BCUC Collapses Power Sales to BC Hydro

By 250 News

    The return on the sale of Hydro electric power by Alcan could have yielded a return on investment that has been called "staggering" by some appearing before the BCUC hearings. The BCUC was hearing a plan by Alcan to sell a firm power load of 140 MWH  to BC Hydro .

The British Columbia Utilities Commission has turned down the agreement between Alcan and BC Hydro.

Testimony at the hearings by BC Hydro officials indicated that in fact the province of BC does not have a power shortage as has been suggested.

Under the proposed agreement, Alcan would have produced the power at a published figure of $10 dollars for MWH, then turn around and sell the same power to BC Hydro for $70 per MWH. In testimony at the hearing the Mayor of Kitimat called the profit "staggering", and he raised the matter of why BC Hydro had tried to sign a new contract at rates considerably higher than those that had been originally agreed to.

Alcan began the construction of the Kemano Completion Project in the early 90’s. That project was cancelled by the provincial government. KCP was intended, according to information at the time, to expand the aluminum production at Kitimat but that never happened.

In fact the reverse is true.

In 1997, shortly after the cancellation of the Kemano Completion Project, Alcan singed a deal with Enron in the USA to provide that company with 167 mwh through Powerex, an arm of BC Hydro. Enron went broke, and Alcan was forced to pay Powerex $111 million dollars in December 2004. At the time, Alcan had a deal with BC Hydro to supply 140 MWH of power at 1990 prices until 2014. Subject to recall for that power for industrial development.

In 2000, because of a water shortage at the dam, Alcan curbed production, throwing 40 office staff out of work.  In 2001, a further 200 employees were laid off.  The result according to Kitimat Mayor Richard Wozney has been that the company has never returned to its former employment levels. In addition, the new smelter that was proposed would operate with a further reduction of 30 % of the employment force.

Wozney says the City originally had 2400 employees.  That has now been reduced to 1553 and a new smelter would cut that by a further 30%. Wozney says home values have declined by 20 to 40% and the vacancy rate in that town is 44% ,the highest in BC.

What Alcan and BC hydro will now do in view of the move by the BCUC is not known.

People who had argued against the Kemano Completion Project have continually said KCP was all about power sales by Alcan and no smelter was planned. At one time in the early 80’s Alcan  said in a series of meetings that it was going to build a new facility in Kitimat along with a smelter in Vanderhoof, and a further smelter in the Smithers area.

None of those projects ever got off the ground.    

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