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Enmax vs. Alberta Government

Enmax fights order to rebate millions to consumers

Enmax, a utility owned by the City of Calgary, is set to battle the Alberta Government in court in a dispute over about $375 million the utility was assessed in lieu of taxes over the last 10 years.

Enmax is arguing that the hundreds of millions of dollars it is required to return to customers was necessary to collect to even the playing field between municipally owned utilities and corporations. The money was collected under a payment in lieu of taxes (pilot) program. The province claims Enmax inflated the value of contracts or purchase arrangements it received over the last decade; and that they inflated interest rates charged to its own subsidiaries to reduce the amount of money required to pay in lieu of taxes.

“Whoever caught these inflated costs was doing their job,” said Chris Vilcsak, President and CEO of Solution 105. “I’m guessing it was Alberta Finance, as the Utility Consumers Advocate is not as effective as it should be.”

Enmax spokeswoman Doris Kaufmann commented that the whole thing is a technical tax issue, under the payment in lieu of tax regulation and that it’s just a difference of opinion between the Alberta government and Enmax on the value of particular assets.

According to Alberta’s Utilities Consumer Advocate Rob Spragins, Enmax would have to rebate $75 million to residential customers if they lose the cases against the province. This would be done through a fund known as a balancing pool.

“If you are going to compete you have to play by the rules. If other players pay this tax, you have to pay this tax,” Spragins told the Edmonton Journal.

Specific items such as the over-claimed Keephills power purchase contract, loans to subsidiary companies at interest rates higher than rates available on the market, and inflated interest rates on other purchase arrangements will all be discussed in court.

“It will be interesting to see how the case goes and if any other inflated costs are found,” commented Vilcsak.

The trial is slated to begin on September 22 at Calgary Court of Queen’s Bench. The final amount owed will be determined once there is a decision in the courts and that could be appealed. These cases could go on for quite some time.