PHOTOS: With the revelations about how Enron and like companies got what they wanted from Ralph Klein’s government, are we seeing the sunset of Alberta’s disastrous experiment with electricity “deregulation”? Below: The old Kleinster himself and Enron’s logo as pricey corporate art.

The release over the weekend by Alberta’s NDP government of an exchange of mails 16 years ago between Enron’s head office in Houston and the now disgraced and defunct company’s chief Canadian lobbyist contain bad news for both the Progressive Conservative Party and the Wildrose Opposition.

The emails reveal the PC government led by Ralph Klein in 2000, when Enron successfully manipulated the Tories into the deal the NDP is now asking the courts to overturn, was both crookedly inclined and easily suckered.

But then, as any grafter will tell you, it helps draw the suckers in if the deal on offer appeals to their worst instincts.

The emails reveal it wasn’t much work at all for Enron – long since renowned for “massive corporate accounting fraud,” as the Globe and Mail put it in its story – to get the government of the day to do whatever it wanted.

Enron basically told the Kleinsters what to write, and they wrote it. Then they buried it to ensure no one in Alberta knew any better while their pals in the electricity reselling “industry” cashed in to the tune of 10 or so billion dollars in profit.

As the NDP government put it in a long and technical explanation published better late than never this morning, “Enron prevailed upon the (Alberta Energy and Utilities Board) to engage in a legally tenuous exercise of purporting to make a ‘regulation’ out of a collection of documents, a ‘regulation’ that the provincial cabinet of the day later exempted from publication.” (Emphasis added.)

The problem for the Progressive Conservatives is pretty obvious. There may be a certain amount of difference in tone and ideology between the Tories led by Mr. Klein and those led by some of the PC premiers since, but they are still the same party. The whiff of corruption, and naïve incompetence, are bound to linger, no matter what Ric McIver, the current leader, says.

The problem for the Wildrosers is a little subtler because at least they can claim not to be the same party that got up to mischief in 2000, and got diddled in the realization of its sneaky schemes. (Even though, in 2000, all the Wildrosers were all Tories.)

Their problems include the fact they’ve made a cult of venerating the late Mr. Klein. He was the guy who slew the debt dragon (at the expense of the province’s infrastructure, but never mind that just now). They’re the ones who keep asking us: Do we miss him yet? (Answer: Not if we’ve been paying attention.)

So are they endorsing the Klein government’s sneaky business with Enron, now revealed as one of the most corrupt corporations in North American history – and getting taken to the cleaners in the process? So it would seem.

Moreover, it is fair to conclude on the basis of what they have said up to now that they would have done exactly the same thing in the same circumstances, which should be the principal perceptual problem they now face.

As for Jason Kenney, the federal Tory and provincial Wildroser who has cast himself as the would-be uniter of Alberta’s right, his stream of cranky Tweets suggests he too would have done the same thing and, indeed, that he is trying to cast himself as the New Ralph Klein.

As those of us who knew Mr. Klein understand, he may have had his myriad faults, and his economic schemes may have done considerable damage to the province of Alberta, but he was never a prig and a stuffed shirt like Mr. Kenney.

Meanwhile, we know thanks to lawyer Susan Wright, in her excellent Susan on the Soapbox blog post on this topic, that most of the claims the two opposition parties and their media echo chamber have brewed up attacking the NDP and trying to lay the need for the legal action on the NDP’s carbon tax are baloney – or, as Ms. Wright gently put it, “myths.”

Certainly, as she rightly points out, the NDP government is not breaking contracts or suing itself or the people of Alberta, nor was it ever in a position to know about the secret deal before they formed government.

The NDP’s sin in this, if you ask me, was being slow to respond to the opposition’s efforts to frame them, not having its responses ready before the announcement was made and, worst of all, trusting the thoroughly partisan Alberta media, some of whose members nowadays are acting almost like Mr. Kenney’s personal publicists and valets, to treat them fairly.

With the revelations about how Enron and companies of its ilk played Ralph Klein’s government like a violin, we have to ask if we are seeing the sunset of Alberta’s disastrous experiment with electricity “deregulation”?

This post was drafted in airport lounges on two continents. Any errors are the airports’ and their lousy WiFi providers, of course.

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  1. Hydro deferral ‘rat’ keeps getting bigger
    – by Vaughn Palmer, Vancouver Sun

    Five years ago this summer the then-auditor-general, John Doyle, waded into accounting swamps at BC Hydro and emerged with a horror story to frighten ratepayers and taxpayers alike.

    Doyle’s report documented how the B.C. Liberals had for years been diverting hundreds of millions of dollars in current day spending to a burgeoning series of deferral accounts for delayed repayment in future years.

    “Deferral account abuse” not being the stuff of banner headlines, the outspoken Doyle dramatized the concern with a vivid image, borrowed from the outback of his native Australia.

    “The rat in the snake problem,” he called it.

    The players may be different, but the game is the same.

    1. “This will no doubt be one of the more complex and high profile judicial review proceedings ever heard in the province – and the stakes are high. The province has selected Joe Arvay from Vancouver\Victoria as its lead lawyer for its application, one of the best constitutional and administrative lawyers in the country.” – excerpt from written by Nigel Bankes, Professor and Chair of Natural Resources University of Calgary.

      If the court rules the “Enron clause” was unlawful, imagine what a new government or group of citizens can do to try to overturn some of the similar, shady dealings in their provinces. Who knows – perhaps the Alberta NDP were thinking of this when they hired B.C. lawyer Joe Avray.

      As Professor Bankes states, the stakes are high. It explains the relentless attacks and misinformation in the provincial and national media; they are determined to gain control of public perception.

