Bungled wind farm deal destroys green dreams

Ontario's government signed an electricity deal with an American company to build a wind farm at the eastern end of Lake Ontario, froze the project, and then wanted to treat its decision like an uncontrollable act of God to get out of the contract, an international panel found in a ruling saying such behaviour is not OK.

We knew our provincial government's treatment of U.S.-backed Windstream Energy was bad. To see a panel of three arbitrators -- a Finn, a Spaniard and an American, with an international court based in The Hague -- lay out just how bad is startling.

The recent finding makes taxpayers cover $28 million for Windstream.

Ontario stopped the project in 2011 as part of a mass moratorium on offshore wind-energy projects. Windstream challenged the decision under the North American Free Trade Agreement, saying it had been treated unfairly.

Since 2011, the Ontario government has insisted it was worried that planting windmills in the beds of the Great Lakes would stir up pollution. The environment minister at the time, John Wilkinson, testified he was spooked by the deaths from dirty water at Walkerton and wouldn't stand for any risk to drinking water.

The energy minister then, Brad Duguid -- who's now Ontario's economic development minister -- said publicly when the government imposed the moratorium that politics had nothing to do with the decision.

Wilkinson's drinking-water worries were genuine, the panel ruled. "At the same time, however, the evidence before the tribunal suggests that the decision to impose the moratorium was not only driven by the lack of science," its ruling says. "The impact of offshore wind on electricity costs in Ontario, as well as the upcoming provincial elections in November 2011, also appear to have influenced the decision, and the latter in particular in light of the public opposition to offshore wind that had emerged during the relevant period in many parts of rural Ontario."

The bigger political challenge was with other projects, but Windstream got caught up with the rest of them.

If Wilkinson had stopped wind-farm projects in alarm over water safety, the rest of the government doesn't seem to have realized it. Civil servants and staff spent weeks batting around options for the wind-farm problem, long after Wilkinson had supposedly kiboshed all the projects.

And, the panel noted, "The government on the whole did relatively little to address the scientific uncertainty surrounding offshore wind that it had relied upon as the main publicly cited reason for the moratorium." To this day, the Liberals have commissioned no research on whether windmills in lake beds stir up tainted sediment.

What makes that especially ugly, in the tribunal's view, is that the government let Windstream dangle, telling the company it just had to wait for the science nobody was doing.

The government left the Ontario Power Authority, its electricity-buying agency, to sort out the details. But the agency didn't know how. The government's interference was treated as "force majeure," an act of God neither Windstream nor the power authority could change.

After two years went by, a provision in the contract kicked in that allowed the power authority to walk away. It didn't do that, but once Windstream's only customer could cancel, the hypothetical wind farm became impossible to finance.

The OPA refused to consider alternative projects, to return a $6-million letter of credit Windstream had put down, or to put off the walk-away clause.

That's why we're on the hook for $28 million and counting. And the dream of making Ontario a green-energy powerhouse is in tatters.


DEC 12 2016
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