In the Matter of an Arbitration Under Chapter
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PUBLIC IN THE MATTER OFAN ARBITRATION UNDER CHAPTER ELEVEN OF THE NORTH AMERICAN FREE TRADE AGREEMENT AND THE 2010 UNCITRAL ARBITRATION RULES BETWEEN: WINDSTREAM ENERGY LLC Claimant and GOVERNMENT OF CANADA Respondent MEMORIAL OF THE CLAIMANT WINDSTREAM ENERGY LLC August 19, 2014 Torys LLP Suite 3000 79 Wellington St. W. Box 270, TD Centre Toronto, Ontario Canada M5K 1N2 John Terry Myriam M. Seers James Gotowiec Stéphanie A. Lafrance Nick Kennedy Counsel for the Claimant, Windstream Energy LLC TABLE OF CONTENTS page PART ONE – INTRODUCTION............................................................................................... 1 A. Overview................................................................................................. 1 B. Materials Submitted by Windstream .................................................... 11 PART TWO – THE FACTS ..................................................................................................... 16 I. BACKGROUND .............................................................................................. 16 A. Offshore Wind Electricity Generation.................................................. 16 B. The Wolfe Island Shoals Project........................................................... 17 II. WINDSTREAM AND ITS ENTERPRISE WWIS.......................................... 20 A. Windstream........................................................................................... 20 B. Windstream Wolfe Island Shoals Inc. .................................................. 21 C. Windstream’s Other Investments in Ontario ........................................ 22 D. Windstream’s Investments in Wyoming and British Columbia ........... 23 E. Investors in Windstream Have Substantial Experience Developing and Financing Offshore and Onshore Energy Projects.................................................................................................. 23 F. WWIS’ President Has Substantial Experience Developing Wind Energy Projects ..................................................................................... 26 III. THE PROVINCE OF ONTARIO AND ITS RELEVANT MINISTRIES AND AGENCIES ............................................................................................. 27 A. The Province of Ontario........................................................................ 27 B. Premier of Ontario, Executive Council and Premier’s Office .............. 27 C. Ministry of Energy and Infrastructure .................................................. 28 D. Ontario Power Authority....................................................................... 29 E. Ministry of Natural Resources.............................................................. 29 F. Ministry of the Environment................................................................. 30 IV. 2003-2006: ONTARIO ADOPTS POLICIES TO PROMOTE RENEWABLE ENERGY DEVELOPMENT IN THE PROVINCE ............... 30 V. 2006-2008: ONTARIO IMPOSES, AND THEN LIFTS, A DEFERRAL ON APPROVAL OF CROWN LAND APPLICATIONS FOR OFFSHORE WIND PROJECTS...................................................................... 33 VI. 2008-2010: ONTARIO ACTIVELY ENCOURAGES INVESTMENT IN OFFSHORE WIND ENERGY......................................................................... 34 A. Ontario Promotes Itself as “Open for Business” for Offshore Wind Energy Development................................................................... 34 B. Ontario Enacts the Green Energy and Green Economy Act, 2009, to Encourage Renewable Energy Investment, Including Investment in Offshore Projects............................................................ 39 C. Ontario Implements the Green Energy Act by Establishing the FIT Program, REA Regulations and New MNR Policies..................... 42 1. Ontario Establishes the Feed-in-Tariff (FIT) Program............. 43 2. Ontario Establishes the Streamlined Renewable Energy Approvals (REA) Process......................................................... 46 3. MNR Announces Steps To Align Its Policies With These Provisions.................................................................................. 48 - ii - TABLE OF CONTENTS (cont.) page VII. REGULATORY APPROVALS PROCESS IN PLACE FOR OFFSHORE WIND PROJECTS IN ONTARIO IN 2009 ..................................................... 52 A. Process to Obtain a FIT Contract.......................................................... 53 B. Process to Obtain Access to Crown Land............................................. 53 C. Process for Renewable Energy Approval ............................................. 55 D. Process for Grid Connection................................................................. 