Alberta Politics Thread

[Wiggum_PI]

Originally Posted by Fighting Banana Slug

The "or more unprofitable" language is definitely favourable to the industry side. However, I still can't imagine how it is improper. It isn't even particularly vague or ambiguous. Really don't see what the government can argue here.

For sure, that's why the Power Companies had to pay more money to buy the agreements, which in turn allowed the Alberta Government to make more selling them.

[Weitz]

^ Yes its definitely a 2 way street.


I foresee if the Government wins there will be lawsuits seeking damages.

[Bring_Back_Shantz]

Originally Posted by Fighting Banana Slug

The "or more unprofitable" language is definitely favourable to the industry side. However, I still can't imagine how it is improper. It isn't even particularly vague or ambiguous. Really don't see what the government can argue here.

Exactly, and that's what makes it even more absurd.

That clause likely meant that the province received more for the PPAs when they were signed than they would have otherwise, and now that conditions have changed (Due to the government's own policy change), the province is now being forced to take a loss.

In other words.
This clause was inserted at the last minute, and because of that the province has done very well by the process, making a profit of $3 billion, and should now be prepared to face market downturns.

Wait, that sounds familiar.

[cal_guy]

Any change in law from 1999 could have the companies to trigger the clause so even if the NDP didn't modify the SGER they could have simply cited the 2007 implementation of SGER as the reason of their termination since the real reason they're terminating the PPA is because of the low electricity prices.

[Mr.Coffee]

Originally Posted by Makarov

Energy companies aren't familiar with the Constitution or the Natural Resource Transfer Acts?

What is your point?

[Tacopuck]

I dont think the vagueness of the clause reasoning is even valid. Is it not the case in a contract dispute of a vague clause that the decision will go against the party that wrote the clause (ie the Government), so if the vagueness of the clause is in question it will automatically go in favor of the power companies?

[GaiJin]

Originally Posted by Fuzz

Look at it this way...maybe a bureaucrat is trying to sink her and is telling her this is a sure thing.

I'm quite sure she floats rather well.

[Fighting Banana Slug]

Originally Posted by Tacopuck

I dont think the vagueness of the clause reasoning is even valid. Is it not the case in a contract dispute of a vague clause that the decision will go against the party that wrote the clause (ie the Government), so if the vagueness of the clause is in question it will automatically go in favor of the power companies?

I just threw that out an interpretation argument as distinct from what I had been hearing, which was an illegal clause or otherwise unenforceable clause. None of that seems very compelling at this stage. "Contra proferentem" is the doctrine of interpretation which you speak of and would side against the interest of the draftperson, in the case of ambiguity. I think the government likely drafted these, so you are probably correct, although sometimes contracts disavow that doctrine. Either way, still not convinced the language is ambiguous. It is just unfavourable to the government.

[Makarov]

Originally Posted by Fighting Banana Slug

Not a contract? In the ordinary sense? Not sure what you think this is, but it is clearly a contractual issue.
The response from the government is baffling because the position seems to be that it didn't know the provision existed, or that it isn't "fair" or that it was included "last minute". None of which would hold any merit in contract. (Unless they think the companies were acting fraudulently, inserting the language into the governments own agreements! I don't think even the NDP are saying that).

Take it up with the Alberta Utilities Commission which expressly found that PPAs are not commercial contracts.

[Makarov]

Originally Posted by GaiJin

I'm quite sure she floats rather well.

Good one.

[Makarov]

Originally Posted by Mr.Coffee

What is your point?

That any energy company that enters agreements on the presumption that the province will never enact new or amend existing legislation regulating the energy industry (as you seem to suggest happens) is hopelessly misguided.

[Mr.Coffee]

nm

[Mr.Coffee]

Originally Posted by Makarov

That any energy company that enters agreements on the presumption that the province will never enact new or amend existing legislation regulating the energy industry (as you seem to suggest happens) is hopelessly misguided.

Oh no I agree with you, but it's the same concept as what that company was stating in it's quote that several people thought made sense.

The reality of business is that government decisions are a risk big or small. Things change and governments largely do what they want, and it happens all around the world. Like when Venezuela or Saudi Arabia nationalized their oil and gas industries, just a reality of business risk.

Governments have to be able to change terms in contracts over time to take care of their people. However, they need to be careful to establish certainty in business markets and the overall economic environment. Gotta be some balance.

[Makarov]

Originally Posted by Mr.Coffee

Oh no I agree with you, but it's the same concept as what that company was stating in it's quote that several people thought made sense.

