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Conflict of interest probe into ex-Alberta premier Alison Redford lacked important evidence: report

August 10, 2016 By Admin

Mariam Ibrahim, Postmedia News | April 4, 2016 11:59 PM ET
A former Alberta ethics commissioner lacked important evidence in his conflict of interest investigation into how Alison Redford awarded the province’s lawsuit against big tobacco companies, a new report has found.

Former Supreme Court of Canada justice Frank Iacobucci’s independent review of Neil Wilkinson’s 2013 investigation into Redford’s handling of the file found the former ethics commissioner wasn’t given more than a half-dozen relevant emails and briefing notes.

“The information that was not available to the ethics commissioner raises questions that bear on the subject matter of the … investigation,” Iacobucci said in his 27-page report released Monday, which cost the Alberta government $160,000.

Iacobucci recommends the government refer the matter to current ethics commissioner Marguerite Trussler to determine if a new investigation is needed.

“Members of the public will continue to harbour doubts about the propriety of the selection of external counsel to conduct the tobacco litigation, and this may lead to an erosion of confidence in the administration of government in the province more generally,” he wrote.

Justice Minister Kathleen Ganley has referred the report to Trussler and asked for her advice even though Redford is no longer a sitting MLA. The former scandal-plagued MLA resigned as premier in March 2014 and then gave up her Calgary legislature seat less than six months later.

“I think people still have outstanding questions arising from this matter and I think it’s really important that we do our absolutely level best to ensure that those questions are answered, and that the public can have confidence in their government and particularly in the ministry of justice,” Ganley said.

The NDP government appointed Iacobucci to independently review Wilkinson’s investigation in December.

Wilkinson launched his investigation after it was revealed the former premier, while justice minister, chose the International Tobacco Recovery Lawyers Consortium to represent the province in its $10-billion lawsuit against the tobacco companies.

Redford’s ex-husband, Robert Hawkes, was a partner at one of the firms included in the consortium; however, ex-spouses aren’t named as a potential source of conflict in the province’s conflict of interest laws.

Government documents show the consortium ultimately chosen for the litigation in 2010 had originally been ranked last out of three potential firms interviewed for the contract.

A review committee drafted a briefing note stating the consortium was ranked last, “primarily due to their lack of depth and the lack of any presence in Edmonton,” Iacobucci’s report said.

A further revision of that note included a recommendation that Redford instead select between two other firms — Bennett Jones or McLennan Ross — for the contract.

However, that recommendation was ultimately removed from the briefing note delivered to Redford. Instead, it said: “All three consortiums have unique strengths and weaknesses, and the decision really depends on what ‘package’ is most appealing to government,” according to Iacobucci’s report.

The retired justice said in his report he found no evidence that Redford knew about the earlier draft or the review committee’s initial recommendation.

Both Hawkes and Redford were among the 15 people interviewed by Iacobucci for his report, which examined only whether Wilkinson had all the necessary information at his disposal in 2013.

Filed Under: News

Coal power buying rule challenged – Alberta NDP say consumers left on the hook

August 2, 2016 By Admin

26 Jul 2016

Lethbridge Herald

John Cotter

THE CANADIAN PRESS — EDMONTON

The Alberta government is going to court to challenge a regulation it says will saddle consumers with billions of dollars in losses from coal-fired power agreements. The NDP says last-minute changes to a regulation passed secretly by the Progressive Conservatives in 2000 allows power companies to hand back agreements to buy electricity from coal-fired plants if actions by the government make them more unprofitable.

Deputy premier Sarah Hoffman said the government estimates these power purchasing arrangements could end up costing consumers up to $2 billion by 2020.

“Today our government is taking legal action to protect everyday Albertans from having to pay for the business losses of Alberta’s biggest and most profitable power companies,” Hoffman said Monday.

“We think this is not only unfair to Albertans, it is also unlawful.”

Hoffman said U.S.-based Enron lobbied the Alberta Tories for the change as part of the government’s plan to deregulate the province’s electricity market. Enron declared bankruptcy in 2001 following an accounting fraud scandal.

Hoffman said the Tory government at the time told Albertans the risks of a deregulated electricity system would be shared by power companies.

She said the “Enron clause” did the opposite — it set up a system where consumers bear all the risk.

“Our government believes that regular Albertans should not be on the hook for secret backroom deals between companies and the previous PC government.”

