Mesa Power files legal action against Canadian Government

Source: Mesa Power Group LLC

Mesa Power Group LLC, a Texas-based renewable energy development company, has initiated the first step in a legal claim against the Canadian government for violations of the North American Free Trade Agreement (NAFTA) while the company was pursuing 565 megawatts of wind energy projects in western Ontario.

In its filing, Mesa Power specifically noted Canada's failure to meet its international law obligations contained in NAFTA with respect to Ontario's Green Energy Act and subsequent Feed-In Tariff Program (FITP).

"Mesa Power was surprised by unanticipated and last-minute rule changes to the Ontario Power Authority process that allowed wind projects to move from one region to another and interconnect with long, high voltage transmission lines," said Cole Robertson, a company executive. "This clear favoritism disadvantaged Mesa, as well as other wind developers and clearly violates the spirit, goals and objectives of the North American Free Trade Agreement."

In its filing, Mesa Power cites a handful of other NAFTA violations by Ontario in the regulation of renewable energy. It also notes violations with the province's "buy local" contract requirements within the FITP and challenges the preferential treatment given to certain participants in the program, including Korean-based Samsung C&T.

Specific violations cited in the claim include:

• NAFTA Article 1105, by the provincial government directing the Ontario Power Authority to change the rules for awarding Power Purchase Agreements under the FIT Program.

• NAFTA Article 1106, by imposing a variety of prohibited Canadian and Ontario content requirements and "buy local" performance requirements.

• NAFTA Article 1102, by providing more favorable treatment to a domestic company in like circumstances.

• NAFTA Article 1103, by providing more favorable treatment to a non-NAFTA party in like circumstances.

"We believe our projects are among the most advanced wind projects in Ontario," Robertson said. "Our first two projects have completed their environmental studies, have a favorable position on existing transmission infrastructure and can be in operation by the end of next year. We also have a firm agreement to purchase wind turbines from a leading manufacturer and have selected an engineering and construction firm. These two strategic relationships would have quickly created jobs within the province. Other projects that received contracts under the disputed rules will take years to complete and will require extensive planning of new, expensive and unnecessarily long transmission lines."

Mesa Power expects to file a formal NAFTA Notice of Arbitration at any point after October 3, 2011. The filing of this second notice formally begins an international arbitration that will review the fairness and propriety of the government actions in Canada.

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