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CORA AK EAR ER lines running into

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the Kitimat aluminum smelter carry electricity generated at Kemano using the water of the

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watershed. Some say the agreement that gave Alcan the use of that public resource is being perverted, MATTHEW PETERSON PHOTO

Power t

Kitimat says Quebec’s power subsidies turn into a double-your-voltage bonanza for Alcan when coupled with an ability to sell electricity in B.C.

HE CASE against Alcan power sales is taking a new twist.

Now Kitimat officials

argue Alcan can use

any power sales here to fuel its investment in smelters in Que- bec, further undermining Kiti- mat Works.

Kitimat municipal manager Trafford Hall laid out the town’s latest analysis of the power sales issue before a town hall meeting in Terface May 6. ::

Since last summer -Hall -and Kitimat mayor Rick Wozney have been trying to convince north- westerners that electricity sales by the aluminum giant will come at the expense of smelter jobs.

They essentially argue the northwest faces a slippery slope — take a stand now to stop power sales or else Alcan will eventuai- ly cut as many jobs as it wants and sell as much power as it wants rather than using all Kema- no-generated power to produce aluminum.

And Hall says the fight is just beginning.

“The company isn't poing to walk away from this debate,” he predicted. “You're going to see a lot more of this.”

The argument rests on the con- tention that power sales by Alcan are far more lucrative than alumi- num production.

Hall calculates Alcan’s profits from aluminum smelting at $180 million per year fram the Kitimat smelter, and projects Alcan could make $280 million a year profit instead if it shuts the smelter sells all the power at market prices.

Here are their key points:

@ A shakeup of the company and a new policy of “asset opti- mization” has led it to pursue power sales as a strategy in B.C.

Evidence -of that includes the creation of an Alcan subsid- jary in the U.S. to sell power there.

@ Alcan has also split its B.C, operations into a smelting division and a power products division.

M@ That has enabled the power products division to charge the smelting division market price for power. Kitimat officials say that's around $50 per megawatt, rather

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Stories by Jeff Nagel

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ALUMINUM Is why the

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smelter and Kitimat was built. But critics say Alcan is now positioning itself

to use less power for smelling and more for lucrative power sales. JENNIFER LANG PHOTO

than the $5 per megawatt Kemano power actually costs Alcan to pro- duce.

M@ That bockkeeping change eliminates the advantage of cheap power in Kitimat and puts the smelter into what, Alcan can claim is a money-losing position. The sense: of crisis is intended to scare the region into accepting whatever sclution Alcan offers.

Mi Quebec provides subsidized power for Alcan smelters there in return for guaranteed job levels. The latest smelter announced there was to be built based on power provided at $27 per mega- watt.

M@ If Alcan can sell power at high market prices in B.C., it can take the profits and buy back sub- sidized power in Quebec, where it continues. to expand or build new smelters. That power shift from one provitice to another nearly doubles the electricity Alcan has to smelt aluminum. One megawatt sold in B.C. for $50 buys nearly two $27 megawatts of subsidized power in Quebec - where it's tied to jobs for Quebecers.

M@ Unless B.C. firmly enforces the terms of the 1950 agreement that restricts power sales to the local area, Alcan will continue to pursue the power sales strategy.

@ Kitimat describes Alcan's tactics as “creeping incremental-

ism.” That means pushing the boundaries of what the contract allows to sell more and more power.

@ Power sales to B.C. Hydro, which were also lucrative for the province, first began in the 1990s,

@ That gave Alcan a taste for power sales. It. was able to de- monstrate in the past two years it can shut down aluminum smeiting

capacity to meet its contracts to

deliver power to B.C. Hydro. That happened because Alcan said it had tow water levels in its reser- voir and , couldn't both smelt. alumi- num and sell the power. It chose to shut down half the smelter’s production rather than purchase power else-

where to ful- Samick ; fil its re- Trafford Hall quired deliv-

ery.

Mi The next step, Kitimat says, is to demonstrate Alcan can sell power any time it chooses, when there is no water crisis.

M Total power sales would mean permanently closing the Ki- timat smelter, While technically

possible it would be politically difficult. Kitimat officials believe

' Alcan will instead propose to re- build the same size smelter — ra-

ther than a larger one to make use of all Kemano power. The same size smelter but new and more ef- ficient would free up much of Ke- mano power for sales, while at the

same time using several hundred .

fewer workers than today. Hall says there’s nothing wrong

with Alcan’s strategy — it's simply |

meeting its duty to maximize money for its shareholders.

It’s likewise up to the B.C, government, he says, to maximize the value in jobs from a public re- source.

“Alcan is doing what they should be doing. The question is where is our government? No one is minding the store.”

There’s little expertise in gov- ,

ernment in monitoring Alcan, one of B.C.’s biggest manufacturers, he said, adding cuts to the public service and the parade of premiers have all weakened the province's ability to withstand Alcan.

He says the company seized on that weakness after the B.C, Lib- erals came to power.

“Within a month of the govern- ment being elected, Alcan had shut down half the smelter and was selling power to the Ameri- cans.”

Study Quebec’s tactics, Baker urges

KITIMAT’s analysis of the poten- tial for Alcan to sell more power —at the cost of hundreds of north- west jobs -is sound, says Ter- race’s economic development of- ficer.

Brian Baker, executive director of the Terrace Economic Deve- lopment Authority, says he can, find no flaws in the case made by Kitimat officials.

“What they say about power sales is legitimate,” he said. “You

do lose your competitive edge... Our competitive. edge is cheap

power”). 2s , "] totally agree with their argu-

ment.”

But Baker said he has greater difficulty with the tactics being contemplated in Kitimat, particu- larly any court challenge.

