Alcan Given $2b In Subsidized Profits From New Deal With Province
By 250 News
Wednesday, August 16, 2006 09:08 PM
Alcan is set to make over $2 billion in publicly subsidized windfall profits from British Columbia power sales, says the District of Kitimat, following Alcan’s announcement Monday of a $1.8 billion modernization of its Kitimat smelter.
Water rentals of under $5 per Megawatt Hour (MWh) make the publicly owned Nechako/Kemano river system a virtual gift and gives Alcan access to the cheapest power in the world. It costs Alcan under $5 MWh to produce the electricity. Then the public buys back the power for $71 per MWh – totalling a profit of $61 per MWh. With an average sale of about 210 MW per hour, Alcan stands to make over $2 billion in subsidized profits off the new deal’s 22 year term.
“We are long-time supporters of Alcan’s aluminum operations but these profits are far in excess of fair market return, and are made possible by selling the river for a pittance then instantly buying it back for full market value” says Kitimat Mayor, Richard Wozney. “Over the 22-year term the people of BC will subsidize Alcan to the tune of $2 billion. The announced smelter modernization is $1.8 billion. Not only is the modernization far smaller than Alcan’s previous plans, and will cost over 550 direct jobs, but it is being wholly paid for by the public.”
Under the deal announced by Alcan and Premier Gordon Campbell, power from Alcan’s Kemano station will be diverted from expanding the aluminum industry to bulk sales to the grid to capture this windfall profit. Under the original 1950 Agreement between the Province and Alcan, any surplus electricity is intended to attract industry to the vicinity of Alcan’s works.
“The people of British Columbia own the natural resources of the Province and should benefit by corporations paying a fair price for usage to the provincial government or through the creation of real industrial expansion that will benefit the people of BC,” says Wozney.
Yesterday on CBC Radio’s BC Almanac, Minister Richard Neufeld said he, “would much rather buy it (power) in BC and have it delivered to British Columbians than have to actually spend more money to buy from Americans.” In response, Wozney says, “No one begrudges Alcan making a fair profit, but this is ridiculous. The Province of British Columbia does not give the Americans whole river systems and cheap water rentals to produce their power the way BC does with Alcan. The fact remains that Alcan is making over a 1000% profit because we are giving away a public resource.”
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Posted by: Runner46 on August 16 2006 10:35 PM
This could in the final analysis cost the Campbell Government a lot of votes.