Wind farm contracts can be cancelled: legal opinion

Companies without a Notice To Proceed or who have not reached key milestones “have reason to be concerned”

July 6, 2018

In a just released review of the energy landscape in Ontario under the new Ford government, Mike Richmond, wind power contract specialist with law firm McMillan LLP, says the contracts between government and wind power developers can be cancelled in certain situations.

Wind Concerns Ontario has long maintained this to be true, even recommending to the Wynne government that an effective way to reduce electricity bills for Ontario consumers — or at least, not have them go higher — was to cancel the $1.3B of new wind power contracts and to cancel any others where significant milestones have not been met.

Mr. Richmond’s legal opinion and review is here.

The government will be directing IESO to exercise termination rights

An excerpt:

Developers, lenders, construction firms, installers, landlords and other clients with interests in contracts for projects which have not yet been granted Notice to Proceed (NTP) by the Independent Electricity System Operator (IESO) (or acceptance of Key Development Milestones for Large Renewable Procurement (LRP I) projects) have reason to be concerned.

While the [PC election] platform was not long on detail, it was absolutely clear that where pre-construction contracts contain provisions allowing the IESO to terminate at or prior to NTP or other equivalent milestones, before expensive capital equipment has been delivered and installed, the Government will be directing the IESO to exercise those termination rights.

Anticipating such a directive, the IESO had already begun holding back on the issuance of NTP approvals for Feed-In Tariff (FIT) projects prior to the June 29 swearing-in, instead electing to issue NTP Deferral Notices. By doing so, the IESO is able to limit its liability for the eventual termination of those projects to the “Pre-Construction Liability Limit”, which is set at:

  • $400,000 plus $2.00/kW for wind, biogas or biomass facilities;
  • $250,000 plus $10.00/kW for solar facilities; or
  • $500,000 plus $20.00/kW for waterpower facilities.

These figures only represent liability caps. To be eligible even for these amounts, developers will have to be able to demonstrate that they incurred, after being awarded a FIT Contract, “soft” costs up to these amount for items such as environmental approvals, EPC and financing contract negotiations, land rights, resource assessments, connection cost deposits, equipment deposits and permitting. Costs spent on generating equipment (other than reasonable non-refundable deposits), and amounts representing lost profits, are not eligible.

Some questions remain:

Given the stated election platform, and the fact these contracts were a key campaign issue, why then did the Wynne government issue a Renewable Energy Approval to Portugal-based EDPR  for its unneeded 100-MW “Nation Rise” wind project just days before the writ was drawn up for the June election, and why did the IESO toss its termination rights overboard on the WPD “White Pines” project, during the active election campaign?

What pressures were brought to bear on the former government by the power developers?

And why are taxpayers now being forced to pay for the new government’s defence of a bad decision made by the Wynne government, in the Nation Rise appeal?

contact@windconcernsontario.ca

 

Comments

Richard Mann
Reply

Will Ford address known health impacts of Industrial Wind Turbines? In particular, will he ask Erica Clark, Huron County Health Unit, when the on going health investigation will report to the public?

By the way, my contact with Huron County and others involved is documented on my web page,
http://www.cs.uwaterloo.ca/~mannr

Sommer
Reply

View this recent presentation given by Professor Mariana Alves-Pereira in Slovenia to professionals on harm from LFN and infrasound and ask yourself, how can it possibly be ethical to expose rural people to this harm any longer?
This is about so much more than tax payer’s money.

Wind Wraith
Reply

Sure, the wind companies will make a huge stink about contracts being ripped up… they will lose out on a lot of easy money from their scam…. but they were fully aware that a change in government could impact their projects… in fact the landowner lease that I have seen clearly states that the wind company has no obligations of any sort to the landowner if the government changes!

Stan Thayer
Reply

Wow, another new low record for the Ontario wind farms!
July 14th 2018 10AM 27°C and climbing.
Total Ontario wind farm output 59MW
Total Ontario solar farm output 213MW
Extreme heat and calm weather on this beautiful sunny mid-summer Saturday has created a grid demand expected to peak out in the 20,000 + MW range.
Again the IWT output is completely out of phase with demand and of little benefit to ratepayers when needed the most.
Units aging, output dwindling, contracts being cancelled, Ontario taxpayer subsidies ending.
Like I said,
THIS IS GOING TO GET INTERESTING!
Stan the power man

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