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Alcan Makes Power an Election Issue

Kitimat is furious at the company for exporting taxpayer subsidized electricity while cutting jobs.

By Heather Ramsay 11 May 2005 | TheTyee.ca
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Alcan’s Kitimat Works

“It’s like rubbing salt in the wounds,” says Pat Moss, who worked tirelessly and from the early 1980s into the late 1990s to stop Alcan from damming more northern rivers and diverting more water to run their aluminum smelter in Kitimat.

She is not surprised that Alcan is now openly focused on selling power instead of creating jobs at the aluminum smelter in Kitimat and the never-developed-yet-promised plants in places like Terrace and Vanderhoof.

Although “jobs” were always the trump card the company held up to curtail “anti-development” activists, she and many others suspected it was all about power.

In those days, says Moss, Kitimat was totally on side with Alcan, so she is intrigued to see the tables have turned.

Soured relations

Two years ago, the relationship between Alcan and the council of the company town soured, says Ray Brady, a former town councilor and present member of the Save the Northwest Coalition.

He admits that for the last 48 years different councils have supported Alcan right or wrong, but no longer.

The District of Kitimat, population 11,000, is now furious at Alcan for profiting by exporting power on the hydro-electric grid, while continually cutting back production and jobs at the smelter — the major employer in town.

The smelter, which used to employ more than 1,800 people in the past, has not been running at full capacity for a number of years, despite positive metal prices.

“At one time 50 per cent of the plant was shut down,” says Brady.

The only thing running at full capacity are the power lines out of the community, quips the website for the Save the Northwest Coalition. People in Kitimat feel the very existence of their town is threatened and they are fighting hard.

After an original attempt to take Alcan to court for breach of the 50 year-old contract, which says power must be used to employ people at the smelter, failed on a technicality, the town is still swinging. Now it’s the provincial government they’re taking to court, demanding the government enforce the terms of the contract.

Floods and promises

There is quite a history to this tale. Allegiances have shifted. Rivers were reversed, mountains were drilled through and vast areas were flooded.

In 1949 an agreement was signed, sealed and enacted into law that allowed Alcan to dam the Nechako River to feed a powerhouse they would build in Kemano, a tiny village built on the rugged slopes of the Coast Mountains.

The power would feed an aluminum smelter planned for a site called Kitimat, at the end of the deep and narrow Douglas Channel.

In exchange for the right to vast tracks of crown land and water, Alcan agreed to use the water for or in the vicinity of “the works” or the smelter.

By the time all was said and done, 120,000 acres of the Ootsa Lake valley on the east side of the coast mountains were flooded. The Whitesail and Tahtsa Rivers were transformed into lakes. Water from the reservoir was diverted via the newly created Tahtsa Reach to Tahtsa Lake, and then through a 10 mile man-made mountain tunnel to the powerhouse.

The Cheslatta people who now live on the slopes of Grassy Plains overlooking Francois Lake were the most severely affected.

Their homes and graves were flooded with shockingly short notice. Men out hunting or fishing, came back to find their homes submerged and their people in flight.

The murky waters of the lake rose and submerged thousands of dollars worth of timber, along with fine farming land.

The Nechako River, home to world class salmon stocks, was seriously degraded and faces low levels and high temperatures which threaten the fishery to this day.

At the time, Brady says, this was the price government thought they had to pay to develop the north and get people moving into these isolated areas.

What about the environment?

Brady says the original agreement, four pages long, made no mention of the word environment, but that was what Moss and her colleagues were concerned about.

“They didn’t even think that way back then,” Moss says.

Moss remembers when Alcan first started selling power to BC Hydro in 1980. That’s when people really started to notice disturbing levels in the Nechako River — levels that were dangerous to two sockeye salmon runs, she says.

And that was when communities first started taking on the huge conglomeration in a fight to save the rivers and the salmon.

Rafe Mair, Vancouver broadcaster and former Socred cabinet minister, was one of the few big city media types who covered the story. He says the issue split the North in two.

Those west of the coast mountains prospered from Alcan’s use of the river water for power, and those on the east side felt the full devastation.

He remembers when the town of Terrace declared itself a Rafe-free zone, after he became wise to the horrific environmental impacts of the second phase of Alcan’s damming strategy, known as Kemano II and regularly reported on the topic in radio and in print.

The election zone

With the coming election, the people of Kitimat have found themselves in a Campbell-free zone. When invited to a town hall meeting, Campbell’s office said the premier was too busy with the election, even though he swept through Prince Rupert, Terrace and Smithers only weeks later.

NDP leader Carole James jumped into the fray by taking up the invitation to the meeting in Kitimat last month. She and candidate Robin Austin, spoke passionately about ensuring Alcan live up to the intent of the original water license.

"It's very clear they must provide power generation for aluminum production right here in Kitimat. That was the agreement and it must be honoured,” she told the gathered crowd.

The townspeople of Kitimat are making this an election issue. Trafford Hall, City Manager, says the Liberals, including incumbent Roger Harris are helping Alcan sell power.

