Trail politicians were just as blindsided as the rest of the city with the news that Teck is selling its share of Waneta Dam.
“We had no idea this was coming down,” Mayor Mike Martin told the Trail Times. “I did receive a phone call the night before the press release, but we did not see the press release until the following morning when it was made available to the public.”
Until now, Trail council has remained silent on the $1.2 billion cash “agreement” in which Teck Resources will sell to Fortis Inc., its remaining two thirds interests in the hydroelectric utility.
Alarms bells have been ringing throughout the community ever since, because cheap power has long been attributed as the primary reason the Trail plant has remained in operation for 100-plus years.
Council’s first opportunity to reconvene was in a closed meeting on Tuesday. Later, during regular council, Martin revealed the panel’s unanimous resolution to retain legal counsel while the city investigates details of the deal, which upon closing, will net Teck $800 million.
“Council has discussed the sale of the Waneta Dam … with respect to the legal implication associated with the transaction,” Martin began. “Council also took the opportunity to review the information and the city’s involvement when Teck sold one- third of its interest in the dam to BC Hydro in 2009/2010, and if the same issues are relevant today.”
In response to the announcement, he confirmed city officials have decided to retain legal counsel and other experts to explore the underpinnings associated with the proposed sale and potential impacts on the community.
“With a view to ensure public interest is protected within whatever reasonable legal means might be available, council will be initially seeking information regarding the proposed sale and requesting the city’s legal and other advisors to identify the options available to best address the matter.”
Martin acknowledged the difficulty in giving a more definitive statement at this point.
“We have not had much chance to deliberate internally … other than it is very concerning to all of council and to the residents of the community,” he said. “Which is why council deliberated this matter extensively (Tuesday) afternoon and we believe we have to take these steps to fully understand the implications of the sale and whether there is any recourse with regard to the matter … first, we have to understand these details.”
According to Teck’s May 12 release, closing the transaction is subject to “customary conditions, including receipt of certain approvals and consents.”
Additionally, when BC Hydro bought one-third of the dam from Teck in 2010, an established co-ownership and operating agreement between the two companies stipulates that BC Hydro has the “right of first offer.”
“Certain consents and amendments from BC Hydro are required in connection with the transaction,” Teck states. “Teck will pay a break free to Fortis in the event BC Hydro exercises its right of first offer.”
The closing date is expected to occur in the fourth quarter of 2017.
“Further information will be forthcoming after council has had an opportunity to gain a better understanding of the issues associated with the sale and the implications this could have, both now and for the future,” said Martin.
“Council appreciates that many members of the community have expressed their concerns and understand that the city has an important role to play as the matter advances,” he concluded.
“In this respect, council also has an obligation to understand why Teck has decided to proceed in this way and what safeguards will be in place to protect the long-term sustainability of the greater region.
“At this time, council wants the public to be aware the city views this matter as a critical priority and has taken action already to commence an internal review … the public will receive further updates when information is available and can be publicly disclosed.”
The Waneta Dam is governed by the Canal Plant Agreement (“CPA”), a contractual arrangement between BC Hydro, FortisBC and other plant owners along the Kootenay and Pend d’Oreille rivers.
Through coordinated use of water flows, operation of storage reservoirs and generating plants, the CPA enables the parties to generate more power collectively from their respective generating plants than if they were to operate independently.
Teck’s two-thirds interest in the Waneta Dam output is defined and determined in accordance with the terms of the CPA. The CPA mitigates hydrology risk for the Waneta Dam. Also included in this acquisition is the Line 71 transmission line which enables access to the U.S. power import/export market as well as other local transmission assets.