The British Columbia Utilities Commission (BCUC) unconditionally approved Rio Tinto Alcan’s long term electricity purchase agreement with BC Hydro, clearing the way for the US$2.5 billion modernization of Kitimat’s smelter, securing the last of three major conditions needed for final board approval of the modernization project. The other two conditions were reached: a new labour agreement with the plant’s workforce and government approval of the project’s environmental specifications. BCUC acceptance of the 2007 Electricity Purchase Agreement (EPA) between BC Hydro and Rio Tinto Alcan was obtained January 29, 2008.
Under the terms of the EPA, the Kitimat smelter's electricity needs will have priority over power sales. As such, Rio Tinto Alcan will adjust its power sales to BC Hydro depending on the final configuration and power requirements of the modernized smelter.
The BCUC rejected concerns raised by the District of Kitimat, who argued that the EPA would make it more profitable to sell electricity than smelt aluminum. The BCUC noted that any decision on modernization rested with Rio Tinto Alcan’s board of directors, and that the EPA neither harmed nor helped the project.
In fact, the BCUC said modernization was more likely to happen with the EPA in place, as opposed to any of the alternatives proposed by the project’s opponents.
"We are very pleased with the BCUC decision to accept the new power agreement between Rio Tinto Alcan and BC Hydro,” said Jacynthe Côté, Rio Tinto Alcan Primary Metal President. “Final approval of the project will allow us to stay on target to deliver first metal by 2012 and reduce greenhouse gas emissions by half a million tonnes per year."