International round-up: climate change measures developing in 2012

Kim Lawton and Annie Pyke -

The past year was an eventful period in the area of emissions trading and climate change regulation and policy development and 2012 is showing no signs of slowing down. Globally, climate change measures are encountering both resistance and successes as the world’s nations struggle to control greenhouse gas (GHG) emissions.  This blog post contains a rundown of some key stories we see developing in the coming months and which we will monitor and describe from time to time in this blog.

Continue Reading...

Positive outlook for Canadian power M&A

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...

Record bid by Shell Canada secures Nova Scotia offshore exploration rights

Lewis Smith

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.

President Obama denies Keystone XL application

Gus Lu

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.

Energy Board Jumps in the tub

Glenn Zacher -

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...

Ontario amends property tax treatment of renewable energy installation

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.