Defamation suit against the Alberta NDP cost taxpayers $435,000 in legal fees

Simultaneously, the Alberta NDP brought forward carbon tax increases that allowed all PPA Buyers to terminate their PPAs and transfer the $2 billion in future PPA unprofitability to Alberta electricity consumers.

Defamation suit against the Alberta NDP cost taxpayers $435,000 in legal fees
Sarah Hoffman/ Facebook
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A defamation lawsuit against former NDP health minister and now health critic Sarah Hoffman and other government officials cost taxpayers $435,000 in government legal fees.

Dismissed since 2016, the Alberta NDP claimed Enron caused the $2 billion in the power purchase agreement (PPA) losses borne by Alberta electricity consumers, owing to a "secret backroom deal" made in 2000 to alter a critical clause in the PPAs.

"My defamation case was about setting the record straight that I was not involved in a PPA secret backroom deal in 2000," said Calgary lawyer Robert Hemstock, who sued the former Alberta government.

"Albertans also paid $435,000 in legal fees to defend the defamation case I brought against Deputy Premier Sarah Hoffman, Premier [Rachel] Notley's Communications Director Cheryl Oates, and the Government of Alberta."

Hemstock told the Western Standard he filed his claim to hold the NDP government accountable in their attempt to deflect blame from their ill-conceived policies. 

Concurrently, the Alberta NDP brought forward carbon tax increases that allowed all PPA Buyers to terminate their PPAs and transfer the $2 billion in future PPA unprofitability to Alberta electricity consumers.

In June 2015, the NDP government amended Alberta's Specified Gas Emitters Regulation by Ministerial Order 13/2015 to increase carbon taxes on large carbon-emitting facilities, including coal-fired electricity generation.

According to a release from Hemstock, Alberta wholesale electricity market prices existed in a low price cycle then, and Enron pegged most of the PPAs would lose money over the remaining six years of their existence. He cites the NDP's decision to increase the carbon tax on PPAs in 2015 constituted a "change in the law." 

Under these low market price circumstances, all of the PPAs became either "unprofitable or more unprofitable." PPA Buyers could rightfully terminate their PPAs per PPA Change in Law Clause 4.3(j) without paying a financial penalty to the Balancing Pool. 

"Our government believes regular Albertans shouldn't be on the hook for secret backroom deals," said NDP MLA Sarah Hoffman on July 25, 2016, who noted companies have made an estimated $10 billion in profits from the PPAs.

Hemstock said that release didn't acknowledge the role of the June 2015 carbon tax increase in causing the PPA terminations. 

Two weeks into a media campaign, the NDP identified Hemstock, a lawyer for Enron Canada in 2000, as having a role in the "secret backroom deal."

In a related Q&A, Hoffman said: "To be honest, when I hear the term Enron, I don't think about the benefit of the doubt. I think this was a secret backroom Enron deal, and I'm very concerned, and that's why we're standing up for Albertans and taking this to court."

She made similar "secret backroom deal" allegations during a July 26, 2016 CBC Radio Calgary interview and then published an opinion editorial in the Calgary Herald on August 2, 2006, entitled "Why We're Going to Court Over the Power Purchase Agreements." 

In the opinion editorial, the then-health minister said: "This is a clause that was snuck into PPAs at the last minute by a U.S. corporation with a history of illegal activity." 

As a follow-up, the NDP distributed a 28-page memo to media outlets on August 7, 2016, containing the heading "the Enron Clause" that purported to give details of the alleged "secret backroom deal." 

However, Hemstock identified a surprising admission in paragraph 57 of the Attorney General's lawsuit that senior NDP ministers had no knowledge of the final content of PPA Change in Law Clause 4.3(j) until March 2016, when the CEO of the Balancing Pool briefed them on it.

"Hoffman's comments purported to be an explanation of the Attorney General's lawsuit, but the focus of her messaging was on a 'secret backroom deal' assertion that was not actually alleged, or even mentioned, in the Attorney General's lawsuit against the PPA Buyers," said Hemstock. 

Hoffman asserted the $2 billion loss was a result of a "secret backroom deal" orchestrated by Enron and the former PC Government in August 2000 to "sneak" the words "or more unprofitable" into the PPA Change in Law Clause 4.3(j)."

In March 2018, the attorney-general discontinued her lawsuit against the PPA Buyers without overturning any PPA terminations. They assured the $2 billion loss to the Balancing Pool.

A Deloitte report quantified the financial loss at $1.341 billion from May 1, 2015, to April 1, 2019. They also indicated that as of March 31, 2019, the BP had outstanding notes payable of $826.9 million with the Government of Alberta related to the terminated PPAs. 

The combined total is an estimated Balancing Pool loss of $2.1679 billion related to the PPA terminations.

Hemstock later sued Hoffman and other NDP government officials in July 2018 for defamation based on the allegations.

"The story isn't about me," assured the Calgary lawyer. "It's about what happens when a government makes a mistake. And then they use their power as a government like a David and Goliath circumstance."

"They use their power of government to communicate messages that are not true. And it's very unfortunate...and not what Albertans would expect."

In November 2022, Hemstock and the three defendants reached a satisfactory settlement for all parties. They have yet to disclose the tenets of that settlement publicly. 

"I'm not allowed to speak to you about the settlement terms other than to say that all departments are satisfied with the settlements," confirmed Hemstock.

According to the Western Standard, the Alberta NDP has refused to comment on the case several times.

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  • By Ezra Levant

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