Hoffman said the clause was not included in more than a year of public hearings and the government took steps to hide the clause by exempting it from standard public disclosure.

Enmax Corporation has used the regulation to terminate its power purchasing arrangement. Earlier this year Enmax said the government’s decision to charge companies a higher tax on carbon dioxide emissions this year and in 2017 made the agreement unprofitable.

The government contends the Tories had no legal right to create such a legal loophole and is seeking a court order declaring the regulation to be void.

The NDP also wants a judge to quash a decision by a government agency called the Balancing Pool to accept Enmax’s decision to hand back its agreement.

Other companies that have served notice they intend to terminate such arrangements include TransCanada Corp., Capital Power PPA Management and the ASTC Power Partnership.

On Monday, Enmax issued a news release saying they have concerns with the accuracy of information in the filing.

“These legal agreements with the government have been in place and relied upon for 16 years, and were intended to be respected for a 20-year period by an industry that has invested billions of dollars in Alberta during this time,” said the release.

“We are very disappointed that the government is retroactively challenging fundamental aspects that have been in place in these agreements since their inception.” Capital Power Corp. also issued a statement Monday.

“We will exercise every legal avenue at our disposal to ensure that the Government of Alberta honours the terms of the PPAs,” said Capital Power president and CEO Brian Vaasjo.

“We believe the legal claim is without merit, and we will look to the courts to ensure that the Government of Alberta cannot retroactively amend an arrangement for which Albertan companies paid and upon which they have been relying in good faith for 16 years.”

Capital Power also called into question some of the government’s assertions.

“Today’s announcement by the Government of Alberta claims that the PPA terminations will result in consumers bearing up to $2 billion in costs between now and 2020. This claim is misleading because it is incomplete. Based on available public information, the Balancing Pool can reduce its liability to an estimated $950 million by terminating the PPAs that were recently turned back to them, or to an estimated $635 million by terminating some PPAs, and retaining and managing others.”

Spokesman Mark Cooper said TransCanada has always operated in a fully open and transparent manner and will defend its right to terminate the arrangements.

“We properly exercised our termination rights under provisions in the Power Purchase Arrangements that were clear 16 years ago and that remain clear today,” he said in a statement.

“The Government of Alberta through its regulator the AUB clarified the intent of these provisions for all parties during a fully public process back in 2000. We relied on the termination provisions in the PPAs as fundamental to the commercial decision to participate in the PPA auction and would not have participated without them.”

In March, TransCanada and Capital Power both cited the increasing costs of CO2 emissions when serving notice of their intention to terminate their agreements.

Filed Under: News

NDP gov’t continues to pile up debt

July 26, 2016 By Admin

Lethbridge Herald

By Letter to the Editor on July 26, 2016.

The biggest mistake so far is probably the environmental minister slashing the firefighting budget even though they knew it was a dry winter and dry spring forecasted. What would have happened with the Fort McMurray disaster had a water bomber got out on day one instead of day three? They were available. The fire disaster might have been avoided?

Their failure to work with farmers when they went ahead and changed the rules for the Workers Compensation Board. What were they thinking?

The following will increase spending for most Albertans and will probably lead to a loss of jobs and businesses because of less disposable cash. Introducing a carbon tax that the people of Alberta will have to pay for even though the oilsands industry currently accounts for approximately 0.12 per cent of global GHG emissions (Environment Canada 2015). This will increase costs at all levels and no rebates will cover it all and won’t make a dent in world emissions. It will hurt the poorest the most. Minimum wages to continue to rise to a point where people will stop going out to eat, etc. because of increases in prices.

Introduction of a beer tax which will hurt and possibly close the fledgling microbreweries. The government is moving forward with its plans to expand the bureaucracy and reward the friendly unions who helped elect an NDP government in Alberta.

According to the NDP’s forecast, in five years, Alberta’s debt will reach $47.4 billion. That’s about $12,000 for every man, woman and child in the province. What are they going to come out with next?

Finally with all the promises of infrastructure funding why aren’t our MLAs and our MP not fighting for dollars for our second bridge? The time is right.

Jim Tratch

Lethbridge

Filed Under: News

Alberta NDP to challenge coal power buying rule known as ‘Enron clause’

July 26, 2016 By Admin

By John Cotter The Canadian Press

WATCH ABOVE: The Alberta government is taking some of the province’s biggest power providers to court. The NDP alleges a series of backroom deals involving Enron and the former PC government could cost consumers $2 billion. Fletcher Kent explains.

