What follows is a summary of the Q and A I had with Scott Thompson of 900AM CHML in Hamilton on Friday, October 14 on the Windstream Energy NAFTA suit that resulted in a $28 million penalty to be collected against federal and/or Ontario taxpayers. Time stamps are also provided to aid flipping through the podcast.

Windstream’s press release announcing the decision is here. The statement that decision is “the largest ever NAFTA damages and cost award against Canada” may not be correct. In 2010, a $130 million decision against Canada was issued in the Newfoundland AbitibiBowater case, which I discuss briefly with Scott. (Correction Oct 18: The $130 million paid to AbitibiBowater was a settlement and not the result of a decision by an arbitral tribunal. Abitibi {under its new name Resolute Forest Products} also recently brought a new $70 million NAFTA case over the closure of a paper mill in Quebec. That case is pending. The details of the earlier settlement are on the Global Affairs Canada website here: http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/AbitibiBowater.aspx?lang=eng)

A podcast of my CHML interview is available here. Select audio date October 14, 12 noon until 1 pm. The time codes and summaries presented here are only approximate.

35:15 – introduction

36:00 –

Q – What happened to offshore wind in Ontario?

A – The collapse of offshore wind power is all about politics. At the outset of the FIT programs, offshore producers were offered 50% more than on-shore wind producers per unit of production. A gold rush ensued. Proposals concentrated in Liberal ridings but were attracting public complaints. Windstream was the only offshore wind developer who managed to get a signed contract before the offshore wind procurement program got canceled. Notwithstanding their signed contract with the Ontario government, Windstream’s contract was effectively canceled when the procurement program was canceled. Windstream proved in the litigation that they were victims of selective mistreatment.

38:40

Q – So the wind farm wasn’t built because it was in a Liberal riding?

A – Exactly. The entire offshore wind program was canceled for political reasons. Government claimed at the time, a claim it maintained throughout the litigation, that they could not proceed with approving completion of offshore wind development because they were protecting drinking water.

40:00

Q – How is it safe to put them beside houses but not OK to put them off-shore?

A – The government’s drinking water protection claim is an argument only a lawyer could say with a straight face. The Ontario government claimed it was only following the “precautionary principle”. An engineer for Windstream documented a vast distance between the location of the wind farm and the nearest water intake.

41:40

Q – Are wind turbines better offshore or on land?

A – Onshore wind power is much less harmful to consumers. The problems of wind power’s intermittency and the poor correlation between wind power production and consumer needs are the same for offshore and onshore wind power.

44:15

Q – How is offshore wind power working out in Europe?

A – Offshore wind power in Europe is more expensive than onshore wind power. If you had no other options to make electricity, you might think about it, but we have lots of better options to make power.

45:05

Q – Where do things stand now with Windstream? Sounds like Windstream still wants to do business.

A – The tribunal ruled that the contract is still alive. It is unclear how the penalty and legal costs will be shared between federal and provincial taxpayers. If this proposed project goes ahead, which seems possible, the ratepayer impact would be far greater than the NAFTA award against us.

47:00

Q – Why is the federal government and Nafta involved?

A – US company not treated on the same terms as other companies in Ontario. The case of Samsung provided powerful evidence that they got a special deal. (I didn’t mention here but should have how Windstream’s lawyers also drew attention to how TransCanada Energy was treated relative to the recontracting of the Oakville generator at the centre of the gas scandal.) Claims under NAFTA are made against the federal government. Newfoundland’s confiscation of AbitibiBowater was a precedent. The way the rules work now, bad behaviour by provincial governments result in harm to the federal government, a flaw in our federalism.

50:00

Q – Is the liability ongoing?

A – The penalties here — $25 million to Windstream and $3 million in legal costs — maybe just warm-up money.

50:27

Q – Will it be built?

A – The government’s case against Windstream in the litigation was ridiculous. The Windstream case is a repeat of the gas scandal — government contracts canceled for political reasons. Both cases help us understand how irresponsible the energy decisions are that are being made in Ontario.

53:05

Q – Aren’t the Liberals really the bad actors in all of this?

A – Yes. Windstream appears to have complied with all applicable laws and regulations.

54:00

Q- How does this Windstream story inform our understanding of the upcoming Nov 1 rate increase?

A – In the scheme of the overall electricity system financial waste, the orders against taxpayers are small potatoes. This case helps reveal the confusion and irresponsibility of the Ontario government in managing this file.