Losses at Alberta’s Balancing Pool from the controversial power purchase deals have now topped $1.8 billion, but the bleeding is finally slowing — just as the new Kenney government prepares to call in the auditor general to study the fiasco.

“This is a mess entirely of the NDP’s making,” Christine Myatt, spokeswoman for Premier Jason Kenney, said in a statement.

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“Albertans deserve to know how this happened and how much they are on the hook for.”

The Balancing Pool, a government agency that backstops the province’s power purchase arrangements (PPAs), released its annual report last Friday, showing the organization with net liabilities of $946 million at the end of December, down 26 per cent from the previous year.

That’s good news, I guess.

But looking at the total costs connected to the return of power purchase arrangements from industry players to the Balancing Pool in late 2015 and 2016 shows the mountain of red ink is still growing.

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And Alberta electricity consumers will be stuck picking up the tab on their monthly power bills for years to come.

Losses tied to the PPAs hit $265 million last year — down from $662 million in 2017 and $695 million the previous year — as the organization’s decision to cancel three of the biggest money-losing deals had a positive impact, said Balancing Pool CEO Benjamin Chappell.

It’s the first time such data has been disclosed to the public.

“Just by terminating those PPAs, we have seen a significant improvement in our financial results,” he said Wednesday.

Since 2016, the accumulated, locked-in losses from power agreements handed back to the government agency have climbed to $1.6 billion — and that doesn’t include the $219 million price tag last year to terminate three of the agreements early to save money over the longer run.

Add it all up and it’s a gusher of red ink — totalling $1.84 billion and growing — and a mountain of questions about how this situation was allowed to happen.

“It’s big money. It’s a profound cost to Alberta power consumers and Alberta power producers,” said Evan Bahry, executive director of the Independent Power Producers Society of Alberta.

The Balancing Pool expects the financial carnage to moderate before its remaining power contracts expire at the end of next year, with losses of $32 million forecast for 2019.

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The saga began in 2015, when the Notley government decided to increase the province’s carbon levy on large industrial emitters, including coal-fired generating plants. The move inadvertently tripped an opt-out clause in existing electricity agreements in Alberta.

The PPAs, created to give companies the right to purchase electricity from generators and resell it to consumers in a deregulated market, were losing millions of dollars at the time due to depressed power prices.

With the NDP government triggering a change-in-law clause, companies that held the PPAs — including Enmax, TransCanada Energy and Capital Power — were able to hand the under-water agreements back to the Balancing Pool.

Rather than cut its losses and cancel the contracts promptly, the organization continued to hold the biggest money-losers for two years.

The NDP government launched a high-profile lawsuit against PPA holders to prevent the arrangements from being returned, but the legal fight fizzled out with modest settlements between the various sides.

The Balancing Pool borrowed money from the government in late 2016 to handle the debt, with the costs of the loans passed on to consumers through charges on their electricity bills.

According to the annual report, the entity borrowed $349 million from the province last year, pushing its total government loans to $915 million.

As for consumers, the Balancing Pool collected $189 million in monthly charges last year.

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During the spring provincial election, the United Conservative Party vowed it would instruct the auditor general to conduct a special duty audit of the PPA losses

Cabinet has the power to request such an audit, although it hasn’t done so yet. Energy Minister Sonya Savage sidestepped the matter Tuesday when heading into a cabinet meeting.

“Stay tuned,” she told reporters.

Photo by Ian Kucerak Ian Kucerak / Ian Kucerak/Postmedia

Industry groups and experts welcome an examination by the auditor general, if it can provide more information and shine a light on a complex, but expensive, policy failure.

“We are looking forward to that review,” said Bahry. “Given the Balancing Pool’s mandate is to operate in a commercial manner, why did it operate at a loss for such an extended period of time?”

Former Balancing Pool CEO Gary Reynolds believes the audit should dig into why the agency didn’t terminate the PPAs in 2016 or 2017 when it could have saved consumers hundreds of millions of dollars.

Any investigation should also study why the government seemingly didn’t understand the change-in-law clause, or how increasing the carbon levy would start a financial snowball rolling downhill.

Most importantly, what role did politics play in the decision-making and what lessons can be learned from the electricity ordeal?

“I don’t think it is water under the bridge,” said Reynolds, who ran the organization between 2003 and 2011. “It has been a series of errors … and consumers are paying every year now, and will up until 2030.”

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The NDP defended its actions this week, saying the decision to loan money to the Balancing Pool was made with the interests of consumer in mind.

“We welcome any form of additional oversight on that decision,” said Notley’s spokesman, Matt Dykstra.

Some will wonder whether a special audit or inquiry is worth the effort.

Others will see this as the new UCP government looking to lay blame at the feet of the former government.

“Gaining understanding after the fact is good. I don’t think you want to have witch hunts,” said Jim Wachowich of the Consumers’ Coalition of Alberta.

However, given the huge sums of money involved and the potential harm to the power market, Albertans are owed answers.

After all, there are plenty of reasons to dig deeper into Alberta’s power debacle — more than 1.8 billion reasons, to be exact.

Chris Varcoe is a Calgary Herald columnist.