Windstream claims $478m in lost profits from Ontario

Developer explored "every option" to progress 300MW project

Windstream Energy says it wants C$475m (US$478m) in damages because the Canadian provincial government of Ontario’s moratorium on offshore wind farms has made it impossible to develop a 300MW project in Lake Ontario waters.

The company, which has feed-in tariff (FiT) contract with Ontario for its Wolfe Island Shoals project, has announced its intent to file a claim under the North American Free Trade Agreement (NAFTA) for lost profits.

Windstream is pursuing litigation after exploring "every alternative option," according to spokesperson Randi Rahamim. The company hopes that filing the notice of intent "will encourage the government to mitigate the damage they have done and let Windstream move forward with the project," she added, speaking with Windpower Offshore.

A FiT contract in May 2010 was awarded to the Wolfe Island Shoals project, well before the provincial government slapped a moratorium on offshore wind development in February 2011. Announcing the moratorium, the province said further study on potential health and environmental impacts of offshore turbines was needed. It has not said when, or if, the moratorium might be lifted.

Windstream, which is owned by a New York-based private investment group that Rahamim would not name, argues that the ban has deprived the company of the value of its FiT contract and left it vulnerable to losing its right to develop the project.   

The government’s actions amount to "unlawful expropriation" under NAFTA, argues Windstream. The NAFTA treaty prevents expropriating the investments of US investors in Canada, unless it is done for a public purpose, with due process and the investor is paid fair market value in compensation.        

Despite the moratorium, Windstream’s notice explains that it has complied with its FiT contract, by depositing a C$6 million letter of credit with the Ontario Power Authority and entering onto a binding turbine supply agreement with Siemens Canada, worth more than C$600m.

Windstream says it has also proposed a number of avenues for moving its investment forward since the moratorium was imposed. The company approached the government about proceeding with Wolfe Island Shoals as a research project, and has yet to receive a response. In addition, its proposal that the offshore FiT contract be replaced with contracts for onshore wind or solar projects have been rejected.

Ontario’s energy ministry has declined to respond to Windstream’s claims. "As this relates to potential trade litigation, we cannot comment at this time," said a spokesperson. Meanwhile, Bill Thompson, co-ordinator of Blue Green Canada, says his alliance of environmental and labour organisations has been working to see the moratorium lifted and hopes Windstream’s actions turn up the heat on the province.

"If that’s what it takes to begin to shake loose the Ontario government, more power to them. But it is shame that it’s come to this." However, Thompson is also concerned the government may use litigation as an excuse to reject offshore wind more definitively. "There is concern that this could become a reason for the government to walk away."

Windstream’s notice is the latest in a series of challenges to the Ontario government’s policy reversal on offshore wind development and to green energy policies more broadly. Last month, Ontario’s Superior Court of Justice struck down a C$2.3bn damage claim from Trillium Wind Power over a blocked 420MW offshore wind project. Trillium mounted an appeal of the court ruling last month. Unlike Windstream, Trillium did not have a FiT contract for its project at the time the government imposed its moratorium. The World Trade Organization is also expected to rule soon on a complaint from Japan and the European Union that the local content provisions of the province’s renewable energy FiT programme are discriminatory.