Sale of Teck's interest in Waneta dam to BC Hydro announced
The sale of Teck’s two-thirds share of the Waneta dam to BC Hydro is now subject to “a number of conditions” according to press releases dated August 1, 2017. Those conditions include review and approval by the BC Utilities Commission, and assuming that it goes forward, the sale is not likely to be completed before early 2018. When the sale is done, BC Hydro will have complete ownership of the dam.
The price? A cool 1.2 billion dollars cash. Of that, Teck will pay Fortis 28 million dollars — Fortis had made the original offer on Teck’s interest in the dam, but when BC Hydro purchased a one-third interest in the dam in 2010, it had also negotiated a “right of first offer” on the remaining two-thirds. The payment to Fortis is termed a “break fee.” Teck expects to realize a net book gain of about 800 million dollars upon closing the deal.
The agreement for purchase and sale stipulates that Teck will be granted a 20-year lease to use two-thirds of the dam’s power generation to supply Teck’s Trail operations. Lease payments will be approximately 75 million dollars per year, with annual increases of 2%; Teck will also have the option of extending the lease for ten years at comparable rates.
BC Hydro’s executive seem very happy with the pending purchase. “We are excited about this opportunity to secure a source of clean, reliable power at a cost effective
price along with a long-term lease for that power,” said Chris O’Riley, President of BC Hydro. “The lease will provide a long-term stable supply of power to the smelter, supporting
local jobs and economic development for many years to come.”
Ken Peterson, Executive Chair of BC Hydro, thinks the purchase will help BC Hydro keep its rates “more affordable.” He characterized a concern for keeping rates low as “our number one priority.”
Michelle Mungall, BC’s new Minister of Energy, Mines and Petroleum Resources commented, “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. 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.”