Group says Alberta coal-fired power plant approval rushed to beat climate rules

EDMONTON – An environmental group filing a court challenge over the approval of a coal-fired power plant in northern Alberta says the provincial regulator deliberately rushed the go-ahead to help the company avoid new federal rules on carbon emissions.

“This was clearly done on an expedited basis to assist (Maxim Power) in avoiding these proposed federal greenhouse gas regulations,” said lawyer Barry Robinson, who is representing the Pembina Institute in the request for permission to appeal the decision.

“How can it be in the public interest to assist the company to avoid greenhouse gas regulations that were passed in the public interest?”

Pembina plans to argue the commission, by failing to call a hearing on power plant, didn’t consider all the evidence before granting approval.

Maxim CEO John Bobenic declined comment Tuesday because the matter is before the courts.

But commission spokesman Jim Law said there was nothing unusual in the approval.

“The hearing was not required and we processed the application for approval. The timing of the interim decision reflected in part the request from Maxim,” Law said.

“All other things being equal, there was no reason we wouldn’t issue a decision by that date if we could. And we could, so we did.”

Earlier this summer, the Alberta Utilities Commission granted an interim approval to Calgary-based Maxim Power (TSX:MXG) to build a 500-megawatt coal-fired expansion to its Milner generating plant near its mine near Grande Cache, Alta.

With nobody in the immediate vicinity of the proposal stepping forward to ask for a hearing on the project, none was called. The Pembina Institute, which does policy research on climate change and energy issues, was not granted standing, despite having intervened in other hearings.

Such standing is usually only granted to those whose property rights are immediately affected by a proposal, Law said.

“Pembina is not directly affected by the decision and they don’t represent anyone living near the site.”

However, the approval came after a letter to the commission from Maxim, in which company lawyers asked for a quick approval.

“A recent development that is of extreme concern to Maxim is the proposed federal carbon legislation announced to industry by (Environment Minister Peter) Kent,” the letter said.

“Maxim has consulted with the minister on this new legislation and understands that the Milner expansion will be considered an existing plant if it is commissioned by July 1, 2015 … Maxim requires an approval from (the commission) as soon as possible and no later than June 30, 2011, in order to qualify as an existing plant under this new federal legislation.”

Maxim’s letter said having to abide by the federal legislation would likely kill the $1.7-billion Milner expansion, which would emit about three million tonnes of greenhouse gases a year – roughly twice the carbon dioxide of an equivalent natural-gas-fired plant.

The interim approval was granted June 30. It includes provision for further conditions in a final approval.

Kent’s office has not confirmed the assurances Maxim’s lawyers outlined. His office did not return calls Tuesday seeking comment.

Chris Severson-Baker of the Pembina Institute pointed out that Kent’s predecessor, Jim Prentice, specifically promised to prevent new coal-fired plants from trying to squeeze in before the new regulations.

“We will guard against any rush to build non-compliant coal plants in the interim,” Prentice said last summer.

The Alberta commission’s interim approval directly undercuts the federal plan, said Severson-Baker.

“If the Alberta Utilities Commission decision stands, this would be a direct challenge to those regulations,” he said. “It undermines the federal regulations that the federal government has announced.

“What we would like to see would be to have this project comply with the new federal regulations or not go ahead at all.”

The regulations have been announced but not yet enacted. They stipulate that new power plants must have greenhouse gas emissions that are no worse than natural gas generation. They also rule out the purchase of carbon offsets to meet that goal.

“You actually have to meet that performance standard within your facility,” said Andrew Leach, a professor of energy economics at the University of Alberta.

Leach, who has blogged extensively on the Maxim approval, said the new rules push companies away from using coal to generate electricity, or force them to build coal-fired plants with expensive new technologies such as carbon capture and storage (CCS).

“You’re not going to build coal with CCS to sell into the private power market unless you have a government deal,” said Leach.

Law said the commission has to rule on the basis of regulations already in hand.

“We don’t deal hypothetical regulations,” he said.