BC Hydro, Alcan will try to revise power deal

VANCOUVER, British Columbia, April 2 - BC Hydro will not appeal a provincial regulator's rejection of a deal to purchase power from Alcan Inc., and said on Monday the companies will see if they can reach a new agreement.

The provincially-owned utility said the companies have already been talking about concerns raised by the British Columbia Utilities Commission last year when it rejected the first plan.

"In light of the positive nature of these discussions, BC Hydro has decided to drop its appeal and will focus on completing discussions with Alcan in the coming weeks," the utility said in a written statement.

The firms announced in August that Alcan would sell power from its Kemano hydro-electric facility to BC Hydro as part of proposal by the big aluminum maker to undertake a $1.8 billion overhaul of its Kitimat, British Columbia, smelter.

But utility regulators ruled in December that the terms of the agreement were not in the public interest and ordered the deal scrapped. Any new agreement would also be subject to a review by the utilities commission.

BC Hydro said it still believes that buying electricity from Alcan can be a cost-effective way to supply the province with power whose generation does not result in the production of greenhouse gas emissions.

British Columbia Premier Gordon Campbell, who had hailed the original agreement, has pledged that the province will cut its greenhouse gas emissions 33 percent by 2020 to reduce the threat of climate change.

Alcan won a court victory last week when a judge ruled it had the right to sell power from Kemano, which it has done for many years.

Kitimat municipal officials had sued over the power sales, arguing that Alcan was violating a 1950 agreement by selling power instead of using it to produce aluminum at the smelter and maintain jobs in the community.