The outlook for M&A activity in the Canadian power sector is positive, according to participants in a panel discussion at the Canadian Power Finance Conference on January 25th. Factors cited by the panel, which was moderated by Lewis Smith of Stikeman Elliott's Toronto office, included:
Continue Reading...Shell Canada Limited has been awarded exploration rights by the Canada-Nova Scotia Offshore Petroleum Board on four parcels of offshore lands located approximately 200 kilometers off the southwest shore of Nova Scotia. The area is largely unexplored, but recent geological work funded by the Province of Nova Scotia indicates it has significant oil and gas potential. Government officials have credited this work, the results of which were publicly released, with creating renewed interest in offshore exploration in the region. The Shell Canada initiative will be the first major exploration project in the province in ten years.
Shell Canada’s bid commits it to spend a total of $970 million on exploration activities during the first six years of its nine year licence. These expenditure bids are the highest ever received by CNSOPB. A deposit of 25 percent of the bid amount will be required to secure Shell’s commitment.
The awards were based solely on the amount of money committed to exploration of each parcel. Bidders were required to demonstrate experience drilling deep-water exploration wells in the last ten years. Four other parcels included in the process received no bids.
CNSOPB’s next call for bids will be issued in May 2012. Industry members may nominate parcels to be included in this round until March 16, 2012.
On January 18, 2012, the U.S. State Department recommended to President Obama that the Presidential Permit for TransCanada Corp.’s Keystone XL pipeline be denied. President Obama concurred with this recommendation, which according to a State Department spokesperson was “predicated on the fact that the Department does not have sufficient time to obtain the information necessary to assess whether the project, in its current state, is in the national interest”.
The State Department’s reference to the time constraint refers to the Temporary Payroll Tax Cut Continuation Act of 2011 (“Act“), passed by Congress and signed by President Obama on December 23, 2011. Subsection 501(a) of the Act provided that the President had 60 days from the enactment of the Act to issue a Presidential Permit for the Keystone XL pipeline. Under Subsection 501(b), the President did not have to issue the Presidential Permit if he determined that Keystone XL was not in the national interest.
Had the Presidential Permit been granted under Subsection 501(a), Subsection 501(d) would have required the Permit to provide for a reconsideration of the route of Keystone XL within the State of Nebraska, and to provide a review period for the new route. Keystone XL’s route through Nebraska has been a controversial issue due to its location relative to the heavily-utilized Ogallala aquifer.
On November 14, 2011, TransCanada entered an agreement with the State of Nebraska to amend Keystone XL’s route to bypass the Sandhills region that sits atop the Ogallala aquifer. That development followed the State Department’s ruling that required TransCanada to examine new routes, and President Obama’s announcement indicating that his decision would be delayed until after the 2012 Presidential elections.
Following President Obama's announcement, TransCanada stated that it intended to re-apply for a Presidential Permit and expected the new application to be processed in an expedited manner.
Former Supreme Court of Canada Justice Ian Binnie once remarked on the role of expert witnesses that “the courtroom … is a poor school house and dueling experts may make bad teachers”.
The Ontario Energy Board (OEB) apparently sympathizes, having become one of the first administrative tribunals in Canada to introduce rules for expert witness “hot-tubbing”. Hot-tubbing (less colloquially, termed “concurrent evidence”) entails competing expert witnesses testifying together and being jointly questioned by the judge/tribunal, counsel and sometimes each other.
Continue Reading...James Klein and Annie Pyke -
On January 4, 2012, Ontario amended O. Reg. 282/98 under the Assessment Act to provide new rules with respect to the assessment of property taxes on renewable energy installations. These amendments apply to facilities that generate electricity using solar energy, wind energy or anaerobic digestion of organic matter. The amendments differentiate between rooftop and ground solar installations, as well as between entities whose primary business is the generation, transmission or distribution of electricity (corporate power producers) and persons who are not ordinarily in the business of electricity generation (ancillary producers).