56 E. Federal Permits ..................................................................................... 57 VIII. 2007-2010: WINDSTREAM INVESTIGATES POSSIBILITY OF WIND ENERGY DEVELOPMENT IN ONTARIO AND SUBSEQUENTLY INVESTS IN THE PROJECT BASED ON ONTARIO’S COMMITMENTS TO OFFSHORE WIND AND TO THE PROJECT .......... 57 A. Windstream Begins to Investigate Opportunities for Wind Energy Development in Wolfe Island Shoals Area .............................. 57 B. Windstream Begins Investing in the Project and Applies for Applicant of Record Status, In Reliance on Ontario’s Stated Commitment to Renewable Energy and Offshore Wind ...................... 60 C. WWIS Applies for a FIT Contract, Relying on MNR and OPA’s Assurances and Representations Concerning WWIS’ Application for Crown Land..................................................................................... 62 D. Windstream Secures Additional Investment for the Project................. 65 E. WWIS Invests in Resource Evaluation, Engineering and Technical Reviews................................................................................ 66 IX. 2010: ONTARIO ENCOURAGES WWIS TO ENTER INTO THE FIT CONTRACT BY CONFIRMING ITS SUPPORT FOR THE PROJECT AND COMMITTING TO GRANTING WWIS ACCESS TO CROWN LAND IN A TIMELY MANNER.................................................... 67 A. OPA Selects the Project to Become the Largest Wind Project Developed Under the First Round of FIT Contract Awards................. 67 B. Key Terms of the FIT Contract............................................................. 69 C. Immediately After Being Offered a FIT Contract, Windstream Is Approached by a Number of Major Investors Seeking to Collaborate on the Project..................................................................... 72 D. WWIS Does Not Immediately Sign the FIT Contract, Seeking Comfort from Ontario Regarding Approvals and Timelines................ 72 E. Windstream Holds Meetings with Government Officials to Obtain Comfort Respecting Its Concerns ............................................. 75 F. Ministries Expected to Complete Review of Site Release Process and Confirm Five-Kilometre Setback by January 1, 2011 ................... 82 G. Ministries Were Carrying Out Appropriate Research to Support the Development of Guidelines for Offshore Wind Development ....... 85 H. Windstream Confirms that the Project is Feasible and Financeable ........................................................................................... 87 I. On the Basis of Ontario’s Representations, Windstream Executes the FIT Contract.................................................................................... 90 - iii - TABLE OF CONTENTS (cont.) page J. Windstream’s Decision to Execute the FIT Contract Was Commercially Reasonable .................................................................... 91 K. Windstream Completes Development Work and Takes Steps to Find an Equity Partner for the Project .................................................. 92 X. 2010: WINDSTREAM APPLIES FOR AND RECEIVES CONDITIONAL GRID CONNECTION APPROVAL FROM IESO AND HYDRO ONE ................................................................................................... 93 XI. 2010: ONTARIO FAILS TO PROMPTLY GRANT WWIS ACCESS TO CROWN LAND AND FINALIZE THE FIVE-KILOMETRE SETBACK, BUT ENCOURAGES WINDSTREAM TO CONTINUE INVESTING IN THE PROJECT................................................................................................. 93 A. Ontario Fails to Process WWIS’ Application for Crown Land and to Confirm the Applicable Setback................................................ 93 B. WWIS Has No Other Option But to Declare Force Majeure Under the FIT Contract......................................................................... 97 C. Ministry of Energy Leads Windstream to Believe Project can Proceed Even if Other Offshore Projects Cannot ............................... 100 XII. 2011: ONTARIO IMPOSES A MORATORIUM ON OFFSHORE WIND DEVELOPMENT, BUT COMMITS TO ENSURING THAT THE PROJECT IS NOT PENALIZED AS A RESULT......................................... 102 A. Ontario Unexpectedly Imposes a Moratorium on Offshore Wind Development in February 2011, But Commits to Ensuring WWIS is not Penalized ....................................................................... 102 B. Windstream Could Not Have Foreseen that a Moratorium Would be Imposed by the Ontario Government............................................. 109 XIII. 2011-2012: ONTARIO FAILS TO TAKE MEASURES TO ENSURE THAT THE PROJECT WAS NOT ADVERSELY AFFECTED BY THE MORATORIUM............................................................................................. 113 A. OPA Refuses to Waive the Force Majeure Conditions and Retains Windstream’s Security..........................................................