Calgary: ENMAX delivered notice May 6 to the Balancing Pool of its termination of the Keephills Power Purchase Arrangement under the Change in Law provision of the PPA. ENMAX says it will continue to serve its customers across Alberta through a strong generation portfolio of approximately 1,700 megawatts fueled by natural gas and wind.
A key provision in every PPA provides the PPA Buyer with the right to terminate the PPA should there be a change in law that makes the PPA unprofitable or more unprofitable. This provision was approved by the Alberta Energy and Utilities Board in advance of the PPA auction and has existed since the PPAs were established in 2000. With respect to the Keephills PPA, the change in the costs under the Specified Gas Emitters Regulation made this PPA "more unprofitable" than it already was so the right to terminate was triggered.
With this decision by ENMAX, the Balancing Pool will have dispatch control over all coal-fired PPA generation in the province.
ENMAX says the decision was carefully considered and results in the company recording an impairment charge of $51 million, which represents the remaining book value of the original investment in the PPA. Combined with the 2015 write-down of $144.5 million from the termination of the Battle River PPA, ENMAX has now incurred a financial impact of $195.4 million in impairment charges as a result of terminating its two coal PPAs.
ENMAX remains supportive of the government's vision to reduce greenhouse gas emissions in Alberta and committed to constructively engaging with government, consumers, environmental groups and industry to move forward with the implementation of the Climate Leadership Plan.