“Are we going to have an alie- nated multinational that has a very extensive legal: team?” he asked. “I'd like. to think leveller heads will prevail.”

Alcan has. pulled out of other locations in the world, he said.

“] don’t think it’s likely. But it’s not beyond the ibility.”

tealm. of poss- -. Pos _ there oe te seco HHinked. to. jobs-at-Alean plants... .>He. also agrees thé Quebec ~

“-government has crafted much’

more effective deals to ensure Alcan creates and maintains jobs there. .

“Quebec did their homework better,’ Baker said. “They have a better deal.”

Baker says the provincial gov- ernment, in concert with. the af- fected northwest towns, should carry out a.detailed analysis of how, Quebec deals with Alcan. or even mount a fact-finding mission to that province. _

Power . subsidies there -are | “Quebec seems:to have exact.” ly. what we want,” he said.

“Megawatls for jobs.”

That knowledge, he said, would help fortify the communi- ties and the province in any up-

‘coming negotiations with Alcan.

"Maybe it won't be as good as what Quebec has,” he said. "But

- maybe something can be worked

out.” . ,

Baker says the issue of where any surplus power to the smelter’s needs could be sok is also of in- terest, He said cheap Alcan power

could be-a major tool to attract “new industries to the Terrace area. if if could be used beyond the im-

mediate Kitimat area.

; The Terrace Standard, Wednesday, May 21, 2003 - A5

CORRESPONDENCE FOR THE TERRACE STANDARD

The Mail Bag

Board’s damage control rag dodges questions

Dear Sir:

Parents of the 6,100 students in Coast Mountains School District recently received complimentary copies of Board News — a fluffy little blurb extolling the Good Works being visited upon our children by the trustees (and not, I’m sure, a self-serving waste of scarce educational funds).

The April edition treats us to a full page of flummery entitled “You Asked Us...”, which doesn’t so much answer questions directed to the board as present an exercise in damage control against recent public criticism of board decision-making.

In response to published complaints that the mave

‘to a four-day compressed work week for our young

. people has been arbitrary and ill-considered, the News refers critics to the parents of students in the five schools the board axed last year: “Ask them if they were given a choice of schooi.closure or four-day week last year what they would have taken.”

Well, my-two daughters were affected by the closures last year. And you know what? Parents weren't given the choice between a closure or a four- day week despite our considerable efforts to bring

- alternatives to the board’s attention.

The decision -- made by the board behind closed doors — offered little possibility for public input or oversight. Parents were pre-emptively advised that closure was really the only tenable option. Not a peep then about a compressed week (or any other options).

This year, we're being told that the compressed week is the only way to go.

Wonder what the “one true way” will be next year, when the cuts are forecast to be even deeper? Twenty-four hour operations to maximize plant utilization, perhaps?

In response to calls for a “needs budget”, the News is similarly single- and/or simple-minded.

“This is a budget to Victoria saying that we ‘need’ — this much to run this school district.”

What's wrong with that? What’s wrong with figuring out What our kids need - has the board actually undertaken that little exercise — then working their collective butts off to try to secure the requisite | resources, as some other boards in the province are— doing?

Well, says the News, if we submit a “needs” budget, “in all likelihood the government would dissolve the current board and appoint a single administrator to balance the budget at all costs”. Isn’t that the noble educational exercise that our Board is currently obsessed with?

But wait! There’s more: “If the board were dissolved, parents would no longer have a voice in decisions concerning the direction of their child’s education.” [’m sorry to have to inform the board that many parents - rightly or wrongly - already feel marginalized in the restructuring of “our” public education system. an ae

When you feel that your kids’ educational opportunities are being attacked by a bunch of New

Era schoolyard bullies, it really doesn’t matter * whether the abusers are home-grown or imported,

’ What matters is weeding them out and eliminating . their abusive behaviour.

How much would it cost to work up a “needs” budget? Probably no more than another rendition of the Board News, Which would serve our children's

_ needs better? 1 can’t wait ‘til the board answers that one for us!

John How Lakelse Lake

a * s Does it really help kids? Dear Sir:

The four day school day is here and there are problems that have yet to be addressed.

Have you ever gone to the Skeena Mall on a Friday night? This is one place I avoid at this time since it has become a hang out,

This will be a lot worse with the four-day school week,

There are just not enough babysitters, day cares or other supervised activities for children. There are a lot of families, whose income can not make room for this expense, if it was available.

These children are going to be left to their own devices that could lead to vagrancy, vandalism and other crimes that will be their entertainment.

The school board has not looked at the impact on the community.

_ This will tax not only the lower income and single parent groups but the police force, local merchant security and the home owner who happens to live in the down town core. ° .

The students who live farther out of town are now at a disadvantage since they, most likely, will be left alone for the day.

Has: the School Board contacted Nechako North Coast to see if snow plows can open roads earlier to accommodate parents and school buses?

Has the mechanical staff that cares for buses been asked to start earlier and stay later or do they have to hire more staff? .

Does the school board.teally live in the ‘perfect world bubble’? © | _

The support staffs at the schools and others who have an income based on school services have been asked to take a 20 to 30 per cent pay cut and all seem ta be union staff.

Is the school board taking the same pay reduction or cut back their staff? I do not think so, The numbers that represent the ‘savings’ are incorrect since all that is saved is about two hours, when you add the extended hours proposed to the equation.

The present support staff will lose the best people and the quality of service will be diminished.

Increasing class size interferes with quality of education and this was reported in Ontario in 1998. Has the School Board researched this?

The proposed. time table does not allow for second jobs since it does not have the same days off each week. It is confusing at best for both students and _ parents. -

No wonder the schoo] board had ‘closed door’

. meetings. They had to convince themselves they were really acting: in student’s best interests.

ES esc”) *sKearea Focker elect Terrace, B.C.