Maxim Power Corp. is racing to beat proposed federal emission regulations that could derail its plan to build a 500-megawatt coal-fired power plant in the mountains of western Alberta.
The Calgary-based, TSX-listed company won approval to build the $1.7-billion plant from the Alberta Utilities Commission last week, after arguing it needed an immediate decision to meet an ambitious time line that would allow it to avoid the tough new federal regime.
Environment Minister Peter Kent is expected to release the government's electricity regulations later this month, but Maxim says the company received assurances from Mr. Kent that it would not be subject to the regulations so long as it began operations before July 1, 2015.
Environment Canada would not confirm that it provided assurances to Maxim. In an e-mailed statement, a spokesman said departmental officials have "conducted numerous consultations with key stakeholders to inform the development of the draft regulations."
The new rules will prohibit construction of new coal-fired power plants unless they incorporate carbon capture and storage (CCS) technology to remove the greenhouse gases and store them underground.
The Conservative government's twists and shifts on climate policy have played havoc with industry planning, especially in fast-growing provinces like Alberta where companies are scrambling to build new power plants to avert looming shortages.
Maxim began planning its state-of-the-art "super-critical" plant near Grande Cache on the existing 150-megawatt Milner generating station in 2005. Since then, it has seen the announcement of three dramatically different federal emissions plans – including the current one that could effectively kill its Milner expansion project.
The new power plant would produce far less emissions than current coal-fired stations, but far more than a CCS-enabled one would.
Both industry and environmentalists are frustrated by the federal policy delays.
The Calgary-based Pembina Institute, which opposed the development in hearings before the utility commission, has slammed the federal reassurances to Maxim. When former environment minister Jim Prentice announced the planned regulations last summer, he pledged the government would guard against a rush to build non-compliant plants before the regulations could be drafted.
"You have a company clearly trying to subvert or get around the regulation," said Tim Weis, Pembina's director for electricity generation. "It's clearly going against the intent of the regulations, it's going against what Environment Canada said they would do, and is going against the direction we need to go as a country and a province on greenhouse gas emissions."
Maxim chief executive John Bobenek said his company is desperate for some regulatory certainty in order to proceed with the Milner expansion, as well as a 200-megawatt natural gas plant it is considering for Alberta.
"Obviously, the federal regs are going to have a large impact on generation investment, not just for coal but for natural gas," Mr. Bobenek said. "What we're trying to get is clarity so that it is evident to our shareholders, to the market, and to financers, what happens if you can construct a power plant within a 10-year development cycle."
In a submission to the Alberta Utilities Commission, Maxim's lawyers told the panel that any further delay of the project would put it in jeopardy.
The proposed federal regulations were "of extreme concern," the Maxim submission said, referring to the minister's industry briefing in Calgary on that date. It said it had assurances from Environment Canada that the plant would fall under existing rules if it is commissioned by July 1, 2015.
Meeting that deadline will be tough – Maxim had indicated a start-up date of late 2015. But it could be impossible if the utilities commission delayed it through lengthy hearings.
"Any delay in the AUC's decision will prejudice Maxim in the extreme with significant probability of killing the project outright," the submission said.
Late on June 30, the commission approved the project, ruling that there was no need for a hearing because it deemed there were no opponents who would be adversely affected by the plant.