    1. Hmmmm.. the Calgary School link is broken. Already.

      Or they discovered that perhaps it didn’t contain the kind of support for the PCs that they thought it might?

  2. Wow, the piece by Susan on a Soapbox is amazing…I recommend that everyone read it. It makes me even angrier about the incredible misinformation that is being spread in Postmedia papers about this issue.

    1. Agreed. I have followed Susan on the Soapbox for years. It is an amazing blog.

      It saddens me to think that in Alberta critics condemn the NDP when they are trying to save us $2 billion.

      I’d like to see them collect all the grazing fees owed to Albertans from rich deadbeat ranchers too.

  3. And there are invariably more ghosts from the Klein government past that still really stink, such as the West Edmonton Mall loan refinancing that Albertans were stuck with and the mysterious Alberta Treasury Branch numbered accounts issue. Surely the Alberta PC finance ministers of this time period can step forward and clear their conscience by disclosing what really happened to taxpayers money during this time period.

  4. What about the sweet deals given to fortis and altalink who are currently sucking Albertans dry after being given control of our transmission system for nothing and. Overcharging all of us on a continual basis

  5. Privatize the profits and socialize the losses. Another beef I have with Postmedia is they are trying to rationalize what the Right did by saying it’s only fair to mitigate future government action. Excuse me? No other business or individual gets such protection. Govt changes and my taxes go up. My only option is vote against them next election.

  6. The skeletons have now started to tumble out of the closet, so it could be a perilous time for the PC’s and their apologists. In Saskatchewan, it wasn’t an election loss that sealed the fate of the provincial PC’s, but the scandals that were uncovered after the government changed to the NDP. This eventually made the PC brand toxic there.

    Just like in Saskatchewan at that time, we also already have many conservatives that want to rebrand themselves as something else. I doubt this mess will reduce their desire to deify Ralph Klein, but they may be a bit less vocal about it for a while.

    I understand Rick McIver is in a difficult position on this as it is his party that did this, but both Brian Jean and Jason Kenney could both easily say they had nothing to do with the Enron escape clause and it was a bad idea and leave it at that. I find it a bit puzzling they seem to actually try to defend it. I don’t see any votes to be gained by them by defending Enron or by defending a secretive process in which regulations for the public were dictated by Enron, so I can only conclude they are actually fine with governing in this way. They may not fully realize this yet, but by responding this way they are also associating themselves with a potentially toxic PC legacy.

  7. I hesitate to enter the echo chamber, but you’re wrong.

    If the case was about the isolated area of law that you are discussing, perhaps there would be some merit to it. However, the case as filed (yes, I read it…probably got it before you as the media wanted comments and sent me a copy before the public release) is a fabricated who dunnit. How do I know? I was there. Regardless of the merits of whether or not the change in question was ultra vires, the baggage around it will drag it down.

    Whether the arrangements are a contract or not, companies paid for PPAs on the basis of the language as it stands. Proving the PCs or the GOA didn’t follow procedure is unlikely to have the effect of undoing that language.

    I am not a fan of deregulation. The PPA auction was the single biggest transfer of ratepayer value ever. But this case was put together by people with a mistaken agenda of vengeance and not a forward looking view of what needs to be done to protect customers.

    They have done irreparable damage to their relations with industry, with the likely result of costIng consumers more.

    I’m sorry, but lawyers need leashes.

  8. David Gray, I was initially skeptical about taking this to court, but when I heard about the secretive process around changing the regulation that governs contract termination, I changed my opinion.

    I suppose we could leave those skeletons in the closet and yes it would save us some grief and strife in the short term, but do we really want future governments doing again what was done with power deregulation? Alberta has rarely had a healthy, well functioning democracy at the provincial level and has sometimes for decades operated as a one party state. The secretive process here only compounds this and gives the public even less opportunity to be part of the decision making process or understand what is going on.

  9. David Gray, how do you know they are acting out of vengeance? You’re assuming the Alberta New Democrats are governing for themselves, rather than for the good of us citizens. Has it occurred to you the people in this government could actually be different from the PCs?

    The companies bidding on the PPAs back in 2000 were working with the original terms (including the exit clause, “unprofitable”). The new addition, adding the words, “or more unprofitable”, was only introduced the day before the auction. Did the other companies (besides Enron who made the request July 31) know about the change? Excerpt from page 12 of the Originating Application:

    “53. As noted above, the August 2000 Letter was written on the day before the
    August 2, 2000 commencement of the PPA auction. The Government has no
    records indicating how bidders were informed of the contents of the August 2000
    Letter and its purported implications for the Change in Law provision prior to the
    bidding on the next day.”

    How can you be sure “companies paid for PPAs on the basis of the language as it stands”? I doubt, even if they were given a heads up, their finance departments could calculate new bid numbers in a matter of hours.

  10. In the weeks following the initial sales the ppa reported re sold up to three times. This was simply flipping the coin, driving up the cost of electricity! The balancing pool wasn’t a piece of paper. It held the high priced generation , gas at that time and were bought up by Power Corp who “administered” the fund for considerable profit. The think! The whole scam was lined up so participants could slip in and out of a holding at their will. What happened when ENMAX decided to embrace natural gas again and build new gas generation?

    While this was going on a power line. From southern Alberta was proposed to Langdon from Hay Lakes by Fortin? Coal They. Would provide generation from their coal holdings in that area. Thin was killed by an effective protest by a large group fighting the “Bay City” generation plant. This group was well funded by. Trans Alta!

    The whole thing is a sewer,

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