The Alberta government is going to court to challenge a regulation it says will saddle consumers with billions of dollars in losses from coal-fired power agreements.

The NDP says last-minute changes to a regulation passed secretly by the Progressive Conservatives in 2000 allows power companies to hand back agreements to buy electricity from coal-fired plants if actions by the government make them more unprofitable.

Deputy premier Sarah Hoffman said the government estimates these power purchasing arrangements could end up costing consumers up to $2 billion by 2020.

“We think this is not only unfair to Albertans, it is also unlawful.”

Hoffman said the Tory government at the time told Albertans that the risks of a deregulated electricity system would be shared by power companies.

She said the “Enron clause” did the opposite – it set up a system where consumers bear all the risk.

“Our government believes that regular Albertans should not be on the hook for secret backroom deals between companies and the previous PC government.”

Hoffman said the clause was not included in more than a year of public hearings and the government took steps to hide the clause by exempting it from standard public disclosure.

The government contends the Tories had no legal right to create such a legal loophole and is seeking a court order declaring the regulation to be void.

The NDP also wants a judge to quash a decision by a government agency called the Balancing Pool to accept Enmax’s decision to hand back its agreement.

Other companies that have served notice they intend to terminate such arrangements include TransCanada Corp. (TSX:TRP), Capital Power PPA Management (TSX:CPX) and the ASTC Power Partnership.

On Monday, Enmax issued a news release saying they have concerns with the accuracy of information in the filing.

“We are very disappointed that the government is retroactively challenging fundamental aspects that have been in place in these agreements since their inception.”

Capital Power Corp. also issued a statement Monday.

“We will exercise every legal avenue at our disposal to ensure that the Government of Alberta honours the terms of the PPAs,” said Capital Power president and CEO Brian Vaasjo.

Capital Power also called into question some of the government’s assertions.

“Today’s announcement by the Government of Alberta claims that the PPA terminations will result in consumers bearing up to $2 billion in costs between now and 2020. This claim is misleading because it is incomplete. Based on available public information, the Balancing Pool can reduce its liability to an estimated $950-million by terminating the PPAs that were recently turned back to them, or to an estimated $635-million by terminating some PPAs, and retaining and managing others.”

Spokesman Mark Cooper said TransCanada has always operated in a fully open and transparent manner and will defend its right to terminate the arrangements.

“We properly exercised our termination rights under provisions in the Power Purchase Arrangements that were clear 16 years ago and that remain clear today,” he said in a statement.

In March, TransCanada and Capital Power both cited the increasing costs of CO2 emissions when serving notice of their intention to terminate their agreements.

Nigel Bankes, chairman of Natural Resources Law at the University of Calgary, said he is surprised by how the amendment was developed and handled by the then Tory government and regulators.

He wondered how officials at the time decided it was in the public interest.

“This amendment is not the sort of clause you would expect to see in any ordinary commercial arrangement because it really did provide an open-ended opportunity for companies to walk away from unprofitable arrangements having taking advantage for many years of very profitable arrangements,” he said.

“The transfer of risk that was going on here was just remarkable and it was just done with a sleight of hand.”

The Progressive Conservatives issued a statement Monday afternoon suggesting the NDP was trying to dodge accountability for its policy decisions.

“This government has a habit of blaming others for the consequences of its own policy decisions – decisions that are costing Alberta taxpayers billions,” interim PC party leader Ric McIver said in a release. “The regulation in question has been a matter of public record and available via the Queen’s Printer for the past 15 years. The government failed to read the contract before triggering this clause with its poor policy decisions.”

Calgary Mayor Naheed Nenshi also criticized the NDP government’s decision to take legal action Monday.

“This suit is outrageous,” Nenshi told reporters Monday evening. “We have this spectacle of the provincial government suing itself because apparently it didn’t know its own policies that have been in place for 15 or 16 years, and that Enmax has been abiding by.”

Watch below: Mayor Naheed Nenshi blasted Alberta’s NDP government on Monday over its decision to take power providers to court over a controversial coal power buying rule. Nenshi suggested the government was “suing itself” because it didn’t know its own policy.

The Wildrose Opposition called the government’s court action “heavy-handed.”

