The future of a massive, five-storey high tidal turbine sitting on the bottom of the Bay of Fundy off the coast of Parrsboro continues to represent a financial sinkhole for Nova Scotia taxpayers.
Yesterday, Nova Scotia Supreme Court Justice Peter Rosinski officially accepted a letter from the lawyer representing Grant Thornton, the receiver appointed by the Irish High Court, that effectively removes the bankruptcy protection afforded to OpenHydro Technologies Canada since last July, when its parent company (Naval Energies of France) yanked its financing.
“We will be filing a notion of motion in the coming weeks to formally end the Companies’ Creditors Arrangement Act (CCAA) process, to discharge the Monitor (Grant Thornton), and seek a bankruptcy order in respect of OpenHydro Technologies Canada,” said the letter read out in court by Justice Rosinski.
Once OpenHydro is officially declared bankrupt, its assets can be sold and the money divided among its creditors. Open Hydro owned 80 per cent of the 1,000-tonne turbine through Cape Sharp Tidal Ventures; Emera Inc. held the other 20 per cent. The turbine had begun generating electricity in the Bay of Fundy two days before Naval Technologies pulled the plug.
OpenHydro owed its parent company about 260 million euros and it left behind a string of debts to suppliers in Atlantic Canada totalling $5.9 million CDN. The company’s only real asset is a barge called the Scotia Tide that cost $30 million to build. It was built at a Pictou shipyard to deploy and retrieve the turbine. The sale of the barge is currently the subject of liens and a fight in federal court among several subcontractors of OpenHydro, including RMI Marine of Eastern Passage, the Irving Group, and DP World which operates the port in Saint John.
In September, a team of former employees with OpenHydro examined the turbine and told the court it was broken and non-operational. Despite that, another creditor has sued to retrieve part of the turbine as payment for what it is owed. What’s not clear is where the money will come from to bring the turbine out of the water.
“My client has arrested the turbine control centre and has the right to have it sold by federal court sale process,” says Marc Isaacs, the lawyer retained by BBC Chartering Carriers, a company owed $875,477 for transporting the “brain” of the turbine across the Atlantic from Europe to Saint John, New Brunswick, where the turbine was being overhauled for a second deployment in the summer of 2018. “As you correctly point out, there is an issue as to who is going to front the expenses to do that. I do not know, yet.”
Will the Province of Nova Scotia undertake to remove the turbine from the Bay of Fundy if no other entity comes forward to do so?
“My department continues to ensure Nova Scotia’s interests are represented throughout this process, and that the turbine is monitored and safe for marine life and the environment,” replied Energy Minister Derek Mombourquette in an email. “Since this process started, we have been preparing for various potential outcomes. Finding a private sector solution for retrieval remains our priority, and we are looking at several options to achieve that goal. At this point the legal processes are not complete, and we need to respect that.”
In this case, the approval holder for the tidal energy demonstration project is the Fundy Ocean Research Centre for Energy (FORCE), a non-profit agency established and funded by the provincial government to operate the demonstration site at Minas Passage. Section 2.2 of the conditions of the Environmental Assessment Approval granted to FORCE in September 2009 reads:
The Approval Holder must provide security in the form of either a bond or insurance to ensure financial resources are in place to cover the costs of device removal and site restoration.
These terms of FORCE’s approval suggest if push comes to shove, it is once again the provincial taxpayer who will be forced (no pun intended) to pay for decommissioning and site remediation, a cost that surely could have been charged to the private sector partners. FORCE did require a bond in the amount of $1,020,000 from Cape Sharp Tidal Ventures to help with the decommissioning and remediation of the berth site. But Cape Sharp’s experience with retrieving demonstration turbines on two earlier occasions indicate those operations cost several million dollars more than the one million dollar bond.
Darren Porter is the president of the Bay of Fundy Inshore Fisherman’s Association. His group unsuccessfully sued the Minister of Environment in 2016 over concerns the province hadn’t done enough to establish baseline monitoring of the marine environment shared by fish and mammals before allowing a huge turbine to be placed in Minas Passage. Porter is unsurprised by the latest turn of events.
“Bad management has created a situation where the province can be held to ransom for the cost of this removal,” emailed Darren Porter. “Section 2.2 of the Environmental Approval clearly states FORCE (the approval holder) was/is responsible to secure bonds or insurance so if they didn’t do so, shouldn’t they be held responsible? Where’s Emera’s responsibility here? Should they not step up as a good corporate neighbour? I argued with the government on multiple occasions that this exact situation would happen. They always replied Emera wouldn’t do that, they do too much business with the government of Nova Scotia.”
Emera — which had a 20 per cent stake in Cape Sharp Tidal with OpenHydro — withdrew from the project in August of 2018. The Nova Scotia company had lost more than $12 million and said it would pursue tidal development through its participation in the federal Ocean Supercluster Program.
Maybe if sensors and equipment on the turbine are working to monitor the marine environment as the province claims, there is no rush to remove the massive turbine. Maybe it could even improve fish habitat by becoming an artificial reef.
But Darren Porter says he has “doubts” about the level of monitoring taking place. At the very least, Porter says this experience proves the province has more work to do before another demonstration turbine (planned for later this year or next) goes into the Bay.
“The topic of leaving that turbine in the Minas Passage should not even be entertained,” Porter says. “The topic that needs to be discussed is accountability, responsibility, and repercussions, as they will do so again if allowed to continue.”