A nearly three-year investigation into a B.C. based company that was operating three unregulated power plants in Alberta, including one in Sturgeon County, has concluded with the company being issued a $400,000 fine by the Alberta Utilities Commission (AUC).
The AUC is an independent agency mandated by the provincial government to regulate Alberta's utilities sector.
The settlement between the AUC, the commission's enforcement staff, and the company, Green Block Mining Corp. (formerly known as Link Global Technologies), was finalized in December, and dictates Green Block must pay $346,500 for operating the power plants without approval, and up to $60,000 for the legal costs borne by the enforcement staff. The settlement also prevents Green Block from operating in Alberta again.
The monetary penalty is substantially less than the roughly $7 million figure initially brought forward by investigators at the beginning of the proceeding in early 2021. The reduction, and overall delay in the proceeding, was a result of Green Block being unable to provide the AUC with audited financial statements. Those financial statements were considered necessary for investigators to calculate an accurate “disgorgement” penalty, which would've been based on how much revenue the company generated by operating the power plants.
History
The investigation into Green Block's operations formally began in March of 2021 after the commission received noise complaints from residents of Greystone Manor in Sturgeon County. The noise in question was coming from a nearby power plant owned and operated by Green Block and powered through a natural gas well.
AUC investigators found Green Block hadn't acquired regulatory approval for the Sturgeon County facility, hadn't notified nearby residents or completed a noise assessment; and hadn't completed an environmental impact assessment prior to operating. This led to the AUC ordering the facility, as well as another owned by Green Block in Kirkwall, AB, to shut down in August 2021.
Just three weeks after the AUC ordered the Sturgeon County and Kirkwall facilities to shut down, investigators started a second investigation into the company after a third unregulated facility was found to be operating in Westlock.
Investigators initially thought all three facilities were bitcoin mining operations, but the company maintained throughout the proceeding it was never directly involved with bitcoin mining in Alberta.
In spring 2022, the AUC ruled that Green Block violated the Hydro and Electric Energy Act by operating all three facilities without regulatory approval, and without completing the required noise and environmental impact assessments beforehand. With the ruling finalized, investigators proposed a disgorgement penalty that required audited financial statements from the company to calculate. However, Green Block failed to provide the statements for over a year, missing several AUC-imposed deadlines.
The settlement
In the settlement agreement, which is dated Dec. 21, 2023, the AUC wrote finalizing the proceeding now without the company's audited financial statements is in the public's interest, especially because of the approaching three-year statutory limitation date.
“The settlement agreement provides a resolution on the outstanding issue in this proceeding, which is whether Green Block should be required to disgorge any economic benefit it obtained from its wrongdoing,” the commission wrote. “Enforcement staff had originally requested that Green Block be required to disgorge economic benefits in the amount of [$7.04 million], being the asserted economic gains of Green Block from the generation of electricity and mining bitcoin from the Sturgeon and Kirkwall power plant sites.”
“As it turns out, the asserted claim for economic benefit may have been based on enforcement staff's incomplete understanding of both the nature of Green Block's business operations and the revenues and profits generated by Green Block from its operations.”
In a sworn affidavit filed in the proceeding in October, Green Block's director, Kevin Ma (no relation to the Gazette reporter of the same name), wrote the company “never engaged in bitcoin mining at any of its Alberta power plants, either on its own or as part of any co-mining arrangement with any other entity.”
Ma's affidavit also included the most up-to-date company financial records available, which show the company generated roughly $520,100 in revenue from its power plants, and experienced a comprehensive loss of more than $30 million in 2021.
According to the joint submission filed by enforcement staff and Green Block's lawyer, Gavin Fitch, the company's comprehensive loss included a $13 million or more “impairment loss on its equipment and accrued losses and contingent liabilities of approximately $6 million, stemming from this and other legal proceedings.”
In an email to the AUC dated Jan. 19, Fitch wrote the company's dire financial position means that Green Block needs to finance its $400,000 fine, which the company is struggling to accomplish.
“We have explained to enforcement staff that raising money in B.C. to pay a regulatory penalty in Alberta is not easy, particularly given the parlous financial state of the company,” Fitch wrote. “In addition, from a practical perspective, Green Block was unable to meaningfully engage in raising funds during the holiday period, resulting in approximately two weeks being lost.”
“Finally, some prospective investors have expressed the same concern which enforcement staff and the commission have had for a long time; namely, they want to see the audited financial statements.”
In his letter, Fitch and Green Block requested a 30-day extension for the company to pay the outstanding $200,000 the company owes after making a payment on Jan. 22, which the AUC has since granted. Green Block now has until Feb. 21 to pay the outstanding amount.
“Green Block has accepted that it made mistakes with respect to its Alberta operations and the settlement agreement confirms that,” the company said in a statement to the Gazette provided by Fitch.
“Green Block intends to pay the remainder of the penalty owing and looks forward to putting this matter behind it.”