Friday, March 22, 2013

Pickens' MESA puts $100 million price on Ontario's FIT local content requirements

The Toronto Star had an article reporting on Nextera's battles with local jurisdictions.
For reasons I note below, a reference to Nextera often leads me to check on the status of MESA Power's Chapter 11 NAFTA challenge.  The case had been dormant but I found it has come back to life as of late (of 9 active Chapter 11 challenges, 2 are due to the Ontario government's feed-in tariff adventure).

Additionally, I found that MESA had filed an opinion in the World Trade Organization where Canada has appealed a perfectly sane finding that the local content provision of it's feed-in tariff program violate Canada's WTO commitments.  In this opinion, MESA puts a big price tag on the cost of the protectionist local content provision:
24. The domestic content requirements in the FIT program caused Mesa Power to modify its own purchasing decision with suppliers. Mesa Power diverted purchases from preferred suppliers outside of Ontario and instead negotiated agreements with goods and services suppliers in Ontario to comply with the FIT Program requirements. The imposition of the minimum domestic content requirement resulted in an increase in cost to Mesa Power of over US $100 million for its projects in Ontario.

The background - as I understand it:  In early 2011, more transmission capacity was being constructed in the Bruce region; the Ontario Power Authority had ranked projects by region and MESA had some highly ranked projects in the Bruce region.
Nextera did not, but had hired the firm of Liberal kingpin David Peterson to lobby for them.  Consequently a directive from the Minister of Energy changed the rules in June and the contracts announced in July both shifted some Nextera contracts to the Bruce region and shifted some capacity to the "West of London" region - making Nextera, via a number of shell companies, the big winner on that day.

MESA launched legal action shortly thereafter

The other NAFTA chapter 11 challenge related to the FIT program has been launched by Windstream - which held a contract for an off-shore project, which was negated by a moratorium on such projects.

Outside of NAFTA, Trillium Wind Energy is also looking for a payout in court due to the moratorium decision - a case which they lost once, but continue to appeal

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