Canada to Pay CAD 28 Million to Windstream Over Stalled Offshore Wind Project

An arbitral tribunal appointed under the North American Free Trade Agreement (NAFTA) has ruled that Canada is to pay around CAD 28 million in damages and legal costs to the U.S. firm Windstream Energy LLC, the developer of the 300MW offshore wind power project in eastern Lake Ontario.

A three-member panel appointed by the Permanent Court of Arbitration in The Hague found that the government of Ontario treated Windstream’s investments in Canada unfairly and inequitably under NAFTA after it placed a moratorium on offshore wind farms in 2011, the company said in a press statement.

This moratorium directly frustrated the CAD 5.2 billion contract for the 300MW offshore wind power project that Windstream signed with the Ontario Power Authority, the company said.

The tribunal ruled that the Government of Ontario “on the whole did relatively little to address the scientific uncertainty surrounding offshore wind that it relied upon as the main publicly cited reason for the moratorium.” Further, it “did little to address the legal and contractual limbo in which Windstream found itself after the imposition of the moratorium.”

The tribunal declared that the contract is formally “in force” and has not been unilaterally terminated by the government of Ontario, Windstream said.

The CAD 28 million award is the largest ever NAFTA damages and cost award against Canada, but it is just a fraction of CAD 475 million compensation Windstream had claimed for damages.

“Windstream responded to the Ontario government’s call for renewable power and jobs, and entered into a contract with the Ontario government in good faith in August 2010,” said David Mars, Director of Windstream Energy LLC.

“This award is an appropriate first step at remedying the challenges we have faced. We look forward to working with the Government of Ontario to build this project in accordance with the contract.”

In November 2009, Windstream submitted eleven FIT applications for wind power projects, including an application for the 130-turbine offshore wind project in the Wolfe Island Shoals off Lake Ontario, near Kingston.

Having met the basic conditions of a FIT application, the Ontario Power Authority (OPA) offered Windstream a FIT Contract on May 4, 2010. Windstream did not sign back the contract immediately, but requested a series of extensions throughout the summer while the Government of Ontario undertook a policy review on offshore wind development.

On August 20, 2010, prior to the finalization of the policy review on offshore wind, Windstream and the OPA signed the FIT Contract, which provided for fixed pricing for power generated over a 20-year period on the condition that Windstream brought its project into commercial operation by May 4, 2015. This included acquiring all of the necessary permits and approvals to develop the project.

The Ministry of the Environment’s Offshore Wind Policy Review closed on February 11, 2011, when the government of Ontario decided to defer offshore wind development until the necessary scientific research is completed and an adequately informed policy framework can be developed.

Windstream alleged that the government of Ontario acted in an expropriatory, arbitrary and discriminatory manner when it deferred offshore wind development, resulting in the loss of its investment.