Almost half of Alberta's power generating capacity is from coal, giving the province the dirtiest electricity sector in the country. ((Charlie Riedel/Associated Press))

Alberta's electricity regulator has given its final approval for a new coal-fired power plant just north of the Rockies, and an environmental group is crying foul because the decision was rushed so the facility won't face stringent federal limits on its greenhouse gas emissions.

Calgary-based Maxim Power got the official go-ahead Thursday from the Alberta Utilities Commission for a $1.7-billion expansion of its H.R. Milner plant near Grande Cache. The company will build a 500-megawatt generating station next to its existing 150-megawatt one, which is to be shut down in 2012.

Environmental groups filed a court challenge when the project received an interim nod in June, saying the utilities commission rushed the approval to help the company avoid upcoming federal rules on carbon emissions. Any coal-fired power plant that comes online after July 1, 2015, would have to cut its emissions to the level of a natural-gas power plant, but plants in operation before then are exempt.

The Pembina Institute had asked for the commission to hold a public session into the new generating station, but the regulator rejected that more drawn-out approach and issued its decision without hearings.

"This was clearly done on an expedited basis to assist [Maxim Power] in avoiding these proposed federal greenhouse gas regulations," lawyer Barry Robinson, who is representing the Pembina Institute and the group Ecojustice in their request to appeal the decision, said last week.

Utilities commission spokesman Jim Law countered that the proposal was given a thorough and fair review under rules that are in effect now.

Company asked for quick review

The interim OK came after a letter to the commission from Maxim, in which company lawyers asked for a quick approval.

"A recent development that is of extreme concern to Maxim is the proposed federal carbon legislation announced to industry," the letter said. "Maxim has consulted with the minister on this new legislation and understands that the Milner expansion will be considered an existing plant if it is commissioned by July 1, 2015.…Maxim requires an approval from [the commission] as soon as possible and no later than June 30, 2011, in order to qualify as an existing plant under this new federal legislation."

Maxim's letter said having to abide by the federal legislation would likely kill the $1.7-billion Milner expansion.

The last two new coal-fired power plants to be built in Alberta — Keephills 3, which will come online later this year, and Genesee 3, which powered up in 2005 — were approved by the province years ago on condition that they offset their greenhouse gas emissions down to the level of a natural gas plant.

Pembina expressed outrage Thursday that Maxim Power's new coal-fired plant won't be subject to that limit, and will be allowed to spew about three million tonnes of greenhouse gases a year — roughly twice the carbon dioxide equivalent of a similarly sized natural-gas-fired plant.

"After helping this coal plant to beat the federal deadline, the AUC has now also loosened the standard for greenhouse gas pollution in Alberta," said Chris Severson-Baker, Pembina's managing director. "Today's decision is a 10-year step backward for the AUC and the province of Alberta."

Air quality standards breached

The new coal-fired plant near Grande Cache still needs final approval from Alberta's Environment Ministry.

It's unclear whether emissions issues at the current plant will affect that process. The Alberta Utilities Commission decision notes that levels of air pollutants in the vicinity of the plant have "occasionally exceeded" provincial standards, and that the new generating station would do so as well.

Alberta Environment's decision is expected by the end of the year.

Maxim CEO John Bobenic would not comment to reporters last week on concerns related to the Milner plan expansion because the matter is before the courts.

Alberta is the only province still building coal-fired power plants. Nearly half its electrical generating capacity relies on coal, and its electricity sector produces more greenhouse gas emissions per capita than any other province.

With files from The Canadian Press