Trail mayor Mike Martin speaks to Waneta Dam’s sale to BC Hydro
Teck’s Waneta Dam two-thirds ownership is going to BC Hydro. Mike Martin, mayor of Trail, B.C., gives his thoughts on the sale
Waneta Dam isn’t going anywhere, but its owners are. BC Hydro plans to purchase the remaining two-thirds ownership interest in the Waneta Dam and Generating Station in Trail, B.C. from Teck Resources Limited (Teck) for $1.2 billion. With this planned purchase, BC Hydro will have complete ownership of the dam and the Waneta Generating Station. The final decision to move forward is subject to a number of conditions, including approval by the BC Utilities Commission. The transaction includes a 20-year lease agreement where the electricity generated from the two-thirds share will continue to supply power to the Teck smelter in Trail at set prices.
In May, Teck announced it had reached an agreement to sell its two-thirds share of the Waneta Dam and Generating Station to Fortis Inc. When BC Hydro purchased a one-third share of Waneta in 2010, it negotiated a right of first offer on any future sales of the remaining two-thirds interest retained by Teck. As a result of this agreement, Teck offered to sell the two-thirds interest to BC Hydro on substantially the same terms and conditions that it was prepared to sell to Fortis Inc.
Kootenay Business caught up with Trail mayor Mike Martin to get his take on the Waneta Dam sale and how it will affect the community.
How does BC Hydro's purchase of Waneta Dam from Teck affect Trail's future?
Recognizing that Teck put the dam up for sale, the best possible outcome would be for the dam to be purchased by the Province through BC Hydro rather than a private sector and unregulated entity. This option is far more likely to ensure that the power generated at the Waneta dam would continue to be provided to the smelter at rates that will ensure the smelter’s long-term future. Through public ownership, there exist options that might not be available or possible with private sector ownership.
What was your reaction to the news?
Our concerns with regard to the sale of the Waneta Dam revolved around the sustainability of Teck Trail Operations along with the possible transfer of ownership of a public resource to a private sector and unregulated firm. The Trail smelter has been integrally linked to the local production of power at Waneta and its associated low power costs. The sale of the remaining two-thirds of the Waneta Dam and the known financial arrangements lead to the erosion of the low power cost resource and this could significantly hamper the operation of the smelter and its long-term sustainability.
Our interest is to ensure the continuing viability of the smelter to the extent possible, given its economic impact on the City of Trail, the region and the Province of B.C. As one of the largest industrial facilities in the province, the smelter operation affects the livelihood of thousands of people through both direct and indirect employment and supports of all levels of government. It is of immense economic and social importance to the City of Trail, the Lower Columbia and entire West Kootenay.
What are the next steps?
My understanding is that the sale process to BC Hydro now needs to go through the BC Utilities Commission (BCUC). We are fully prepared to engage in that process in support of the sale to BC Hydro. At the same time, it needs to be acknowledged that the public interest, as stated at a previous BCUC hearing, “required that the continuation of the Teck industrial operation at Trail, to the extent that is dependent upon a long-term source of inexpensive electricity, should not be impaired” and remains a consideration. As the sale process unfolds, this factor cannot be lost on either the Province or BC Hydro. It is our job to bring about the necessary attention and focus to this element.
Our job is also to work with government—our MLA in particular—to ensure there are mechanisms that allow some flexibility establishing appropriate power prices into the future and thereby protecting the jobs and economy of our region.
How does this purchase impact the sustainability of the smelter?
Our community and the whole region is highly dependent on this major employer and the impact of the (potential) increased power prices needs to be mitigated. The sale of Waneta to BC Hydro provides us with the best opportunity to influence and shape an arrangement that protects the sustainability of the smelter to the extent that it is dependent on low-cost power. However, Teck needs to continue, as it has done in the recent past, to make substantial capital investments into the facility and we have received assurance that this will continue. The operation has a long history of innovation and continuous improvement and there is no reason this world-class facility cannot be successful for many years to come, if not another 100 years.
What is the general feeling in Trail? How have residents and business owners reacted to the news?
There is no doubt that the sale of the Waneta Dam is concerning and not ideal from a community perspective. Many communities have faced similar challenges and we are no different in this regard. However, we have proven ourselves to be most resilient in overcoming numerous past challenges and I have no doubt that with our strong resolve and community pride we will succeed in addressing this challenge.