Mesa Power Group, a private Texas-based wind developer, has initiated the process of taking legal action against the Province of Ontario for its feed-in tariff program's failure to comply to the North American Free Trade Agreement (NAFTA).
Mesa, which is attempting to develop 565 megawatts of wind power in the Canadian province, says the Ontario Power Authority (OPA) is violating the treaty by giving preferential treatment to particular businesses as well as requiring renewable energy developers to "buy local" for their projects.
In its early stages, Ontario's generous feed-in tariff program focused on shovel ready projects -- renewable installations which could were not in their preliminary phase of development and could be built within three years. Mesa Power submitted early applications for two of the four wind farms it is developing on shores of Lake Huron.
In these applications, the company outlined several reasons why they fit the province's acceleration criteria: they had financial depth, a turbine supply agreement, a contract with a renewable energy company to develop the project, and the management experience to build in an short time period.
Mesa Power spokesman Jay Rosser says the company's 150-megawatt Twenty Two Degree Wind Energy Project was ranked eighth on the Ontario Power Authority's priority list of the most shovel ready projects in December 2010. This placed the wind farm ahead of the 700 MW cutoff point for renewable energy projects to receive contracts in the Bruce Area of transmission.
However, in June the OPA changed the rules, allowing projects in the nearby West London Area to connect with the Bruce Area transmission grid.
On July 4, 2011, the OPA awarded 25 contracts for 1,046 MW of renewable energy in the Bruce Area and West London Area. Of those contracts, 400 MW of renewable energy projects from West London were allowed to connect to the Bruce Area transmission system. Neither of Mesa Power's two early applications -- the Twenty Two Degree Wind Energy Project and the Arran Wind Energy Project -- for the Bruce Area were awarded contracts.
Mesa says its two projects are among the most advanced in Ontario; despite this, the province awarded contracts to companies whose projects will take years to develop.
Beyond pulling the NAFTA rulebook out on the OPA for not only changing the rules of its feed-in tariff program but also requiring developers to purchase local materials, Mesa says the province is giving preferential treatment to non-NAFTA-based companies, which violates the treaty. In particular, the company has singled out Ontario's agreement with the Korean company, Samsung.
In 2010, Ontario signed a mega wind and solar agreement with Samsung. The terms of the contract call for Samsung to construct 2,000 MW of wind power and 500 MW of solar power over the next five years. All totaled, the deal is worth C$6.6 billion.
Paul Gerard, a spokesman for the Ontario Ministry of Energy, says the province has not violated any terms of NAFTA: "The Ontario Power Authority runs an open, fair, and transparent process to award clean energy contracts under the Feed In-Tariff program. Both Ontario and internationally based companies have been awarded contracts under the program."
Gerard further stated that province is working with the Government of Canada regarding this matter, and if a NAFTA claim is filed, the province will work with Canada to "vigorously defend this case."
Executives at Mesa Power say the company intends to file a NAFTA Notice of Arbitration in November. This notice will formally begin the international process of reviewing Mesa's claim and the fairness Ontario's actions.
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