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NDP moves to end secret Klein-era scheme to offload corporate losses on the public

Sarah Hoffman

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No one should be surprised that as its final decade approached, Alberta's Progressive Conservative government cut a secret and illegal deal with a small group of electricity marketing companies to let them leave the province's consumers holding the bag for billions of dollars in the event the dice ever failed to roll their way.

Indeed, no one is very surprised, as you can tell from reading between the lines of the oh-so-cautious mainstream media coverage of the NDP Government's lawsuit, launched in the Alberta Court of Queen's Bench yesterday, to invalidate a secretly negotiated clause in Tory-passed legislation that allowed corporations to offload business losses in the electricity market onto the public.

"Our government believes Albertans should not be on the hook for secret backroom deals that were created between companies like Enron and the previous PC Government," said Deputy Premier Sarah Hoffman, who is the NDP Cabinet's point person on this issue. "We think it's not only unfair to Albertans, it's also unlawful."

Anyone who was paying attention to how crony capitalism operated in oligarchical Tory Alberta may be appalled, but certainly not shocked, by the workings of this scheme. This kind of thing was standard operating procedure back when conservatives ran this place, and you can place a bet on it there's more to come.

So while it may be unusual for a government to sue to challenge the activities of one of its own agencies, as a University of Calgary law professor interviewed by the Calgary Herald conceded yesterday, it's "not a bad argument."

The details are complicated -- just the kind of news story that makes readers' eyes glaze over and their attention wander. Which is what conservative governments count on when they cook up this stuff.

In a nutshell, the Tories intentionally snuck a loophole into their legislation "deregulating" electricity sales that allowed companies buying electricity from generators and reselling it in the "market" to walk away if a change in the law made their activities unprofitable. This was done in secret, naturally, passed by a discreet cabinet order.

The effect was to leave consumers carrying the risks of the system of casino capitalism desired by the government's pals and funders. Unsurprisingly, all this happened back in 2000 when the beloved Ralph Klein, supposed slayer of the provincial deficit, was Conservative premier of Alberta.

What fun! If the roulette wheel spins to the right colour and number, the corporate bosses get to keep all the chips. If it lands on the wrong combination, and they lose big, no worries! They still got to keep all the chips.

The Klein Government -- again, unsurprisingly -- lied to us at the time and said they were transferring risk to the private sector when in fact they were transferring risk away from corporations and onto the public. Remember that every time you hear a complicated explanation for a how a so-called public-private partnership, or P3, is in your interest as a taxpayer. Same scam; different details.

The fact that Enron Corp. -- the disgraced U.S. company that turned out to be a financial house of cards -- lobbied for such schemes gave the NDP a memorable way to try to ensure this scandal sticks in the public's mind for what it really is. At the end of 2001, after it was revealed its reputed profits were sustained by "institutionalized, systematic, and creatively planned accounting fraud," New York-based Enron went into bankruptcy. The company had ceased to exist by 2007.

Like a lot of Klein's conniving, it took a long time for the chickens to come home to roost. But after 16 years and about $10-billion in profits, now that the market for electricity has turned down as part of the general economic situation, corporations got ready to use their secret golden parachute to bail out of their no longer automatically profitable deals.

The government's lawyer said he will argue Klein’s government lacked the legal authority to make the secret deal -- which Hoffman said could now cost Alberta electricity consumers $2 billion. Therefore, the government will argue, the clause is void. It is seeking a court order quashing a recent order of the Klein-era regulatory authority to let Calgary-based Enmax Corp. pass off a money-losing contract to consumers.

Corporate heads are spinning, of course. Never in their wildest nightmares did they imagine common sense and the interests of citizens would prevail in electricity sales casino!

The Opposition reaction yesterday was poor, to say the least.

Don MacIntyre, Wildrose electricity and renewables critic, tried gamely to make the case this sort of thing would scare investment away from Alberta. 

"The NDP is asking the courts to turn back time," he huffed to the CBC. Actually, you could make a case they're trying to turn back crime, political crime anyway, and will save taxpayers billions of dollars.

Ric McIver, hapless interim leader of the PCs, the party that came up with this rotten deal, tried to put it back on the NDP, arguing laughably it's the NDP who are trying to pin their mistake on someone else. I don't know about you, but I missed the part when the NDP was in power in 2000.

This is almost as silly as last week's Wildrose news release demanding that the NDP stop hurting Brad Wall's fist with its face.

Seriously, I'm not making this up! When Premier Rachel Notley finally crisply responded to the umpteenth drive-by slagging of her government by Saskatchewan's ill-tempered premier, the Wildrosers were immediately on her case. The headline on their press release read: "Notley needs to stop tearing down Alberta's relationship with Saskatchewan."

Makes you wonder just whose side they're on, anyway? Oh, wait. We already know the answer to that one, don't we?

This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

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