Kitimat asks court to resolve Alcan feud
District wants firm to use power to smelt more aluminum
Fiona Anderson
Vancouver Sun
Saturday, October 21, 2006
The long-running feud between Alcan Inc. and the District of Kitimat had its day in court this week as Kitimat asked the B.C. Supreme Court to force Alcan to stop selling the electricity it generates and use it instead to benefit the local area.
The week-long court proceedings before Chief Justice Donald Brenner ended Friday. It's not known when a ruling will be handed down.
Alcan built its Kemano power plant in the 1950s to provide electricity to the Kitimat smelter, and the town was built around it. But, in recent years, more and more of that electricity has been sold while production at the smelter has been curtailed, Kitimat Mayor Richard Wozney said.
In its petition, Kitimat claims that Alcan's sale of electricity breaches its agreement with the province, which says the power can only be used "for the establishment or enhancement of the aluminum industry in British Columbia," or "to encourage the promotion and development of the district of Kitimat and other industries in the vicinity."
According to the petition, Alcan shut down 20 per cent of its aluminum production in 2000 in order to sell power to BC Hydro under an agreement it had made with the crown corporation in 1990. Then, in June 2001, when California was suffering from a shortage of power, Alcan sold power to the United States through BC Hydro's subsidiary Powerex, while reducing production at the Kitimat smelter to about 50 per cent.
Wozney said the cutbacks in production have caused Kitimat's population to drop by 2,000 to 3,000 while schools and businesses close. If the population drops any further, medical services may also be affected.
Wozney believes that, if Alcan is allowed to continue to sell power, the company will shift its focus to producing power rather than aluminum.
"If they can sell power, we know they will simply continue down along the road they have followed since 2001," Wozney said. "That will mean a further decline in the smelter and the smelter will at some point in time be a very small smelter with a very small work force."
"And that will have an impact on the number of jobs in our community and we will continue to decline," he added.
But if Alcan is restricted from selling the power, Wozney believes the company will build a new smelter.
Alcan and the province both argued that Alcan owns the electricity and therefore has the right to sell it, with or without the province's okay.
"Electricity is property," and "it is a fundamental attribute of property that its owner can sell or dispose of [it] in any way he/she wishes," the province wrote in documents filed with the court.
"Hence, Alcan needs no authorization from the province in order to be able to sell the electricity it produces," the documents said.
The province would not comment on the case because the matter was before the court. Representatives from Alcan were unavailable.
The Haisla Nation intervened in the case in support of Alcan's position.
Haisla wants to see the smelter modernized to be more environmentally friendly and to create longer-term jobs, Haisla's lawyer Allan Donovan said in an interview.
"Part of making sure this modernization takes place is making sure that the company is on a solid financial footing and that may involve some power sales," Donovan said.
But Wozney is skeptical that Alcan will go ahead with its most recent proposal, a $1.8-billion US upgrade announced in August.
"There is nothing in writing that Alcan will do anything with the money they are currently making from the power sales," Wozney said. "Frankly Alcan has not lived up to any of the promises it's made in the last 20-odd years," he added.
The district originally brought the suit in 2004 against Alcan but the case was thrown out on the grounds that Kitimat was not a party to Alcan's agreement with the province and therefore could not sue to enforce it. The district then started the current action, which names the province as defendant. Alcan applied for and received standing to participate in the action.
© The Vancouver Sun 2006
Posted by Arthur Caldicott on 21 Oct 2006