A major dam in the BC Interior in Trail, near the Canada-US border, will be acquired by British Columbia’s electric utility for $1.2 billion.
BC Hydro announced its intentions yesterday that it is seeking the remaining two-third ownership interest in Teck Resources’ Waneta Dam and Generating Station. It already owns a one-third share in the infrastructure through an $825-million purchase in 2010.
The latest acquisition will “keep rates affordable” and the decision is supported by the new BC NDP provincial government.
“Our government is committed to making BC Hydro rates more affordable and I’m encouraged that BC Hydro’s analysis indicates this purchase is a step in that direction,” said Michelle Mungall, Minister of Energy, Mines and Petroleum Resources, in a statement.
“Now, the BC Utilities Commission will be provided with the opportunity to conduct a thorough review to confirm the benefits of this transaction to ratepayers.”
The deal, subject to approval from the BC Utilities Commission, includes a 20-year lease agreement that will allow the Teck smelter in Trail to access electricity generated from BC Hydro’s two-thirds ownership share at set prices. After the term ends, Teck will have the option to extend this lease by another 10 years.
Teck initially announced in the spring that it had sold its interest in the infrastructure to Fortis Inc., but it cancelled the agreement as it had previously promised BC Hydro the first offer on the dam’s remaining shares. As a result of breaking the deal, Teck will have to pay Fortis a $28-million penalty.
The Waneta Dam is situated near the mouth of the Pend d’Oreille River, just before it merges with the Columbia River. It was originally built and funded by Teck in 1954 and has a generating capacity of 2,680 gigawatt hours of energy per year.
It remains to be seen what will happen with Site C on the Peace River – BC Hydro’s other major infrastructure project – under the new government, which is under a new review by the BC Utilities Commission. Premier John Horgan has been highly critical of the project and the electric utility, and it led to the firing of longtime BC Hydro president and CEO Jessica McDonald last month.
The $8-billion project is already roughly 25% complete, with $1.75 billion already spent and $4 billion committed in contracts. When completed in 2024, it will produce about 5,100 gigawatt hours of electricity each year – roughly half of the energy from Waneta’s generating units.