The Alberta government is on the offensive after facing backlash over its decision to ask a judge to declare void the so-called "Enron clause," which allows energy companies to get out of Power Purchase Arrangements if they became "more unprofitable."

In an unusual move, the government has released a package of documents it says proves its claim that will go to court in November. The messages "tell our side of the story," Cheryl Oates, communications director for Premier Rachel Notley, said Sunday.

"The emails show a very cozy relationship between Enron and the government at the time that allowed Enron to lobby for a clause that would change the power purchase arrangements after they had gone to public hearings, so they were in the interest of one company over the public," Oates told CBC News.

The government alleges that during the process to deregulate Alberta electricity markets 16 years ago, a last-minute clause was forged in secret by the Progressive Conservative cabinet of the day under pressure from defunct and disgraced energy giant Enron.

In May 2000, the Alberta Energy Utilities Board issued an order approving the PPAs with a provision that power companies could terminate their arrangements without liability if a change in law rendered their arrangement unprofitable.

The Enron clause gave power companies a loophole to bail out of Power Purchase Arrangements — or PPAs — with the government-created Balancing Pool by adding the words "or more unprofitable" to the provision.

The government announced on July 25 it is taking legal action to protect consumers from $2 billion in liability in additional utility costs if energy companies are allowed to opt out so freely from the arrangements that weren't set to expire until 2020.

An application before the court seeks an order declaring the Enron clause void in law, and an order quashing a recent decision by the Balancing Pool to accept the early return of a money-losing Enmax PPA.

Emails detail Enron lobbying effort

The documents released over the weekend include a July 27, 2000, letter from Robert Hemstock, Enron Canada's director of government affairs, to Larry Charach, then-executive director of electricity in the government's resource development department. The letter was dated five days before the PPAs went up for auction.

Hemstock asked for the words "or more unprofitable" to be added to a Change in Law clause that had been approved two months earlier by the Alberta Energy Utilities Board. The letter said Enron wanted the AEUB order amended, and for the final form of the PPA agreements to be filed under the Regulations Act, "to be sure they are in force and effective."

Hemstock stressed that "the implications of some of these changes is a change in the entitlements and obligations of the parties to the PPAs in the order of hundreds of millions of dollars."

Later the same day, Charach wrote to Bob Heggie, the AEUB's executive director, encouraging Heggie to call Hemstock to talk about Enron's requests.

Charach said Hemstock thought the EUB could approve clarifications to the PPA wording without a hearing. "I believe you believe otherwise," Charach told Heggie. "Perhaps a discussion would close the gap."

The next day, Hemstock wrote to Enron colleagues, telling them that Charach had smoothed the path for the wording changes and for the PPAs to be filed under the Regulations Act.

'Tooting my own horn'

Hemstock said it "may sound a bit like I am tooting my own horn" but "I am quite proud of having accomplished the results we achieved in relation to identifying the regulatory risks and advocating for changes that would mitigate or eliminate many of the risks in the PPAs over the last few months.

"In particular, I thought to write this note to you because I am proud of the comment I received from Larry Charach this evening during our final conversation in relation to the issues described below.

"Larry said to me that his decision to take steps to address Enron's concerns at this late date was based in large part on our relationship and the trust that he has developed in me as a result of having worked with me for some time."

The change went into effect on Aug. 1, 2000, the day before the PPA auction began. Enron, which later went bankrupt, bought one of the PPAs.

Since the NDP government increased the Specified Gas Emitters Regulation on large emitters Jan. 1, Enmax and three other power companies have applied to terminate their arrangements to buy electricity from coal-fired power plants.