“Today’s announcement to take private companies to court over agreements signed at the turn of the century is extremely short-sighted and will keep billions of dollars of necessary investment away from our province,” Wildrose critic Don MacIntyre said in a news release.

Hoffman said lower electricity prices are why power companies are losing money.

The court action is to be heard in November.

-With files from Global News.

Filed Under: News

Varcoe: Blame game heats up as province heads to court over unprofitable power contracts

July 26, 2016 By Admin

Chris Varcoe, Calgary Herald

Published on: July 26, 2016 | Last Updated: July 26, 2016 5:00 AM MDT

Is the former Progressive Conservative government responsible for a critical electricity decision that could cost Albertans up to $2 billion in higher charges — or is the current NDP government accountable?

Or is anyone to blame in this high-voltage affair?

Ultimately, that question could be decided by an Alberta court after the Notley government started legal action Monday to try to stop utility companies from unloading unprofitable power purchase arrangements (PPAs) on to consumers.

It’s a showdown that’s been brewing for months, but dates back to the Klein government’s deregulation of Alberta’s power market almost two decades ago.

The lawsuit involves a provision contained in the power contracts that the government is now calling “the Enron clause” after the notorious U.S. energy company — and the NDP is fighting to have the clause voided.

“Our government believes that Albertans shouldn’t be on the hook for secret back-room deals that were created between companies like Enron and the previous PC government,” Deputy Premier Sarah Hoffman told a news conference at the legislature.

“We think it is not only unfair to Albertans, it is also unlawful.”

Since the spring, the government has been trying to find a way to prevent the utilities from transferring money-losing PPAs into the lap of a government-created agency, the Balancing Pool.

The agency sells electricity from older generation contracts that weren’t sold at auction when Alberta’s market deregulated in the late 1990s.

It allocates any profits or losses back to consumers on their monthly electricity bills. To date, the pool has returned more than $4.4 billion to Alberta consumers.

Rapidly, however, the profits are turning into losses. Power prices have recently plunged to 20-year lows.

On Dec. 11, Calgary’s power utility Enmax gave notice it was terminating its PPA for the Battle River coal-fired power facility.

It noted the province was increasing Alberta’s carbon tax on heavy greenhouse gas emitters and that the PPA became “unprofitable or more unprofitable” for Enmax.

The power arrangements originally contained an exit clause that allowed for the contract to be terminated if a change in law made the PPAs unprofitable.

But the arrangements were later amended in August 2000 to also include the words “more unprofitable.”

The province claims the change was made at the behest of now-defunct Enron, then a big player in Alberta’s power market.

The province argues no public notice was given or hearings held into the changes made by Alberta’s Energy and Utilities Board at the time, and that the province’s own energy regulator made an amendment “that it was not authorized by law to make,” according to court documents.

The government says it isn’t fair for consumers to have to pay for losses on contracts that were already unprofitable due to market conditions. It notes the buyers collectively made an estimated $11 billion in profit from their PPA operations dating back to last decade.

After Enmax terminated its PPA, the decision was accepted by the Balancing Pool in January — something the province is also contesting.

Other utilities stuck with unprofitable coal-fired PPAs have since joined the stampede and terminated their contracts. However, their cancellations haven’t been accepted by the pool.

In March, a statement by Energy Minister Marg-McCuaig Boyd noted “any change of ownership of the power purchase arrangement will have minimal impact to consumers.”

But stuck with the unprofitable contract, the Balancing Pool has already begun taking steps to brace for the financial meteor heading its way.

Its board of directors approved a strategy this spring to liquidate its $705-million investment portfolio due to the cash requirements tied to the contract terminations.

If the cancellations are upheld, the Balancing Pool will have to cover the shortfall, estimated at up to $2 billion by the time the contracts finally expire in 2020, according to the government.

In essence, the NDP government is blaming the former PC government for being asleep at the switch and not examining the repercussions of the “more unprofitable” clause on Alberta consumers.

Hoffman leaned heavily on inflammatory language at the news conference, using words like “secret clause” and “covert moves” to describe the changes made back in 2000.

“It’s clear there was an intention to have this deal struck secretly between Enron and the then government, and that certainly is not in the public interest, and we’re arguing it’s also unlawful,” she said.

But there’s a counter-point to be made here.

If the NDP hadn’t changed the carbon levy on heavy emitters, it wouldn’t have given companies the opportunity to terminate the contracts in the first place, critics contend.