For rooftop solar installations the amendments provide that the assessment and tax classification of property will not change due to the addition of a renewable energy installation on the rooftop of a building. For ground-mounted installations, the property tax treatment will depend upon the size and location of the facility as well as who is conducting the generation. Corporate power producers will be taxed at the industrial rate, regardless of the size of the facility. With respect to ancillary producers, no changes were made with respect to ancillary producers up to 10 kW. Ancillary producers of greater than 10 kW of solar or wind energy will be taxed at the surrounding land use rate for up to 500 kW and then at the industrial rate for the proportion over 500 kW. On-farm anaerobic digesters over 10 kW, which are operated by farmers, will be taxed at the surrounding land use rate regardless of size. These amendments took effect as of January 1, 2011.
At the Stikeman Elliot energy blog, we decided to get into the spirit of the season and compile our own list of the top 5 Canadian energy stories of the year.
5.GHGs and Cap-and-Trade
There continued to be developments in the regulation of greenhouse gases (GHGs) across the country and globally in 2011. From January to March, Manitoba sought public comment on a proposed cap-and-trade system for GHGs following the Western Climate Initiative (WCI) framework, and in October, Quebec published draft harmonizing regulations in accordance with its WCI commitments to enable a functional cap-and-trade system for GHGs, and adopted them on December 14. Quebec’s cap-and-trade legislation will come into force on January 1, 2012.
Continue Reading...On December 14, 2011, the Government of Québec officially adopted the Regulation respecting the cap-and-trade system for greenhouse gas emission allowances (the Regulation) which is based on the rules established by the Western Climate Initiative (WCI).
The Regulation will come into force on January 1, 2012. The first year of the system will be a transition year which will allow emitters and participants to familiarize themselves with how the system works. In 2012, emitters and participants will be able to register with the system, take part in pilot auctions and buy and sell greenhouse gas (GHG) emission allowances on the market. No reduction or capping of GHG emissions will be required during this transition year.
Continue Reading...The U.S. Environmental Protection Agency (“EPA”) will delay proposing the country’s first-ever greenhouse gas limits on oil refineries. The EPA agreed to implement these regulations under a settlement agreement (“Settlement“) that stemmed from two multi-state lawsuits where environmental groups sought court orders to require the EPA’s action on greenhouse gas regulation.
Pursuant to the Settlement, the EPA agreed to propose standards for oil refineries by December 10, 2011, and to enact the new regulations by November 10, 2012. According to a spokeswoman for the EPA, “the EPA expects to need more time to complete work on greenhouse gas pollution standards for oil refineries.” The EPA did not meet the December 10 deadline for the standards but is currently working with the litigants from the Settlement to set a new date for submitting the proposed standards. It is unclear whether the EPA will also miss the deadline to enact the regulations.
Gus Lu -
On December 2, 2011, Enbridge Inc. entered into an equity participation agreement with the Gitxsan First Nation, pursuant to which Enbridge will assist the Gitxsan First Nation in purchasing a stake in the proposed $5.5 billion Northern Gateway pipeline which has the potential to result in $7 million in profits for the Gitxsan over the project’s lifetime. Northern Gateway’s proposed route does not cross the Gitxsan First Nation’s territory, although the route passes several tributaries which feed into a lake used by the Gitxsan.
This announcement arrived shortly after 61 British Columbia First Nation groups signed the “Save the Fraser Gathering of Nations” declaration, a document which states that the federal process to approve Northern Gateway violates the signatories’ “laws, traditions, values and inherent rights as Indigenous People under international law.”
The federal Joint Review Panel, established by the National Energy Board and the Canadian Environmental Assessment Agency, will begin community hearings on Northern Gateway in Kitimat, B.C. on January 12, 2012.
Patrick Duffy and Christopher Yung -
On December 8, 2011 the Ontario Energy Board dismissed a motion by the Consumers Council of Canada (CCC) challenging the constitutionality of the Board’s assessments to recover costs in respect of energy conservation or renewable energy programs.
The assessment is made under the Ontario Energy Board Act, 1998, to recover costs associated with the Home Energy Savings Program and the Ontario Solar Thermal heating Initiative. It is imposed on licensed electricity distributors and the Independent Electricity System Operator (IESO). In turn, distributors and the IESO pass the assessment onto their customers.
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