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Energy Minister Margaret McCuaig-Boyd said in an e-mailed statement that power providers, not consumers, should cover any losses in the electricity market. She said the government is willing to negotiate with the other parties to “find a better solution.”

“We undertook this legal action to protect Albertans from serious mistakes made by the former government,” McCuaig-Boyd said.

A legal expert says it’s within government’s power to pass laws affecting contracts, such as the power arrangements, but cautioned the move would also impact the investment climate in Alberta.

“Governments can legislate; they can pass legislation that interferes with private rights, including the right of contract and the right to sue or to obtain damages,” said Sean O’Neill, a partner in the power group with McCarthy Tetrault LLP.

“Without question, it would cause investors to think twice about whether they want to invest on the terms that are being suggested.”

Wildrose MLA Don MacIntyre said the government is likely considering retroactive legislation “because they know their lawsuit is frivolous.”

“If they can’t win in court — and I’m very sure they know they can’t win this lawsuit in court — well that’s fine; we’ll just change the legislation,” MacIntyre said. “This is craziness.”

The war of words escalated as two board members resigned from the Balancing Pool, the government agency that markets electricity from older power contracts and is now stuck backstopping the money-losing PPAs at the centre of the lawsuit.

Only one official remains on the board of the Balancing Pool, which is losing about $70 million a month from the PPAs.

“They have decided not to continue with the board,” said Balancing Pool CEO Bruce Roberts.

MacIntyre said he believes the resignations were triggered by political interference in the independent agency.

McCuaig-Boyd said a recruitment process was already underway to fill the vacancies and received considerable interest with more than 100 applicants.

With files from Annalise Klingbeil

rsouthwick@postmedia.com