incapable of fulfilling the FIT contract terms.  These FIT contract terms have been made publicly available and are well known.

In 2010, a FIT contract for 60MW wind energy project to be operational within three (3) years was offered by the Ontario Power Authority (now the IESO) to WPD.   The contract allowed for termination if the project was not able to deliver at least 75% of the contracted power. A Renewable Energy Approval (REA) was granted to WPD by the Ministry of the Environment and Climate Change (MOECC) five years later in 2015.   Immediately after the MOECC approval, an appeal was made by APPEC to the Environmental Review Tribunal (ERT). In 2016 the ERT found that the project would cause serious and irreversible harm to the natural environment.  After allowing the proponent an opportunity to propose additional mitigation measures to prevent this harm, the ERT still found it necessary to remove 18 of the 27 wind turbines from the project.  As a result, the project is only permitted to erect nine (9) 2.05 MW turbines which can only fulfill approximately 30% of the original FIT contract requirement, far less than the 75% referred to under the contract.

APPEC has made an application to the Ontario Superior Court of Justice seeking a declaration that the FIT contract for the White Pines Wind Project is null and void and an injunction on any further work on the White Pines Wind project. A hearing on this matter is currently scheduled for November 17th, 2017 at 44 Union Street, Picton, Ontario K0K 2T0 at 10:00 a.m.

APPEC is represented by Eric K. Gillespie Professional Corporation which has represented APPEC during the ERT hearings for both the White Pines Wind Project and the Ostrander Point Wind Energy projects.

 

Posted in News Release