Alcan not restricted in what it does with Kemano power

The District of Kitimat will soon decide whether to appeal a court decision dismissing its petition to restrict Alcan Inc.'s power sales from its Kemano power plant.

The British Columbia Supreme Court ruled that the aluminum giant's 1950 agreement with the province and the Industrial Development Act contain no constraints limiting Alcan's use of the hydroelectric power it generates at the northern B.C. facility.

Led by long-time mayor Ricard Wozney, Kitimat has waged a legal battle against Alcan, alleging the company has cut back on production and power use at its aging Kitimat smelter because it is more interested in selling the power from Kemano directly to the province for a higher profit.

"This is a huge disappointment for us. The court has come down on the side of Alcan and the BC government. I'd say it's a blow to all the people who live in the northwest, not only Kitimat," said Mr. Wozney in an interview.

"The government has stood side by side with Alcan and is giving away a huge natural resource owned by the people of British Columbia," he said.

The mayor and the district's lawyers are now deciding whether to launch an appeal.

In the ruling handed down late Wednesday, Chief Justice Donald Brenner said neither the Industrial Development Act or the 1950 agreement constrains Alcan's use of its power or how much aluminum it produces. "There is nothing in either instrument that would require Alcan to maintain any specific production levels at the Kitimat smelter," 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."

Alcan, which is based in Montreal, said its still hopes to go ahead with the $2-billion modernization of Kitimat that will increase annual capacity from 275,000 tonnes to 400,000 tonnes.

"The court's decision is a step foreword in ensuring the sustainability of our operations in British Columbia," said Michel Jacques, president and chief executive officer of Alcan's Primary Metal Group in a statement.

Late last year, the British Columbia Utilities Commission rejected a long-term power supply agreement Alcan had struck with the province relating to the Kitimat expansion, ruling it was not in the public interest. The accord would have allowed Alcan to sell up to $97-million worth of electricity per year for 20 years and included $111-million in lump sum payments to Alcan. It costs Alcan between $5 and $10 to produce a megawatt hour of electricity at Kemano. Under the deal, BC Hydro was to have paid Alcan $71 per megawatt hour.

Without the power sale agreement, Alcan has threatened to scrap the expansion, which is says also requires environmental approval from the province and a long-term labour agreement. It is expected to appeal the BCUC decision before a deadline next week.

Mr. Wozney said he was pleased with one element of the Supreme Court decision.

"The court said the water is a public resource and now I think it's incumbent on the government to step up to the plate and make sure that the people of British Columbia get fair return for the water resource and not just give it away, which has been the case with Alcan," he said.