BCUC Reasons for Decision (which killed LTEPA+ deal with Alcan)

On Dec 29, 2006, the BC Utilities Commission surprised many British Columbians, not the least the provincial government, when it rejected the Amended Long Term Electricity Purchase Agreement (LTEPA+) between BC Hydro and Alcan.
Utilities Commission kills Alcan deal

LTEPA+ would have allowed Alcan to sell electricity surplus to its smelting needs in Kitimat to BC Hydro for about $71 per megawatt hour (MWh), and would also have resulted in a $111 million pulic incentive to Alcan to build a new smelter in Kitimat. But LTEPA+ did not obligate Alcan to build the new smelter.

The BCUC's decision to reject LTEPA+ was based on five points.

1. "The Commission Panel concludes that BC Hydro should not have agreed to the pricing provisions of LTEPA+, and in particular should not have agreed to pricing provisions based on the F2006 Call." The basis for arriving at that $71/MWh rate, in other words, is not acceptable to the Commission.

2. "For the purposes of assessing Alcan’s opportunity cost, the Commission Panel concludes that firm transmission service from Kitimat to other potential purchasers is not currently available on the British Columbia Transmission Corporation transmission system."

3. The Commission Panel does not accept BC Hydro’s evidence regarding the value of the benefits to ratepayers in LTEPA+, and expressly rejects [one of] BC Hydro’s submissions.

4. LTEPA+ should not be accepted for filing because of concerns related to the pricing provisions of LTEPA+ that are not related to the incentive or disincentive for the modernization project.

5. The public interest is a flexible test. The Commission Panel needs to decide if the impacts of LTEPA+ on the District of Kitimat should be considered along with other public interest considerations.

BCUC decision re LTEPA+, 29-Dec-2006

On 02-Feb-2007, the BCUC released its reasons for the 29-Dec-2006 decision.
BCUC Reasons for Decision re LTEPA+, 02-Feb-2007