Ontarioâ€™s cancellation of a proposed wind farm in the St. Lawrence River could cost Canada $568 million, if a NAFTA tribunal rules in favour of a U.S.-based energy company.
Hearings began in Toronto this week into the case of U.S.-based Windstream Energy. The company launched a lawsuit against Ontario in 2012, after the province cancelled an offshore wind farm project the company wanted to build off Wolf Island, in the St. Lawrence River near Kingston.
The federal government is the defendant in cases brought under NAFTA, even in instances where provincial policy is at issue.
The initial filing sought C$475 million in damages for the cancellation of the 100-turbine project, but according to a recent report in the Globe and Mail, the company is now seeking $568 million.
Ontario placed a moratorium on offshore wind farms in 2011, cancelling dozens of projects. But Windstream says that, unlike other projects, it had a contract with the Ontario Power Authority, according to a 2012 Toronto Star report.
Windstream says it placed a $6-million security with the power authority, and had signed a supply contract with Siemens Canada before the province enacted the moratorium.
â€śAlthough we view litigation as an absolute last resort, we have been given no other option but to pursue this path,â€ť Windstream president Ian Baines said at the time, as quoted at the Star.
â€śWe hope that this mechanism will break the provincial political interference.â€ť
In Green Energy Futures' whirlwind tour of wind energy myths, we learned that the only significant health effect of wind farms is that they annoy some people. Beauty truly is in the eye of the beholder. Photo: David Dodge, GreenEnergyFutures.ca
Studies have looked at tens of thousands of property sales and the end have determined wind turbines donâ€™t have a significant impact one way or the other on property values. Photo David Dodge, GreenEnergyFutures.ca
Wind power is selling for 5 cents US/kWh in the US and in Alberta the grid operator paid an average of 5.5 cents/kWh for wind in 2013 making it the most inexpensive power purchased in 2013. Photo David Dodge, GreenEnergyFutures.ca
The New York State Energy Research and Development authority found wind has the second lowest overall impact on wildlife of all the methods of generating electricity. Photo David Dodge, GreenEnergyFutures.ca
Wind turbines do cause bird mortalities, something the industry acknowledges, but the impact is quite low when compared to cats, skyscrapers, transmission lines, and other forms of generating electricity. Photo David Dodge, GreenEnergyFutures.ca
The story of conservationist Heidi Eijgel and what it was like to have a wind farm developed next door. Photo David Dodge, GreenEnergyFutures.ca
The 105 megawatt Bear Mountain Wind Park in Dawson Creek, B.C. was conceived of by a citizen's group called the Peace Renewable Energy Coop out of Dawson Creek. It was one of the first big wind projects in B.C. Photo David Dodge, GreenEnergyFutures.ca
The Quality Wind project was the second big wind project in B.C. and it was developed by Capital Power out of Edmonton, Alberta. Workers seem dwarfed by the almost 50 metre turbine blades that were installed in the wind farm at Tumbler Ridge B.C. Photo David Dodge, GreenEnergyFutures.ca
In documents filed with the trbunal, the federal government said Ontario has a â€śright to proceed with cautionâ€ť on offshore wind projects, and NAFTA doesnâ€™t forbid â€śreasonableâ€ť regulatory delays, the Globe reported.
The federal government is also reportedly arguing the project had no market value because it could not have been pulled off in the time required under the contract.
Windstream is suing under NAFTAâ€™s chapter 11, known as an â€śinvestor-state dispute settlement (ISDS) mechanism.â€ť Such ISDS clauses have become politically unpopular in recent years, and their inclusion in the proposed Canada-EU and U.S.-EU free trade deals have been blamed for holding up both treaties.
Critics say ISDS clauses in effect hand corporations the ability to rewrite or strike down national laws when they affect foreign trade with free-trade partners.
Canada is reportedly the most-sued country under NAFTAâ€™s ISDS tribunal. As of last year, there were 35 claims brought against Canada. So far, Canada has lost six, paying out a total of $170 million. Mexico has lost five cases and paid out $204 million. The U.S. has never lost a NAFTA lawsuit brought against it.
Trade lawyer Harry Herman of Herman & Associates told the Globe and Mail that, while Canada may have lost a few, â€śthe general trend in these [cases] has been to recognize that governments â€¦ have a right to regulate.â€ť
And Canadian companies have also taken advantage of the clause. TransCanada earlier this year launched a $15-billion NAFTA lawsuit against the U.S. government over its decision to reject the Keystone XL pipeline. The lawsuit helped fire up the U.S.'s anti-free trade movement.