“It’s a banana republic move,” charged Alberta Party Leader Greg Clark. “They’ve tied themselves in legal knots to try to find some way of un-ringing the bell.”

Enmax added that the government should have known about the implications of its carbon levy. “Enmax’s actions on its PPAs were completely foreseeable, legal and reasonable,” it said in a statement.

In its court filing, the province contends the energy, environment and justice ministers only became aware of the “more unprofitable” clause in a mid-March 2016 meeting with the Balancing Pool.

And so the case is now headed for the courts in November.

Meanwhile, the Balancing Pool has to accept all of the losses of the terminated power contracts until the legal matter is decided.

This messy case may have its roots back in the formative days of power deregulation some 16 years ago, but the issue will have ramifications for consumers in the days ahead with higher surcharges likely added to their power bills.

And the blame game is only getting started.

Chris Varcoe is a Calgary Herald columnist.

[email protected]

Filed Under: News

Fracking may worsen asthma, study says

July 20, 2016 By Admin

19 Jul 2016

Lethbridge Herald

Lindsey Tanner THE ASSOCIATED PRESS – CHICAGO

Fracking may worsen asthma in children and adults who live near sites where the oil and gas drilling method is used, according to an eight-year study in Pennsylvania.

The study found that asthma treatments were as much as four times more common in patients living closer to areas with more or bigger active wells than those living far away.

But the study did not establish that fracking directly caused or worsened asthma. There’s also no way to tell from the study whether asthma patients exposed to fracking fare worse than those exposed to more traditional gas drilling methods or to other industrial activities.

Fracking refers to hydraulic fracturing, a technique for extracting oil and gas by injecting water, sand and chemicals into wells at high pressure to crack rock. Environmental effects include exhaust, dust and noise from heavy truck traffic transporting water and other materials, and from drilling rigs and compressors. Fracking and improved drilling methods led to a boom in production of oil and gas in several U.S. states, including Pennsylvania, North Dakota, Oklahoma, Texas and Colorado.

Johns Hopkins University researcher Sara Rasmussen, the study’s lead author, said pollution and stress from the noise caused by fracking might explain the results. But the authors emphasized that the study doesn’t prove what caused patients’ symptoms.

More than 25 million U.S. adults and children have asthma, a disease that narrows airways in the lungs. Symptoms include wheezing, breathing difficulties and chest tightness, and they can sometimes flare up with exposure to dust, air pollution and stress.

Previous research has found heavy air pollution in areas where oil and gas drilling is booming.

The new study was published Monday in JAMA Internal Medicine.

The researchers noted that between 2005 and 2012, more than 6,200 fracking wells were drilled in Pennsylvania. They used electronic health records to identify almost 36,000 asthma patients treated during that time in the Geisinger Health System, which covers more than 40 counties in Pennsylvania. Evidence of asthma attacks included new prescriptions for steroid medicines, emergency-room treatment for asthma and asthma hospitalizations.

During the study, there were more than 20,000 new oral steroid prescriptions ordered, almost 5,000 asthma hospitalizations and almost 2,000 ER asthma visits.

Those outcomes were 50 per cent to four times more common in asthma patients living closer to areas with more or bigger active wells than among those living far away.

The highest risk for asthma attacks occurred in people living a median of about 12 miles from drilled wells. The lowest risk was for people living a median of about 40 miles away.

Dr. Norman H. Edelman, senior scientific adviser for the American Lung Association, called the study “interesting and provocative.” But he said it only shows an association between fracking and asthma, not a “cause and effect,” and that more rigorous research is needed.

