Quote:
Originally Posted by Regorium
100% the former. I think the clause was poorly written as is.
However, I'm just commenting on intent, and what I feel is the "spirit" of the law. Just discussion that doesn't have anything to do with the actual legality of what is currently occurring.
Basically, I think that because the Buyer controls the price of the product, the profitability of the contract doesn't change with a carbon tax. The Owner raises his price by X amount because of carbon tax, the Buyer raises his price by X amount, the consumer pays X more. No profitability is affected if this is the case.
If the government, as an example, caps the price that the Buyer can sell electricity at, THAT would be a change in law that would drastically affect profitability. This is a case where I think it would be a legitimate use of the "change in law" clause.
Again, just to re-emphasize, the NDP government has no case, and they should have expected this based on the agreement that was signed. I'm just saying it's a loophole more than a feature.
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That's all well in good if those companies could actually just raise their prices by X. In reality the selling of power is much more complicated than that.
With the cheapest in/first to sell model for selling power, and the nature of a coal plant as base supply (pretty much unable to shut them down), they've now added a cost that pretty much ensures these PPAs will be unprofitable for the foreseeable future.
A few people have commented on how the price will just get passed along to the consumer but that's not the case. The way the power market is right now, much of the carbon tax will go directly to the bottom lines of the companies that are selling the power, there simply isn't room for them to bid in that extra cost.
That's the issue here, that instead of companies taking the hit, the NDP has now given them an out to put that burden back into the balancing pool, and THAT will show up directly on our power bills, every cent of it. If there was no way out for these companies, they would be the ones taking the majority of the hit, not the consumers.