Why, 'Force Majeure', of course, which means:
"Unforeseeable circumstances that prevent someone from fulfilling a contract"
Recently, we noted that BC Hydro was setting itself up to blame the COVID19-induced economic slowdown for missing their consistently unrealistic power consumption numbers.
Anyway, it would appear that the good folks at Hydro have decided to use a rationale to stiff one IPP contractor, for real, at least in the short term:
Postmedia's Derrick Penner has that story:
B.C. Hydro has cancelled $20 million worth of electricity purchases from six private power facilities, the company that operates them said, and it is disputing the utility’s reasons for refusing delivery of the power.
Longueuil, Que.-headquartered Innergex Renewable Energy Inc. said last week that it had received notice that Hydro would refuse delivery of electricity from the six run-of-river generating stations between May 22 and July 20.
“B.C. Hydro cites the current COVID-19 pandemic and related governmental measures taken in response to it as constituting a ‘force majeure’ event,” meaning an event beyond its control that prevents Hydro from fulfilling its contract, Innergex said in a news release...
All if which got me to wondering if this, perhaps, is signaling a change in policy regarding those egregious IPP contracts that we've been locked into pretty much forever at ridiculously inflated prices.
So I asked Norm Farrell, via the Twittmachine, what he thought:
Hard to argue with the guy who knows all, and I mean all, of the numbers.
OK?
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4 comments:
Good reporting dude.
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Expropriation is, I believe, the word for what is required of IPPs. It is a tool that overrides personal property rights (such as they are) with the necessities of the sovereign jurisdiction—that is, the sate only expropriates for the greater public good which, I should think, includes avoiding where possible unnecessary and harmful damage to the public weal. IPPs surely fit this definition.
In a fair and democratic nation which sometimes respects the rule-of-law, the expropriated expect compensation. Fair enough. A price is negotiated, usually after the government has made its opening offer. It might include compensation for an assessed value of a property and for lost opportunity. But the insider crony pals of the old BC Liberal government saw ‘opportunity’ in charging BC Hydro exorbitant rates for the electricity IPPs produce—rates several times that which BC Hydro can make the electricity by itself, rates which would eventually bankrupt the public enterprise. Therefore this apparent breach of public trust cannot be used to calculate lost opportunity.
I think it would be justly deserved if the compensated get exactly what BC Hydro would spend to make the same power by itself—that is, the exact same rate. I’m being generous because every single one of those IPPs knew before purchasing licence that such a pay arrangement would eventually bankrupt the venerable BC Hydro (I’ll say nothing of my suspicion that a good many of these were also on the short list to buy bankrupted shares of BC Hydro for pennies on the dollar).
Who would be eligible for expropriation compensation? Well, all of them should be expropriated, and some of them would walk away from expropriation having recovered their investments and agreed to a premium for lost opportunity at BC Hydro’s own rate. But others would have to bear responsibility for any breaches of environmental laws they might have committed, habitat destruction, fisheries-devaluation. Since I’m such a generous guy (and IPP owners are accustomed to generosity), I’d only ding them for half the road debuilding costs.
This would apply to all Built IPPs and ruin-of-river prospects as yet not built. The latter would be summarily expropriated without further ado. IPPs already built would submit a statement of verifiable costs upon which their compensations would be partly based—minus environmental remediation costs.
As usual, expropriated licensees would have their day in court if price negotiations failed to arrive at an agreement. Like in nullifying the discouraging severances for BC Ferries Services Inc executives, plaintiffs would have their opportunity to rationalize the ulteriorly-motivated severances to a judge who would decide with the public interest foremost in mind.
Scotty--
You make an excellent point about what so many of the fine folks involved likely 'knew' regarding what this gambit would do to BC Hydro's debt load.
After all, it wasn't as if this hadn't been done already by GordCo Inc, and its backers, when it came to BC Rail.
Heckfire, in the latter case the debt was actually a selling point.
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