Filed Under: News

County faces lawsuit due to tax

July 15, 2016 By Admin

Posted on July 12, 2016
By Stan Ashbee
Sunny South News

A group of feedlot operators and supporters from the Lethbridge County area are using the courts to try and get a judge to make a ruling the new county Funding Our Future tax bylaws are invalid through a recent lawsuit.
“It was delivered to the courts June 18,” said Rick Paskal, from Van Raay Paskal Farms near Picture Butte. Paskal is one of the litigants in the law suit.
It was announced earlier this year, new county taxes were on the way for livestock operations, after Lethbridge County passed second and third reading of three bylaws at a regular meeting held Apr. 21.
The Business Tax Bylaw, Special Tax Bylaw and Community Aggregate Payment Levy became a reality, after tedious deliberations and public consultation.
As for the Business Tax Bylaw, the 2016 county budget includes $1.6 million for road construction, $1.4 million for bridge replacement/repair and $500,000 for hardtop surfaces, which will be placed in a capital reserve for a future hardtop project.
According to a report submitted to county council for consideration, the phased in approach to Funding Our Future, which includes the business tax bylaw, special tax bylaw and community aggregate levy bylaw will result in a total of $850,000 less in revenue in 2016, as the county moves forward to fund maintenance and reconstruction of the county’s Market Access Network, which includes 2,000 kilometres of roads and 167 bridges. The county, according to a report, needs to collect over $3 million annually to invest in this network starting in 2016.
Funding Option 4 is based on a two-year phase-in approach of Option 1 with 75 per cent of revenue from the business tax and special tax in 2016 and increased to 100 per cent in 2017. Option 1, the report stated, reflects calculations based on the economic impact method resulting in $925,740 or 26 per cent of revenue generated from special tax and $2,474,260 or 71 per cent from the intensive livestock industry through a business tax. The report stated the 2016 tax rate in Option 4 is $3 per animal unit and a 2016 revenue of $1,855,695.
What the group of litigants and supporters are concerned about, Paskal noted, is the county elevating the tax level to an area where feedlot operators will be in a very uncompetitive position with other jurisdictions.
There’s two sides of the equation, Paskal explained — there’s a revenue side.
“The county is requesting more dollars for revenue, and we’re rather supportive of the county on lobbying the provincial government and the federal government for proper allocation of fuel taxes. We’re already paying a bunch of tax. A 25,000-head feedlot pays about $125,000 a year in fuel tax plus our regular property assessment that everybody gets assessed in the county,” Paskal said.
According to Paskal, by the county enacting this law, they allegedly have the power on their own to increase tax to whoever, whenever to balance their budget.
“They already published the tax is going to be higher next year and they wish they would have started it at $7 a head. They have a mandate to balance their budget by revenue only,” Paskal said.
What the group’s issue was right from day one — Paskal noted, is what about expenditures? What about the county’s handling of ratepayers’ dollars?
Before the group launched the lawsuit, Paskal added, it could see the county’s spending is, in the group’s opinion, totally out of control.
“The money they are wasting here today, they’ve told county residents the roads are in bad condition. The roads are not in bad condition, they’re taking perfectly good roads rebuilt seven years ago and spending $100,000 a mile to redo these roads again. It’s just a total waste of taxpayers’ dollars,” he said.
Council does not run the county, he noted — management runs the county, in Paskal’s opinion. “That’s a real problem here,” he added.
Lethbridge County Councillors and staff have been advised not to speak about matters currently before the courts, it was reported.

Filed Under: News

County tax fight goes to court – FEEDLOT OPERATORS SAY THEY’RE FED UP

July 15, 2016 By Admin

14 Jul 2016

Lethbridge Herald

Stan Ashbee

SOUTHERN ALBERTA NEWSPAPERS

A group of feedlot operators and supporters from the Lethbridge County area are using the courts to try to get a judge to make a ruling the new county Funding Our Future tax bylaws are invalid.

“It was delivered to the courts June 18,” said Rick Paskal, from Van Raay Paskal Farms near Picture Butte. Paskal is one of the litigants in the lawsuit.

It was announced earlier this year that new county taxes were on the way for livestock operations, with the Business Tax Bylaw, Special Tax Bylaw and the Community Aggregate Payment Levy.

The 2016 county budget includes $1.6 million for road construction, $1.4 million for bridge replacement/repair and $500,000 for hardtop surfaces, which will be placed in a capital reserve for a future hardtop project.

According to a report submitted to county council for consideration, the phased in approach to Funding Our Future, which includes the business tax bylaw, special tax bylaw and community aggregate levy bylaw, will result in a total of $850,000 less in revenue in 2016.

The county is trying to fund maintenance and reconstruction of its Market Access Network, which includes 2,000 kilometres of roads and 167 bridges. The county, according to a report, needs to collect more than $3 million annually to invest in this network, starting in 2016.

Funding Option 4 is based on a twoyear phase-in approach of Option 1 with 75 per cent of revenue from the business tax and special tax in 2016 and increased to 100 per cent in 2017. Option 1, the report stated, reflects calculations based on the economic impact method resulting in $925,740 or 26 per cent of revenue generated from special tax and $2,474,260 or 71 per cent from the intensive livestock industry through a business tax.

