Ontario's controversial green energy policy is facing a new assault as famed oilman tycoon T. Boone Pickens has launched a $775-million NAFTA challenge alleging the government has discriminated against his privately owned wind energy company.
With the Dallas-based Mesa Power Group's action, the Liberal government is now fighting multi-front battles over its Green Energy Act and the feed-in tariff that pays renewable energy companies premium prices for electricity – so long as they procure a percentage of the goods and services in the province.
Ontario Conservative Leader Tim Hudak has vowed to kill the Green Energy Act if his party wins the October election, while Japan has challenged the act's local procurement rules at the World Trade Organization.
On Thursday, Mesa filed a notice of intent to launch challenge under the North American Free Trade Agreement, claiming the Ontario government arbitrarily changed a policy that designated which wind companies would get access to critical transmission hookups.
"This case is about unfairness, the abuse of power and process, and undue political influence in the regulations of renewable power in Ontario," the company said in a notice filed with the federal government on Thursday.
Famed for his high-profile corporate battles in the oil industry a generation ago, Mr. Pickens has more received turned to natural gas and renewable energy, and has lobbied hard for a U.S. strategy that would reduce American dependence on imported oil.
He founded Mesa in 2007 to build wind projects across North America, and is pursuing four projects in southwestern Ontario with total capacity of 465 megawatts.
In a statement, Energy Minister Brad Duguid defended the province's approach to renewable power, which is managed by the Ontario Power Authority.
"Ontario is a global leader in clean energy development and has attracted Ontario-based and international companies to set up shop," he said. "Our plan is creating thousands of jobs across Ontario and helping bring on new clean energy as we replace coal-fired generation."
He rejected the Mesa complaint that it had been unfairly treated.
"The Ontario Power Authority runs an open, fair, and transparent process to award clean energy contracts under the feed-in-tariff program, " he said, "and all companies are treated equally with the same opportunities to participate, regardless of whether they are Ontario-based or internationally-based."
Mr. Duguid got some welcome support this week for the province's Green Energy Act from a prominent American analyst, John Podesta, who has advised President Barack Obama, was chief of staff to former president Bill Clinton, and founded the Washington-based think tank, Center for American Progress.
Mr. Podesta said the Liberal policy has made Ontario a global leader in clean-energy technology and it would be a mistake to kill it.
Mesa had high praise for the provincial program last December, when two of its proposed projects near Lake Huron received a high rating from the Ontario Power Authority, and the Texas company believed it was in line to received coveted access to the transmission system.
Access to the grid is a major hurdle for wind developers because their projects are typically built in the windiest spots, usually far from transmission lines.
In its complaint, it said the province had not been clear in its formula for ranking the projects, and that Mesa was able to "meet or exceed the terms of others who were ranked higher" in the December round.
In June, Minister Duguid ordered the OPA to amend its process for evaluating projects, a move Mesa claims allowed a domestic company, Boulevard Associates Canada Inc., to "jump to the front of the priority line" for transmission access.
Under NAFTA rules, foreign investors can sue the federal government if provinces discriminate against them. Provinces can have local content rules for their own procurement programs, but both Mesa and the Government of Japan argue the electricity contracts do not count as provincial procurement.
"Provinces are not directly bound [by trade agreements]but Canada is bound and Canada can be found to be in violation of its trade obligations as a result of actions by the province," said trade lawyer Lawrence Herman with Toronto-based Cassels Brock & Blackwell LLP .
Canada is now negotiating a free trade agreement with Europe in which the Europeans are seeking to have the provinces directly commit to unfettered access to their procurement contracts for European firms.
This article has been corrected from an earlier version.