“This was an exchange, and the Liberals are making it a gift. This is bad for BC, but it will be felt first by the people of the Skeena,” he says.

But in 50 years, no political parties have clean records on the topic. The NDP also encouraged Alcan’s power sales throughout the 1990s, even though Hall says those sales were surplus power and they were to be made for the sole purpose of expanding aluminum production. As each government changes, Hall says, Alcan tries to move further from this.

As for shifting allegiances, Mair remembers when Premier Gordon Campbell was leader of the opposition. Campbell showed up at his office to read through Mair’s library of files on Kemano II.

After perusing the scientific reports, Campbell came to the conclusion that the project was not worth the destruction of the salmon stocks, says Mair.

Mair, who has become a feisty supporter of wild salmon and very vocally against fish farms, finds this anecdote highly ironic, as Campbell’s government is now pressing for these farms and threatening wild salmon stocks.

Cheslatta forgive Alcan

Also ironic is the position of the Cheslatta people. Mike Robertson, senior policy advisor for the Cheslatta Carrier Nation, says that after 20 years of protests and court cases of their own, his nation now has a good relationship with Alcan.

They signed a memorandum of understanding in 2000 and have been involved in several business relationships since.

These include developing technology for work being done by the Cheslatta to salvage the timber left underwater when the Nechako was dammed, as well as, a commissioning a feasibility study for building a alcohol and drug abuse treatment centre for Alcan and other corporate clients. “Power exports don’t affect us. What is done is done with the flooding 50 years ago,” he says.

Robertson says his tiny nation of 110 people is experiencing a much-needed revitalization.

“It is kind of interesting how the Cheslatta have come full-circle with Alcan. They are not pandering to us. All of these relationships are business to business.”

But Robertson says they haven’t held Alcan to the fire since the MOU and he is glad to see his nation moving ahead on economic initiatives that were put on hold during the years of conflict.

The Cheslatta own a community forest license, have built a sawmill, completed a $14 million community water treatment facility and pipeline and built a community health facility in the past few years. Pretty impressive for a nation of 150 who have to take a ferry and drive 40 kilometres to pick up their mail in Burns Lake.

Robertson understands the position of the people of Kitimat -- it was his people’s for years -- but after being railed at for threatening the prosperity of Alcan workers back in the days of the Kemano fight, he has little advice for them.

“The losers in the first instance are now the winners and vice versa,” muses Mair as he’s told of the turn around for the Cheslatta.

“Alcan are a lot of things, but they aren’t stupid,” he adds.

Back to the power game

Kitimat may not be getting any help from the Cheslatta, but there are a lot of others on their side, including various groups now part of a coalition called Don’t Sell Us Out. Protesters took action at Alcan’s recent annual general meeting in Montreal, staging a demonstration against Alcan’s sell-off of B.C.’s natural resources.

Brady says the growing concern in Kitimat over power exports came home in 2002 when Alcan submitted a letter to the BC Power Commission recommending that private power generators should have the same access to the grid as BC Hydro.

Rather than selling their power to the middleman (BC Hydro), Alcan now wants to sell direct. So when the market goes crazy, as it did during the brown outs in California and Washington State in the late 90s, they will reap the windfall profits, says Brady.

“They want unfettered rights to sell power to the end user... That is not what they were given rights to the Nechako watershed for.”

Within the last five years, the village of Kemano, site of the powerhouse, has been shut down. More than 300 people, including families, were moved out; the houses were burned down by firefighters for drills. Now single people work in shifts, flying in and out when needed.

Brady says Alcan wants to upgrade the smelter in Kitimat, but they have the technology to use less hydro power and 40 per cent less man power to produce the same amount of aluminum. This means more job losses in a town that has 300 already.

The town commissioned a study that found with every 100 jobs lost at the smelter, the province would lose $56.5 million in gross industrial output and up to $2.4 million in provincial taxes.

British Columbia boasts Alcan’s lowest power costs, but that means BC power also has the highest profit margin. In Quebec, the province grants renewable water licenses which are tied to investment in Quebec aluminum capacity and numbers of jobs.

Alcan is trying to stretch the limits of the 50 year old contract in order to take advantage of the obscene profit margins selling electricity provides, says Hall. He says the rate of return on electricity for Alcan is 900 per cent, as compared to 18 per cent for aluminum — a great return in itself.

“Why would a manager chose to make a mere 20 per cent profit, when the government is allowing them access to this risk-free profit margin?”

The district’s position is that Alcan should build a plant big enough so no jobs will be lost. They insist that Alcan stops selling power to subsidize other operations in Quebec and around the world.

“They are knowingly and deliberately sacrificing a whole town, but there is so much money on the table, that they are doing it anyway,” says Hall.

“Stop selling power. It’s against your contract,” reiterates Brady, who has lived in Kitimat since 1957 and is a retired construction electrician.

Heather Ramsay is a contributing editor to The Tyee based in Queen Charlotte City.  [Tyee]

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