What the group of litigants and supporters are concerned about, Paskal noted, is the county elevating the tax level to an area where feedlot operators will be in a very uncompetitive position with other jurisdictions.

There’s two sides of the equation, Paskal explained — there’s a revenue side.

“The county is requesting more dollars for revenue, and we’re rather supportive of the county on lobbying the provincial government and the federal government for proper allocation of fuel taxes,” he said.

“We’re already paying a bunch of tax. A 25,000-head feedlot pays about $125,000 a year in fuel tax plus our regular property assessment that everybody gets assessed in the county.”

According to Paskal, by the county enacting this law, they allegedly have the power on their own to increase tax to whoever, whenever to balance their budget.

“They already published the tax is going to be higher next year and they wish they would have started it at $7 a head. They have a mandate to balance their budget by revenue only,” Paskal said.

What the group’s issue was from day one, Paskal noted, is what about expenditures? What about the county’s handling of ratepayers’ dollars? Before the group launched the lawsuit, Paskal added, it could see the county’s spending is, in the group’s opinion, totally out of control.

“The money they are wasting here today, they’ve told county residents the roads are in bad condition,” he said. “The roads are not in bad condition, they’re taking perfectly good roads rebuilt seven years ago and spending $100,000 a mile to redo these roads again. It’s just a total waste of taxpayers’ dollars.”

Council does not run the county, he noted — management runs the county, in Paskal’s opinion. “That’s a real problem here,” he added.

Lethbridge County Councillors and staff have been advised not to speak about matters currently before the courts.

Filed Under: News

Landowners losing on leases

May 14, 2016 By Admin

Farmers should refuse to accept lower lease payments from oil companies, says advocacy group

There was $1,200 missing from the lease fee cheque Verna Phippen received this year from the energy company that has leases on her land.

The Pigeon Lake, Alta., landowner filed a claim with the Alberta Surface Rights Board to obtain the balance of the fee owed according to her lease agreement, but she isn’t holding her breath for a quick payment.

“I know of people that have been waiting a couple years and have yet to get their cheque even though the Surface Rights Board has recommended to the minister (of finance) that they be paid out of general revenues,” said Phippen.

Her situation may become commonplace, as the beleaguered Alberta oil and gas industry seeks to cut costs amid a pricing slump that is affecting almost all sectors of the economy.

More than one energy company has asked farmers to accept reduced lease payments, which are designed to compensate them for adverse effect on their land and inconvenience resulting from the presence of wells and pipelines on their property.

They should refuse those requests, said Ronald Huvenaars, a farmer from Hays, Alta., who is chair of Action Surface Rights (ASR), an advocacy group formed to help landowners deal with energy companies.

“Don’t sign,” said Huvenaars.

“If you sign that for a reduced rate and this company happens to go bankrupt, in the next year or so, if you want to apply to the Surface Rights Board to get your lease payment, the lease payment will only be for the new re-negotiated price.

“Basically you’re committing yourself to a lower amount from that day on, until you can renegotiate a higher price again.”

Huvenaars said he has not been asked to accept a lower rate on his leases but knows of other landowners who have been approached to do so.

“They’re sending out letters saying ‘due to the problems in the industry, we feel we want you to cut your lease rates.’ A lot of them are saying in half.

“It’s to share the pain, I guess, is how their letters go. Everybody’s just trying to find a place to save some funds. Some of the companies are finding all kinds of interesting federal legislation to try to get out of leases.”

However, Huvenaars points out energy companies didn’t offer to increase lease payments when oil prices were high. Rates are written in contracts.

Daryl Bennett, an ASR director and vice-president with My Landman Group, said he has been helping farmers deal with requests for reduced lease payments, some of them seeking a 50 or 60 percent reduction.

“In those cases we just send them a letter saying we are applying to the Surface Rights Board and they have 30 days to pay the remainder of the amount or we’ll apply to the board and then they can have the privilege of paying for representation costs for the landowner,” said Bennett.

“Usually the company will back off because they’ll have to pay far more than that in legal costs to go before the board.”

In some cases, energy companies have offered to pay farmers a lump sum for wells they say are close to reclamation. However, if that reclamation doesn’t take place, the landowner will have forfeited the lease payments.

“That’s a common tactic, for companies to promise reclamation, but they don’t have the money to reclaim a lot of these wells. They’re just trying to get rid of their obligation to pay the rental,” said Bennett.

