Why Dominion Energy is suing Dominion Energy over $4-billion price tag
The oil and gas giant has sued the provincial government and three employees over the cost of a $4.9-billion carbon tax that Dominion says was imposed on the company’s electricity business and should be repealed.
Dominion says it paid $4,854,000 in the last two years to assess and administer the carbon tax, which was implemented to curb greenhouse gas emissions and curb the flow of oil and natural gas through the province’s power system.
“We did not anticipate the magnitude of the damage we were undertaking to our customers and our business and the damage to our economy,” Dominion chief executive Brian Murphy said in a statement.
“The costs associated with this litigation have exceeded our expectations and have significantly exceeded the amounts we are reimbursed.”
Dominion has alleged the carbon pricing law is illegal because it unfairly penalizes it for the carbon it emits.
It also said the carbon levy has caused the company to incur higher costs for maintenance, equipment and training and has resulted in increased operational and financial risks.
The company has said it’s not seeking to recoup the costs of the carbon charge.
“Domination Energy has always made an effort to minimize the impact on its customers and business,” Murphy said.
“However, due to the nature of this case, we cannot comment further at this time.”
The company’s lawsuit alleges the carbon fee was imposed under the Renewable Fuel Standard (RFS) that requires the province to buy up carbon credits from companies that emit carbon.
It alleges that by imposing the carbon rate on Dominion Energy, the government violated its fiduciary duties under the federal Fair Trading Act and its duties under a contract with the provinces.
“This was a grossly disproportionate tax imposed on Dominion’s customers and businesses,” Murphy added.
“By imposing a tax on Dominion, the province has impaired its ability to secure financial support from the federal government.”
The case is expected to last two weeks.
Murphy has previously defended the carbon price and said the company pays $8-million annually in carbon credits.
In its lawsuit, Dominion said the province is “ignoring its duty to provide the support required under the RFS, which is in line with its obligations under its fiducial responsibilities to its customers.”
Murphy said the RFEAs mandate is to provide incentives to increase carbon emissions and increase investment in clean energy technologies.
“In order to comply with its fiduioary duty, Dominion Energy must make substantial financial and operational investments to achieve and maintain the emissions reductions it is required to achieve through its operations,” Murphy wrote.
The lawsuit says the carbon market is “at risk of collapsing due to a lack of incentives to reduce emissions.”
Murphy has said the state should not be “punished” for implementing the tax, because the province pays a rebate to Dominion Energy for every tonne of CO2 it emits and is a strong supporter of the industry.
He has also said it is “wrong and unreasonable” for the province not to be reimbursed for its carbon charge because it was imposed during the RFA.
“Under the Fair Trading and Environmental Acts, the Crown has the power to recover damages from parties whose conduct was harmful to the public good,” Murphy stated.
“At this time, we are unable to comment further on the specifics of this particular case because the matter is before the courts.”