The reality of business is that government decisions are a risk big or small. Things change and governments largely do what they want, and it happens all around the world. Like when Venezuela or Saudi Arabia nationalized their oil and gas industries, just a reality of business risk.

Governments have to be able to change terms in contracts over time to take care of their people. However, they need to be careful to establish certainty in business markets and the overall economic environment. Gotta be some balance.

That's reasonable. Fair enough.

[Resolute 14]

There is a difference between government being able to change the terms, and government being able to change the terms without consequence. If the NDP get away with this, then I can't see any reason why any company would want to invest in Alberta. Why bother when you know the government is just going to be out to screw you?

[CaptainCrunch]

Originally Posted by Makarov

That any energy company that enters agreements on the presumption that the province will never enact new or amend existing legislation regulating the energy industry (as you seem to suggest happens) is hopelessly misguided.

I disagree with you on this completely, there has to be a fair escape clause or else you can get a government that can enact completely harmful changes to an industry or a company without consequence and damn any previously signed agreements. Any company with any kind of intelligent negotiation team is going to want an escape clause to protect them from damaging changes.


And if that is upheld by the courts, businesses will look at the NDP as business hostile and not invest here.

[Makarov]

Originally Posted by CaptainCrunch

I disagree with you on this completely, there has to be a fair escape clause or else you can get a government that can enact completely harmful changes to an industry or a company without consequence and damn any previously signed agreements. Any company with any kind of intelligent negotiation team is going to want an escape clause to protect them from damaging changes.


And if that is upheld by the courts, businesses will look at the NDP as business hostile and not invest here.

Well, there is always the prospect of political consequences (at the polls) for bad decisions. That is the most serious consequence for elected officials.

Anyway, in my experience (which is not totally unrelated) and opinion, the "change in law"' provision in these arrangements is uncommon (I've never seen one before) and very favourable to the buyers. It doesn't seem like it was avery good deal for Albertans (at least in the long term.) That said, its complicated, I don't know a lot about the electricity generation market, and so I'm totally prepaed to be wrong on that front.

[CaptainCrunch]

Originally Posted by Makarov

Well, there is always the prospect of political consequences (at the polls) for bad decisions. That is the most serious consequence for elected officials.

Anyway, in my experience (which is not totally unrelated) and opinion, the "change in law"' provision in these arrangements is uncommon (I've never seen one before) and very favourable to the buyers. It doesn't seem like it was avery good deal for Albertans (at least in the long term.) That said, its complicated, I don't know a lot about the electricity generation market, and so I'm totally prepaed to be wrong on that front.

I think its extra to the vote. The companies outside of Alberta vote via investment dollars so it doesn't show up in the polls and it creates long long term economic damage because once they decide its a business hostile government that money goes elsewhere and its not an infinite bucket.

I don't know how it can be called extremely unfavorable when it basically reads as, if the government makes changes that make a deal unprofitable the signee can walk away. Its not as if the company's actions are causing the problem.

[Makarov]

Originally Posted by CaptainCrunch

I think its extra to the vote. The companies outside of Alberta vote via investment dollars so it doesn't show up in the polls and it creates long long term economic damage because once they decide its a business hostile government that money goes elsewhere and its not an infinite bucket.

I don't know how it can be called extremely unfavorable when it basically reads as, if the government makes changes that make a deal unprofitable the signee can walk away. Its not as if the company's actions are causing the problem.

I hear what are you saying but I still think that is the sort of policy decision that can be punished at the polls if it is regarded as a bad one (indeed, its safe to say from reading this thread that the NDP haven't earned themselves any new votes as a result of this decision so far.)

I think its unfavourable because it doesn't share the risk very evenly among the stakeholders. There are a great many unknowns in the world. Circumstances change (for example, climate change worsening). Governments need to react to those changing circumstances. That's a risk for everyone when they enter into commercial agreements (whether it is a family taking out a mortgage [faced with the prospect of a Bank of Canada interest rate change] or a huge elecricity generation company buying a PPA). Its reasonable to expect that in most commercial agreements, these risks are shared to some extent amongst the parties (although I suppose the parties are always free to distribute these risks as they see fit). In this case, it seems like the people of Alberta assumed all of the risk, that's all. (Sorry, long, rambling response).

[Mr.Coffee]

Originally Posted by Resolute 14

There is a difference between government being able to change the terms, and government being able to change the terms without consequence. If the NDP get away with this, then I can't see any reason why any company would want to invest in Alberta. Why bother when you know the government is just going to be out to screw you?

Yes and I would agree with this too, of course there's consequences to making unilateral moves.