Tribal council allowed to appeal Rio Tinto deal

B.C. Court of Appeal decision stalls BC Hydro's efforts to renew sales

Scott Simpson
Vancouver Sun
April 10, 2008

BC Hydro's troubled efforts to renew a power sales deal with Rio Tinto Alcan have hit a new, and potentially monumental snag.

The British Columbia Court of Appeal has granted the Carrier Sekani Tribal council leave to appeal the multi-billion-dollar electricity purchase agreement that was approved in January by the British Columbia Utilities Commission.

The agreement gives BC Hydro long-term access to a portion of the electricity produced at Alcan's Kemano generating station near Kitimat.

The deal was struck in the context of Alcan's plan for a $2 billion modernization plan for its Kitimat smelter -- a plan that would lower the smelter's overall electricity requirements and leave about 15 per cent of annual electricity output for sales to Hydro.

However, the Carrier Sekani are looking for a new deal, either through a court fight or a negotiated settlement, to give some of that water back to Nechako River fish populations downstream of Kemano that have been devastated by the dam.

If they're successful, Hydro may lose some of the electricity production it negotiated with Alcan -- cheap, reliable power that is at a premium in B.C. and across North America.

The tribal council notes that Hydro has set ample precedents that recognize the crown's responsibility to first nations on this issue.

Over the past decade, Hydro has dedicated tens of millions of dollars in environmental restoration funds and foregone power generation in the form of improved water flows in rivers downstream of its dams around the province as a means of compensating for the adverse effects of its facilities.

The Carrier Sekani think Hydro needs to support the same sort of measures on the Nechako, although Hydro and Alcan were able to persuade the utilities commission otherwise in a ruling handed down last January.

The BCUC, in its ruling, stated that it had no authority to make a ruling on first nations issues.

Now, the tribal council says, the whole issue has been reopened.

In an interview, Carrier Sekani Tribal Council tribal Chief David Luggi said neither the province, nor a Crown agency such as BC Hydro, can absolve itself of a duty to consult first nations in matters involving traditional territory or interests.

"The province can't sign off on aboriginal rights or title. It's been long documented that they don't have that capability. So this is where we come in," Luggi said in a telephone interview from Prince George.

BC Hydro declined comment because the matter is still before the courts, spokesperson Susan Danard said in an interview.

"It's potentially a very significant decision," Greg McDade, legal counsel for Carrier Sekani Tribal Council, said in an interview.

"The grounds here are quite far reaching in terms of the utilities commission's role in dealing with first nations issues. They have tried to avoid that, despite the rest of the province and every other agency of the Crown becoming involved in aboriginal consultation."

An Alcan spokesperson said the company believes that the B.C. Utilities Commission made a correct decision, and is continuing with its plan for modernization of the Kitimat smelter.

"Rio Tinto Alcan believes that the BCUC decision is correct and specifically, the 2007 Electricity Purchase Agreement between the company and BC Hydro does not impact the flows in the Nechako River, therefore Rio Tinto Alcan is confident [that the BCUC ruling will stand]," corporate affairs and community relations manager Colleen Nyce said in an e-mail.

Nyce, whose office is located at Kitimat, said Rio Tinto Alcan's managers "are completing the necessary final pre-engineering and feasibility work before taking the Kitimat modernization business plan to the company board of directors for final approval."

That approval is expected later this year.