Wind turbines are pictured near Grand Valley Ontario. Windstream Energy LLC, the company that recently won $25-million in damages from a NAFTA tribunal because its offshore wind farm was cancelled by the Ontario government, says it still wants to go ahead with the project.Glenn Lowson/The Globe and Mail
Windstream Energy LLC, the company that recently won $25-million in damages from a NAFTA tribunal because its offshore wind farm was cancelled by the Ontario government, says it still wants to go ahead with the project.
The proposed 100-turbine wind farm, planned for five kilometres off Kingston in Lake Ontario, is still viable and "we are prepared to go forward with this project," Windstream director David Mars said in an interview Thursday. Indeed it would be more financially viable than it was when first proposed several years ago because offshore wind technology has improved, he said.
At the end of September, a panel convened by the Netherlands-based Permanent Court of Arbitration awarded $25.2-million in damages and almost $3-million in legal costs to Windstream, saying the province broke rules under the North American free-trade agreement when it put a moratorium on offshore wind developments in February, 2011, effectively scuttling the Windstream project.
The case pitted New York-based Windstream against the Government of Canada, rather than Ontario, because under the NAFTA process Ottawa is considered to be responsible for the actions of the provinces. The claim, filed under the "Chapter 11" investor protection sections of NAFTA, asked for $568-million in damages.
The full text of the ruling has not yet been released, because both parties are given a chance to make revisions to the public version. Windstream said it made no cuts, but the federal government can also request that certain information remain private.
Windstream has said that the tribunal ruling makes it clear that the contract it signed with the province is still in force, and has not been unilaterally terminated by the government.
"We have a contract here, and contracts don't go away," Mr. Mars said, even though the moratorium on offshore wind is still in effect. Windstream is ready to meet its obligations under that contract, he said, but "if the government of Ontario has a different point of view we are absolutely willing to sit down with them and resolve this in an amicable fashion." Windstream has not talked to the ministry of energy since 2011, he said.
Mr. Mars said his company still has suppliers lined up who can provide the material for the Lake Ontario project, including the large offshore turbines. The price of those turbines has fallen substantially in the past few years and they have become more efficient, so the project would likely generate more revenue than initially planned, he said.
A spokesperson for Ontario's energy ministry said the government still believes the decision to put a moratorium on offshore wind was correct, and it is continuing to take a "cautious approach to offshore wind, which includes finalizing research into decommissioning requirements and sound propagation over water, to make sure that any potential future proposals can be developed in a way that is protective of both human health and the environment." The government also noted that the tribunal dismissed "the majority" of Windstream's claims.
Last month, Ontario cancelled a procurement process for a new round of land-based renewable energy projects, saying it didn't need the power and it wanted to cut electricity bills in the province. It said it would honour contracts signed in earlier rounds of procurement, but the status of Windstream's project is unclear because of the offshore moratorium.
Mr. Mars said that if the government tries to "walk away" from the contract, it could damage its reputation among investors. "We have been investors in a number of different energy projects around the world, and we have never had this situation happen to us. We never wound up in litigation. To be frank, we never thought Ontario would be a risky government to be working with."
Mr. Mars said that Windstream has not built any other offshore wind projects, but related companies have constructed offshore drill rigs in a number of locations, he said.