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The provincial government has reached a settlement with Enmax, ending a legal battle dating back almost two years after the city utility tried to return a money-losing electricity contract to the government.

The legal dispute stems from an announcement by the NDP government in June 2015, one month after it was elected, that it would hike Alberta’s carbon levy on large industrial greenhouse-gas emitters, including coal-fired power plants.

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That move triggered an opt-out clause contained in a series of electricity deals known as power purchase arrangements (PPAs), which were established when Alberta’s electrical sector was deregulated nearly two decades ago.

The deals gave companies such as Enmax the ability to buy coal-fired electricity from power generating firms, in order to resell it to consumers on the open market.

But the opt-out clause allowed those purchasers to hand PPAs back to the Balancing Pool — a government-created agency that backstops the deals — if a change in legislation causes the agreements to become unprofitable “or more unprofitable.”