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Alberta Court of Queen’s Bench Grants Mandatory Injunction Against Balancing Pool

November 22, 2017

On November 22, 2017, the Court of Queen’s Bench of Alberta (Court) issued a mandatory injunction in favour of ENMAX Energy Corporation (ENMAX) compelling the Balancing Pool of Alberta to, forthwith and in good faith, complete and communicate the result of its assessment and verification of ENMAX’s termination notice of the Keephills Power Purchase Arrangement issued on May 5, 2016. This decision confirms that injunctive relief is available to parties where a statutory body fails to perform its obligations.

Power Purchase Arrangements (PPAs) are the instruments by which the Government of Alberta deregulated the electricity market in 2000, requiring the owner of regulated power plants to make committed electrical capacity and energy available to buyers. PPAs contain “Change in Law” provisions that allow buyers to terminate a PPA if, for example, the government imposes taxes, charges or levies that would make the PPA unprofitable or more unprofitable over the balance of the term.

In June 2015, as part of its Climate Change Policy, Alberta amended the Specified Gas Emitters Regulation which, effective January 1, 2016, imposed increased operational efficiency requirements on regulated facilities and doubled the cost of fund credits for 2017. Those increased burdens and taxes took effect January 2016 and January 2017.

As a result, all of the thermal PPA buyers terminated their respective PPAs in 2016. Once a termination notice is sent, the Balancing Pool of Alberta is statutorily required to assess and verify the termination notice. The Balancing Pool was enacted under the Electric Utilities Act and carries out various functions to manage certain assets, liabilities, revenues and expenses arising from the transition to competition in Alberta’s electric industry. In the case of ENMAX’s termination of the Battle River PPA, the Balancing Pool took about four weeks to perform its review and verify the termination notice (for more information, please see our October 2017 Blakes Bulletin: Court Upholds Commercial Certainty in Alberta Power Purchase Arrangements).

ENMAX terminated the Keephills PPA effective May 5, 2016. The Balancing Pool did not perform its statutory function to assess and verify that termination. In September 2016, the Balancing Pool advised ENMAX that no assessment or verification of any additional PPA termination (aside from the Battle River PPA) would occur pending the outcome of an action commenced by Alberta’s attorney general in July 2016 seeking to impugn the Change in Law provision in the PPAs.

In early July 2017, ENMAX applied to the Court for a mandatory injunction compelling the Balancing Pool to complete and communicate the result of its assessment and verification of the Keephills PPA termination notice.

In granting the injunction, the Court held that ENMAX had established a strong prima facie case that the Balancing Pool was not performing its statutory duties. The Court held that the existence of the attorney general of Alberta’s action was not an excuse for the Balancing Pool failing to perform its obligations. The Court also found, on the uncontradicted evidence, that ENMAX would suffer irreparable harm in the absence of an injunction and that the balance of convenience favoured the Balancing Pool performing its statutory obligations.

This decision is of significant importance to the industry at large and also confirms the ability, in appropriate circumstances, to seek a mandatory injunction against statutory bodies that fail to perform their duties and obligations.

Blakes successfully represented ENMAX in this matter.

For further information, please contact:

Dalton W. McGrath, Q.C.           403-260-9654
Michael O’Brien                         403-260-9753

or any other member of our Litigation & Dispute Resolution group.