Wind farm contracting process a cesspool in Ontario, says lawyer

Pickens chose Ontario because he thought there was a "rule of law" and fairness here. Apparently not.
Pickens chose Ontario because he thought there was a “rule of law” and fairness here. Apparently not.

London Free Press, October 26, 2015

It’s a high-stakes legal battle over London-area wind farms that pits a self-proclaimed, Canada-loving, Texas oil tycoon against the federal government.

Mesa Power Group LLC vs. Government of Canada, a case that could leave taxpayers on the hook for hundreds of millions of dollars in damages, is expected to be ruled on within weeks, four years after the claim was launched by T. Boone Pickens under the North American Free Trade Agreement.

Though the federal government is the defendant, Pickens’ real quarrel is with Ontario.

In submissions and testimony before the NAFTA panel hearing the arbitration case, Pickens’ company claims it failed to win contracts for four massive wind farms in Huron and Bruce counties in Southwestern Ontario because of political interference at the highest level.

“This whole process was not carried out in good faith. This was not honesty. This was not fairness. This process was infused with raw politics, arbitrariness, and an egregious abuse of authority,” Mesa lawyer Barry Appleton said in his closing submission to the panel’s three arbitrators at a hearing in Toronto in October 2014.

The claim contains allegations that have not been proven.

In his own testimony before the NAFTA arbitrators, Pickens described how he was a big fan of Canada because of its rule of law.

“My experiences were so good that I enjoyed telling people about it,” he said, relating how he came to Canada with less than $100,000 in 1959 and sold out 20 years later for $610 million.

But his experience in Ontario left him disappointed, he said.

“You always feel bad when you lose, and then you look to see why you lost, and here we lost because we didn’t have a level playing field,” Pickens testified.

Home to Ontario’s largest wind farms with its largest number of the highrise-sized turbines, Southwestern Ontario is no stranger to the controversies generated by the power-producing windmills. Critics have decried them as a threat to human health, divisive to rural communities and a financial blow to a province that signed up producers with early sweetheart deals paying them far more to generate power than consumers pay.

Details of this latest dust-up are found on a federal government website containing submissions by Mesa, the governments of Canada, the U.S. and Mexico, and transcripts of the claim heard before a NAFTA tribunal last fall.

Mesa argued that other wind farm companies, Florida-based NextEra Energy and Korean-based Samsung — both, industry giants — were given illegal, preferential treatment and inside information that doomed Mesa’s projects.

“It was a cesspool. It was shameful. I feel very badly after seeing what went on here for my fellow Ontarians and the ratepayers of Ontario. They are having to bear the burden of the shameful behaviour,” Appleton said in a transcript from the hearing.

Responding to Mesa’s arguments, also at the hearing, Canada’s lawyers rejected Mesa’s assertions and said the company’s failures were self-inflicted.

“This is a case which is, as the expression goes, about sour grapes. It is a case about an investor who took a business risk and is unwilling to accept that that risk did not pay off,” government of Canada lawyer Shane Spelliscy said.

Spelliscy said Mesa’s applications for contracts with the Ontario Power Corp. were “sloppy” and “poorly done.”

When contracts were handed out, Mesa didn’t get one because its proposals weren’t highly ranked in a process monitored by an independent third party, Spelliscy said.

If they had put together better applications, they may have been successful, the federal lawyer said.

“There was no discrimination,” he said.

According to Mesa’s submissions, it decided to develop wind farms in Ontario — one, a 200-megawatt proposal in Bruce County would have been the largest in Ontario — after learning the province was offering 20-year contracts at a fixed price of 13.5 cents per kilowatt-hour.

“Make no doubt about this, this was a highly attractive rate,” said Appleton.

The rate meant there was no shortage of competing applications. A critical factor for companies became whether there would be enough transmission capacity for wind energy in the areas where they’d selected to build.

Appleton said Mesa had no idea that Ontario had cut a separate deal to allocate transmission capacity to Samsung, a Korean industrial giant, which promised to build manufacturing plants in Ontario.

And Mesa, unlike some of its competitors, was never informed about rule changes, a chance to switch its transmission points in order to increase its chances, he said.

Part of Mesa’s case was based on e-mails from Bob Lopinski, a registered lobbyist for NextEra, to Energy Ministry officials during the allocation process.

Lopinksi, a principal at Counsel Public Affairs, had previously served as director of issues management and legislative affairs to then-premier Dalton McGuinty and advised the Liberal leader on selecting cabinet ministers.

Appleton said though Lopinski and NextEra executives were communicating with Ontario government and Hydro One officials, Mesa understood no such communication was allowed.

Canada’s response filed with the NAFTA panel was there isn’t any evidence NextEra was ever provided with non-public information.

Mesa has asked for damages of $653 million plus interest.

READ THE DOCUMENTS

Legal documents from Mesa’s lawsuit against Canada under Chapter 11 of NAFTA can be found at: http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/mesa.aspx?lang=eng

MESA’S four PROPOSED WIND FARMS

The company claims it already invested $160 million on preliminary work for four proposed wind farms in western Ontario and would have spent $1.2 billion-plus on construction:

Twenty Two Degree: 150-megawatt project

Arran Wind Energy: 115-MW project

Summerhill: 100-MW project

North Bruce: 200-MW project

Comments

John Vincent
Reply

Gee, and I’m supposed to feel sorry for them?

wgulden
Reply

What we all should be feeling is extraordinary anger at how arrogant and ignorant (always a dangerous combination) Ontario’s government was (and still is). Along with feeling fairly hopeless in the face of the recent elections.

John Vincent
Reply

It looks like it could get worse since Trudeau Jr wants to put $9 billion into renewable energy, and will say “yes please” to the next climate meeting witch hunt. I feel the frustration that the news media doesn’t touch any of this stuff and the general public knows nothing of what’s going on in Ontario. A friend in Toronto believed local power outages were the result of lack of generation on the power sytem. That’s how bad its got getting the word out.

Barbara
Reply

There have been MSM reports on Ontario energy issues, mostly in the business news, but they don’t supply enough information to put things together.

The reader/viewer is left to pursue the rest of the story!

Pat Cusack
Reply

Heaven help us all!

ScepticalGord
Reply

Just wait and see:

Wynne and Trudeau will try to finger Harper (or maybe Mike Harris) for this.

Another day, another Liberal scam.

Mike
Reply

Pickens has a point, he was screwed, but not as much as the Ontario ratepayers. Look at the location of the IWTs that were approved just before the provincial election 4 years ago vs. the ones that were passes over. There was an attempt to save Carol Mitchel’s seat. Fortunately it failed.

Barbara
Reply

So true! And can this carry over to an Ontario investigation as well?

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