Windstream Takes Canada to Arbitration over CAD 475 Million Damages Claim

A panel of international arbitrators will today start the hearing in an arbitration between the Windstream Energy LLC and the Government of Canada regarding the US-based company’s CAD 475 million claim for damages under North American Free Trade Agreement (NAFTA) for lost profit due to the Ontario’s moratorium on offshore wind farms in 2011.

In November 2009, Windstream submitted eleven FIT applications for wind power projects, including an application for a 300-megawatt, 130-turbine offshore wind project in the Wolfe Island Shoals of Lake Ontario, near Kingston.

Having met the basic conditions of a FIT application, the Ontario Power Authority (OPA) offered it a FIT Contract on May 4, 2010. Windstream did not sign back the contract immediately, but requested a series of extensions throughout the summer while the Government of Ontario undertook a policy review on offshore wind development.

On August 20, 2010, prior to the finalization of the policy review on offshore wind, Windstream and the OPA signed the FIT Contract, which provided for fixed pricing for power generated over a 20-year period on the condition that Windstream brought its project into commercial operation by May 4, 2015. This included acquiring all of the necessary permits and approvals to develop the project.

The Ministry of the Environment’s Offshore Wind Policy Review closed on February 11, 2011, when the Government of Ontario decided to defer offshore wind development until the necessary scientific research is completed and an adequately informed policy framework can be developed.

Windstream alleges that the Government of Ontario acted in an expropriatory, arbitrary and discriminatory manner when it deferred offshore wind development, resulting in the loss of its investment. In particular, Windstream asserts that the decision was made in an arbitrary and political manner, with no intention of pursuing the science and developing the regulations required for a regulatory framework for offshore wind projects.

Windstream Energy had reportedly deposited a CAD 6 million letter of credit with the power authority and had also signed a binding turbine supply agreement with Siemens Canada, worth more than CAD 600 million at the time.

In October 2012, Windstream served a Notice of Intent to Submit a Claim to Arbitration on the Government of Canada, and in January 2013 it served a Notice of Arbitration where it alleged that Canada violated its obligations under the NAFTA, resulting in approximately CAD 475 million in damages to their investment.

The parties have exchanged pleadings and the panel appointed by The Hague-based Permanent Court of Arbitration (PCA) will hold a hearing on jurisdiction, merits, and damages in Toronto, Ontario, from 15 to 26 February.

 

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