It’s a high-stakes legal battle over London-area wind farms that pits a self-proclaimed, Canada-loving, Texas oil tycoon against the federal government.
Mesa Power Group LLC vs. Government of Canada, a case that could leave taxpayers on the hook for hundreds of millions of dollars in damages, is expected to be ruled on within weeks, four years after the claim was launched by T. Boone Pickens under the North American Free Trade Agreement.
Though the federal government is the defendant, Pickens’ real quarrel is with Ontario.
In submissions and testimony before the NAFTA panel hearing the arbitration case, Pickens’ company claims it failed to win contracts for four massive wind farms in Huron and Bruce counties in Southwestern Ontario because of political interference at the highest level.
“This whole process was not carried out in good faith. This was not honesty. This was not fairness. This process was infused with raw politics, arbitrariness, and an egregious abuse of authority,” Mesa lawyer Barry Appleton said in his closing submission to the panel’s three arbitrators at a hearing in Toronto in October 2014.
The claim contains allegations that have not been proven.
In his own testimony before the NAFTA arbitrators, Pickens described how he was a big fan of Canada because of its rule of law.
“My experiences were so good that I enjoyed telling people about it,” he said, relating how he came to Canada with less than $100,000 in 1959 and sold out 20 years later for $610 million.
But his experience in Ontario left him disappointed, he said.
“You always feel bad when you lose, and then you look to see why you lost, and here we lost because we didn’t have a level playing field,” Pickens testified.
Home to Ontario’s largest wind farms with its largest number of the highrise-sized turbines, Southwestern Ontario is no stranger to the controversies generated by the power-producing windmills. Critics have decried them as a threat to human health, divisive to rural communities and a financial blow to a province that signed up producers with early sweetheart deals paying them far more to generate power than consumers pay.
Details of this latest dust-up are found on a federal government website containing submissions by Mesa, the governments of Canada, the U.S. and Mexico, and transcripts of the claim heard before a NAFTA tribunal last fall.
Mesa argued that other wind farm companies, Florida-based NextEra Energy and Korean-based Samsung – both, industry giants – were given illegal, preferential treatment and inside information that doomed Mesa’s projects.
“It was a cesspool. It was shameful. I feel very badly after seeing what went on here for my fellow Ontarians and the ratepayers of Ontario. They are having to bear the burden of the shameful behaviour,” Appleton said in a transcript from the hearing.
Responding to Mesa’s arguments, also at the hearing, Canada’s lawyers rejected Mesa’s assertions and said the company’s failures were self-inflicted.
“This is a case which is, as the expression goes, about sour grapes. It is a case about an investor who took a business risk and is unwilling to accept that that risk did not pay off,” government of Canada lawyer Shane Spelliscy said.
Spelliscy said Mesa’s applications for contracts with the Ontario Power Corp. were “sloppy” and “poorly done.”
When contracts were handed out, Mesa didn’t get one because its proposals weren’t highly ranked in a process monitored by an independent third party, Spelliscy said.
If they had put together better applications, they may have been successful, the federal lawyer said.
“There was no discrimination,” he said.
According to Mesa’s submissions, it decided to develop wind farms in Ontario – one, a 200-megawatt proposal in Bruce County would have been the largest in Ontario – after learning the province was offering 20-year contracts at a fixed price of 13.5 cents per kilowatt-hour.
“Make no doubt about this, this was a highly attractive rate,” said Appleton.
The rate meant there was no shortage of competing applications. A critical factor for companies became whether there would be enough transmission capacity for wind energy in the areas where they’d selected to build.
Appleton said Mesa had no idea that Ontario had cut a separate deal to allocate transmission capacity to Samsung, a Korean industrial giant, which promised to build manufacturing plants in Ontario.
And Mesa, unlike some of its competitors, was never informed about rule changes, a chance to switch its transmission points in order to increase its chances, he said.
Part of Mesa’s case was based on e-mails from Bob Lopinski, a registered lobbyist for NextEra, to Energy Ministry officials during the allocation process.
Lopinksi, a principal at Counsel Public Affairs, had previously served as director of issues management and legislative affairs to then-premier Dalton McGuinty and advised the Liberal leader on selecting cabinet ministers.
Appleton said though Lopinski and NextEra executives were communicating with Ontario government and Hydro One officials, Mesa understood no such communication was allowed.
Canada’s response filed with the NAFTA panel was there isn’t any evidence NextEra was ever provided with non-public information.
Mesa has asked for damages of $653 million plus interest.
READ THE DOCUMENTS
Legal documents from Mesa’s lawsuit against Canada under Chapter 11 of NAFTA can be found at: http://www.international.gc.ca/trade-agreements-accords-commerciaux/topics-domaines/disp-diff/mesa.aspx?lang=eng
MESA’S four PROPOSED WIND FARMS
The company claims it already invested $160 million on preliminary work for four proposed wind farms in western Ontario and would have spent $1.2 billion-plus on construction:
Twenty Two Degree: 150-megawatt project
Arran Wind Energy: 115-MW project
Summerhill: 100-MW project
North Bruce: 200-MW project