Calgary Mayor Naheed Nenshi says it would be "dangerous" if the Alberta government retroactively invalidated electricity contracts signed 16 years ago to end a lawsuit it has initiated against utility companies that cancelled their power purchase agreements.

"Man, oh, man, that is a dangerous precedent — the most dangerous precedent I can imagine any government setting, particularly when they're about to go into the market looking for participants in the renewables auction and in restructuring the electricity grid," he said Tuesday.

He was responding to media reports saying that's one way the Alberta government could get rid of a lawsuit it has filed against utility companies over PPAs.

"Who would ever invest in this province if they thought the government would just simply invalidate their contract decades later?"

He said the move would send a "strong signal" that the province is "closed for business."

Ongoing lawsuit

Power purchase arrangements, or PPAs as they're known, are deals signed between the province and power plants that existed prior to the privatization of Alberta's electricity grid.

Those who own the PPAs agreed to pay the plants at established rates and then take the power and sell it on the open market in the hopes of turning a profit.

Several companies, including Calgary-owned Enmax, have cancelled the contracts because they're no longer profitable, blaming the new increased emissions fees and Alberta's new climate policy.

The government claims could cost Albertans up to $2 billion, but others said will only cost between $600 million and $900 million.

"If I were giving them advice on this," said Nenshi in reference to the Alberta government, "I would say, 'Holy cannoli, are you really thinking about doing this in order to avoid the consequences of the lawsuit that you yourself filed?'"

Nenshi also said the province should discontinue its lawsuit.