One of Alberta’s biggest and most venerable companies is declaring a $408-million hit to the value of its wind and solar projects in the province, and is largely blaming the Smith government’s electricity system reforms for being “detrimental” to investment in renewable energy.

ATCO Ltd.’s power subsidiary Canadian Utilities reported the devaluation of its roughly $1 billion in Alberta renewable energy assets in a recent financial disclosure.

It says that policy changes to the transmission network have forced the company to heavily curtail the output of its major wind turbine project in southeast Alberta — and adds that a looming overhaul of transmission rules stands to harm that and other renewable projects even more.

The company may pursue “legal recourse” if negotiations and lobbying efforts fail to modify the government’s system reforms, the Feb. 26 company management discussion report states.

“The company believes the changes in policy, and resulting uncertainty for large infrastructure investment, is detrimental to the government of Albertaʼs stated objectives to promote investment in the province of Alberta,” the document states.

The Smith government has prided itself on creating an investor-friendly climate in Alberta, and slashing regulation that it derides as “red tape.”

But it has faced repeated criticism from the renewable sector for doing the opposite: applying regulations that have deterred development of new wind and solar installations. Renewable energy advocates say they’re a low-cost, low-carbon power source, but Premier Danielle Smith and her government have criticized them as intermittent and less reliable than other generation types like natural gas.

Canadian Utilities’ report signals that the province’s electricity policies are not only impairing the renewable sector’s potential growth, but also projects already built in Alberta.

“Almost everywhere else, you build as much wind and solar as you possibly can, because they’re low cost, and then you design the system around them,” said Tim Weis of the Pembina Institute, an Alberta-based environmental think tank.

“And frankly, we’re kind of doing the opposite.”

On Oct. 5, 2022, ATCO announced a $730-million acquisition of renewable projects in Ontario and Alberta, including the 202-megawatt Forty Mile wind farm in southeast Alberta. It was a major foray by a massive Alberta conglomerate into the province’s then-burgeoning wind and solar power market; ATCO said it cemented the company’s place “at the forefront of the energy transition.”

One day later, Danielle Smith was crowned United Conservative Party leader and incoming premier.

A skeptic when it comes to the merits of renewable power, her government has imposed a range of new limits to renewable project development, including a seven-month moratorium on new approvals in 2023. Reforms to the broader electrical system, made in the name of reliability have been widely criticized by companies and groups involved in wind and solar.

Canadian Utilities says one key harmful change to its existing power generators is the end of a longstanding policy called “zero congestion.” It guaranteed that the province would build new transmission lines to accommodate new private-sector electricity developments, but the government has shifted from that policy in favour of one that accepts some system congestion.

The lack of new power transmission lines from the wind- and solar-heavy southeast part of Alberta has forced the system regulators to curtail some companies’ generation.

The ATCO company’s Forty Mile project has been one of the hardest hit. Twenty-five per cent of its total potential power generation was curtailed last year, according to a report by the provincial Market Surveillance Administrator.

Additional forthcoming regulations will extend this issue, the company says, meaning its major wind farm “remains exposed to sustained curtailment and uncertain timelines for relief, which will continue to depress cash flows until definitive transmission solutions are implemented.”

Canadian Utilities is warning that other recent reforms are also financially harmful. Among them, pricing changes as part of Alberta’s energy market restructuring will further depress potential revenues for the company’s existing wind and solar developments, the company’s report stated.

All told, provincially legislated changes “have materially and retroactively altered the economic conditions under which these renewable assets were developed and financed, ” the ATCO company said in the document.

Canadian Utilities is a publicly traded company that is majority controlled by ATCO, the 79-year-old Calgary-based giant with business in construction, logistics, natural gas distribution and more.

Canadian Utilities did not break down the value impairment to the Forty Mile wind project or three solar farms within its ATCO EnPower division, but $54 million of the total $408-million writedown is due to recent decisions not to proceed with some development projects.

In an email, EnPower chief operating officer Mark Brown, said no legal challenges have been filed.  

“Our strong preference is to continue to work collaboratively with the government of Alberta and the AESO [the Alberta Electric System Operator] on a fair and durable framework that serves customers, investors, and generators — as we have done throughout Alberta’s market redesign process,” he told CBC News.

Affordability and Utilities Minister Nathan Neudorf was not made available for an interview to respond to ATCO’s concerns. Instead, a minister’s spokesperson emailed a statement which stressed that Alberta’s new transmission regulations have not been finalized.

“The policy changes that ATCO EnPower is referring to are not in effect and still in the draft stage,” Ashli Barrett stated. “Further, the policy direction is based on the feedback and input gathered through hundreds of hours of extensive engagement with industry.”

She added that Neudorf’s office is not aware of any legal challenges filed regarding provincial renewable or transmission reforms.

The $408-million writedown may represent a fraction of the total value in all of ATCO Group’s varied divisions, but it amounts to close to one-fifth of the previously reported assets in ATCO EnPower, according to a year-end financial statement.

“Basically what they’ve said in their investor report is what the renewable energy industry has been saying for the past few years,” said Weis, Pembina’s senior director of industrial decarbonization.

“I think we should expect more companies to be making decisions [like this] now.”

Earlier this week, Pembina issued a report on the beleaguered state of Alberta’s wind and solar sector. It noted a 93 per cent drop in newly installed wind, solar and storage capacity between 2022 and 2025. 

Weis said that recent federal-provincial discussions about increased transmission interties between Alberta and British Columbia could help reduce the persistent congestion that’s plaguing wind and solar generators.