“We’re simply telling landowners that if you have a producing well on your land, and the company is just telling you they’re reducing the rents, don’t stand for it.”

Energy company bankruptcy is already a fact of life in the sector. In 2015, 20 Canadian oil and gas exploration companies went into receivership, according to Sayer Energy Advisors, a company involved in energy industry acquisitions and mergers. It said in its winter 2016 newsletter that it expected more to fold in 2016.

Bennett said the ASR group is waiting for a response to its submission to the finance department, asking if it will cover landowners’ legal costs to recoup full lease payments and whether the government is in turn calling energy companies to account.

“We do not think the minister of finance is trying to recoup money from existing operators who refuse to pay and to us, that’s a dereliction of duty. They should be doing that,” Bennett said.

Huvenaars wonders if the situation will worsen as energy companies pull out the stops to save money and survive until oil prices improve.

“One of my fears is that it becomes a bit of a vicious circle when a few companies start trying to do some of these things. We have companies that respect their commitments. But everybody is competitive … and when your competitors are starting to try to walk away from things … it almost forces other companies to start working at doing the same thing.”

Alberta’s Farmers Advocate Office (FAO) issued an advisory about energy companies’ efforts to reduce their payments.

“The amount provided for annual rental is based on a landowner’s Adverse Effect and Loss of Use, not the state of the industry,” the FAO said.

“A company cannot unilaterally decide to reduce the amount of compensation provided to a landowner. Section 27 (6) of the Surface Rights Act entitles landowners to the opportunity to negotiate with industry in good faith.

“A landowner is under no obligation to accommodate the changing financial circumstances of a company.”

The FAO further stated that landowners can seek compensation for unpaid or reduced rents through the SRB, and cashing a cheque from an energy company does not necessarily imply acceptance of the amount.

Filed Under: News

Can landowners sell their leases with energy companies?

May 14, 2016 By Admin

An investment company interested in buying energy company leases from landowners got the attention of Verna Phippen of Pigeon Lake, Alta.

She has several leases on her land and would like to be relieved of the dealings she said have become a headache. Trouble is, she isn’t sure about the long-term implications or even the legality of making such a deal.

“There’s a lot of hydrocarbons under my land so I get bombarded by the oil and gas industry on a constant basis,” said Phippen.

“I’m one of those landowners that, every time they file to get a license, I file an objection with the regulator. I would love nothing more than to get rid of these guys and have someone else deal with them.”

Surface Capital is offering to buy energy leases from farmers to amass a portfolio for shareholder investment. As reported in the April 4 issue of The Western Producer, it estimates there are 700,000 oil leases in Saskatchewan and Alberta that could be worth $10 billion.

With the drastic reduction in oil prices in the past two years, some energy companies are in default of lease payments or have gone bankrupt and abandoned wells. Some of those wells can still be productive, while others will require reclamation.

Karen Johnson, Alberta’s Property Rights Advocate, said April 28 that her office is aware of Surface Capital’s general plan but has not seen a copy of any proposed agreement.

She said it is not the advocate’s role to comment on whether this or any agreement is legal, but rather to assess property rights situations “and then determine if there’s any recommended changes to property rights laws or processes that I can make to government.”

Phippen wonders how a third party such as Surface Capital could claim loss of use and adverse effect on her land. Such loss is the basis for lease payments by energy companies to land owners.

“They do not own land, nor do they occupy it. All they have is my former revenue stream, which the grantee may cut them off of because I had loss of use and adverse effect as the landowner, but the enterprise does not,” Phippen wrote in an email.

The Alberta Farmer’s Advocate Office (FAO) recently issued a warning to landowners about selling leases. It said the Surface Rights Board is a recourse for landowners in cases where an energy company becomes insolvent or refuses to pay lease fees.

“To imply that no recourse for unpaid rentals is available is a misleading approach that capitalizes on landowner fears,” the FAO said.

Value provided is also an issue.

“At this point, the FAO has not confirmed what payout is being offered to landowners in exchange for their surface rights. Since a landowner has a right to be paid in full until the reclamation is complete, assigning the annual compensation to a third party in perpetuity may prevent a landowner from receiving full value in return for the impacts they experience during the lifetime of the development.”

There may also be tax implications and effects on the marketability of the property.

Filed Under: News

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