Before the election, the McGuinty government put a moratorium on offshore wind projects, claiming that further research was needed. Now, one of the companies that planned to build an off-shore wind farm in Lake Ontario is suing for compensation.
Trillium Power Wind Corp. filed a statement of claim reportedly claiming that the moratorium constituted “a confiscation of property rights, without warning or substantive justification.” However, Trillium has not posted its statement of claim, and did not return calls last week.
The claim raises the question to what degree developers can rely on government policies, and whether government can be called to account for losses suffered when it changes its mind. Certainly, the moratorium was inconsistent with the Green Energy Act and many government speeches encouraging the development of renewable energy projects. Trillium may have incurred substantial losses, but does a government invitation to invest in developing a resource really constitute a property right, before any licenses have been issued? As noted in an earlier blog post regarding Attorney General of Canada v. Fielding Chemical Technologies Inc., private companies can sometimes sue the Crown for damages suffered as a result of a change in government policy. In Fielding Chemical’s case, however, the damages flowed from a ban on the export of PCBs found in an earlier case to have violated Chapter 11 of the North American Free Trade. In Trillium’s case, there was nothing similarly illegal about the moratorium.
Another offshore wind development company, Windstream Energy, is taking a different approach, moving ahead with development plans on the assumption that the moratorium will eventually come to an end. Unlike Trillium, Windstream is the only company to hold a signed contract to sell electricity from offshore wind into the provincial grid.
This case highlights the risks, to both the public and the private sector, of flip-flops in government policy. Stable and consistent energy policies are essential for any well-managed energy future, especially for newer technologies such as renewable energy.
By Meredith James and Dianne Saxe