Judge Says Alcan Can Sell Power Without Making Aluminum

Thursday, March 29, 2007 01:32 PM

Mr. Justice Brenner has ruled Alcan cannot be restricted to using power for the smelting of aluminum.

Mr. Justice Brenner decided that neither BC’s Industrial Development Act nor the original 1950 power sales agreement between Alcan and the Province of B.C., restrict Alcan in the decisions it chooses to make with respect to its production of either electricity, or aluminum. In his ruling, he said "Alcan is not restricted by either instrument from selling its Kemano power or using it for the Kitimat smelter as it considers appropriate. "

Experts say the ruling means Alcan could simply shut down the smelter in Kitimat, continue producing power at a cost of $50 million dollars a year, and sell that Kemano power for about $500 million a year.

The Court's decision will play a major part in whatever Alcan decides to do.

Meantime, Alcan says it is pleased with the decision which dismisses the District of Kitimat’s petition. The judgment concludes that there are no restrictions in the legislation, on the company’s use or sale of Kemano power .

Michel Jacques, President and CEO of Alcan Primary Metal Group, says "We must still meet the conditions required for final approval of the US $1.8 billion dollar project." That is the cost of a new smelter for Kitimat if the proposed deal with BC Hydro would have proceeded.

Under that agreement, Alcan would be selling hydro to the grid at just under 78 dollars a MWH .The BC Utilities Commission said the company needs about $10 dollars per MWH to produce the power and the mark up was too high.

Alcan is currently appealing the BCUC decision.

Alcan has said a new smelter must be tied to a new hydro contract with BC Hydro. Under that contract, Alcan would receive susbstantially more money for its power. The Court decision, coupled with the BCUC ruling, now opens the door for Alcan to consider selling power only, without having to build a new smelter.

Economic Development Minister Colin Hansen applauds the decision saying he is optimistic the ruling will allow Alcan to put back on track its plans to build a new smelter.

The District of Kitimat had sought the Court’s support to compel the government to force Alcan to use its power for the development of industry "within the vicinity of the works."

Mayor Richard Wozney and Members of the Kitimat Council say they are disappointed with the ruling.

Mayor Wozney says,” We have been fighting to protect our community and one of the largest water resources in BC for a number of years now, standing in where the Provincial government should be." He asks, “Why are we giving away our resources to Multi Nationals?"

Mayor Wozney says Alcan is now free to close even more aluminum smelting capacity and sell power from the Kemano station. "Under the Industrial Development Act, Alcan got the rights to vast tracts of public land and watersheds of the Nechako and Kemano systems, and Alcan does not have any obligation to use those public resources for industry and jobs."

Wozney says the 500 jobs already lost have left Kitimat with the highest percentage population drop in Canada.

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Posted on Thursday, March 29, 2007 01:32 PM in News by 250 News

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Comments

Posted by: Harbinger on March 29 2007 3:26 PM

Maybe if I ask Alcan if they will sell me cheaper hydro than my local provider, they might look into it. Nuthin' like competition to keep the price down. Right?

Posted by: scotty_855 on March 29 2007 3:52 PM

Opinion 250 keeps getting the facts about the BCUC hearing wrong "The BC Utilities Commission said the company needs about $10 dollars per MWH to produce the power and the mark up was too high." The BCUC decision said that BC hydro price did not reflect the opportunity cost; the fact that there were limited options (in the opion of the BCUC board) as to where Alcan could sell the power. There was mention of Alcan's cost of production.

As for "Mayor" Wozney, The jobs lost at the Eurocan plant, and the closing of Methanex had nothing to do with the decline in population?

Posted by: Gofaster on March 29 2007 4:31 PM

Any odds that Campbell and his @$#$&^$ just legislate an end to this decision, along with the other things that haven't suited them....

Posted by: Chadermando on March 29 2007 5:21 PM

I think in my opinion that this is a huge act of treason on the part of the judge. This should definitely be appealed. I would not be surprised if this decision involved some kind of off-shore accounts, just like I feel is the case with some of our politicians.

This is the case of an activist judge that is ignoring a signed agreement and making up the law as he sees fit. It is wrong, and it is treason that our liberal government does not stand up for the original agreement.

The only solution IMO is to have the province buy the hydro works from Alcan and turn it over to BC Hydro with Alcan negotiating their rights to power from the province as it should have been done in the first place.

Posted by: Chadermando on March 29 2007 5:24 PM

There is no mention of the cost to the provincial environment for the profits of Alcan under this new court opinion that alters the original agreement for "within the vicinity of the works."

Posted by: owl on March 29 2007 5:38 PM

"Alcan has said a new smelter must be tied to a new hydro contract with BC Hydro."

It sounds to me that the users of the power Alcan can sell will be subsidizing the purchasers of Aluminum if that plant is built.

Posted by: Palopu on March 29 2007 9:21 PM

In a sane and honest world this kind of BS couldnt and shouldnt happen. When you have Governments run by **ner do wells** this is what happens.

There are some options that could be looked at.

(1) BC Hydo doesnt have to buy this power from Alcan, they can let them keep it.

(2) The BC Transmission Corp (BCTC) does not have to transport Alcans power to either domestic or foreign markets, or failing that they can charge them enough for transmission to cover the cost of the losses that we will be facing for the job losses.

(3) Maybe the City of Kitimat could pass a local Bylaw and tax the hell out of Alcan.

(4) There is little or no doubt that some behind the **green door** meetings have been taking place as these types of situations take years to get off the ground. It appears that our Government has little of no problem with this idea.

(5) The City of Kitimat tried its best to stop this fiasco, but was unsuccessful, however the Mayor should be given Kudo's for trying. Cant say the same for the Provincial Government boys.

Posted by: lunarguy on March 30 2007 7:31 AM

1) BCHydro desperately needs Hydro, so yes it will purchase the power from Alcan, even though we as tax payers have all ready given Alcan huge concessions in water tax and other benefits.
2) BCTC by law has to transport the power if approached by Alcan or any other major power provider who can deliver the power to the grid in the specified manor.

So basically even though as a province we all helped Alcan get established and make a profit for many years, they are about to make a huge huge profit for little capital put in. Basically BC Hydro should have never created the program that even offered Alcan that much money per MWH.

Posted by: YamaDooPolCat on March 30 2007 7:41 AM

"(1) BC Hydo doesnt have to buy this power from Alcan, they can let them keep it..."

Well then Alcan would just pipe the water to the seashore and start selling water to Japan.

There must be a way to pry the water out of Alcan's hands. Taxes for loss of land use, native displacement fees, make up taxes - governments are good at that.

Posted by: Harbinger on March 30 2007 10:00 PM

Bulk water exports border on treason. Correct me if I am wrong. The start of bulk water exports from Canada would spell the end of us.