Jul. 15, 2009 - Issue #717: Edmonton Musicians Directory 2009

Epcor Sale: Still some fight left in ‘em

Despite legal setback, those opposed to sale of Epcor generating assets pledge to continue the fight

The April 17 closed-door decision by city council to sell off its power-generating assets to create Capital Power has left Edmontonians with much to debate around the issues of privatization of public assets and the need for greater transparency under the pyramid.

Since the announcement in early May—fully three weeks after the deal was approved by all but two city councillors—a range of voices has decried the move, charging that city council abandoned its democratic duty by making the decision in secret, while others believe the sale itself should not have occurred. Many Edmontonians became concerned about the public nature of the city-owned company and the future security of public resources and assets. Richard Zwicker was among them.

"When I heard of the sale on May 8 I was gobsmacked," Zwicker recalls. "I called public interest groups in the city and tried to find out who was going to do something about this. It turns out a number of other people were making the same call, and so we formed Our Power."

Our Power is the citizen action group which filed a court injunction in an attempt to stop the closing of the sale, which was rejected on July 3 by
Court of Queen’s Bench Justice Ged Hawco, giving the green light to the initial public offering for Capital Power.

But even though the group failed to stall the sale, Zwicker says the group plans to move forward in its campaign to challenge the sale, both inside and outside the courtroom, as it looks forward to the next round of municipal elections in October 2010.

"This is not a done deal. We have standing in the courts to examine everyone on council under oath," Zwicker says. "But we don't want to rely on the courts. We are putting together a campaign and building Our Power to initiate a petition for the next election that would call for a plebiscite on the sale. We need 85 000 signatures in a period of 60 days. But our main message right now is that this is not a done deal, as the mayor and Epcor would have you believe."

But Bill Pidruchney, the lawyer bringing the case forward on behalf of Our Power, says that since the decision was made in secret, the group's legal strategy is necessary to properly inform Edmontonians about the details of the sale.

Another legal action calling for a judicial review of the sale was filed on July 7 by the Alberta Federation of Labour, Civic Services Union 52 and CUPE 30.

"It seems the only way citizens are going to find anything out is through the courts, rather than the open and transparent government we expect from our leaders," Pidruchney says.

What Edmontonians do know is that they own less of Epcor now than they previously did. The April 22 decision put the power generating aspect of the business into a publicly traded company, 71 percent owned by Epcor and 29 percent owned by shareholders.

But Ward 5 Councillor Don Iveson, who voted in favour of the deal at the meeting, says council did the best job it could for the city and insists that the sale doesn't significantly change the status quo, since the power-generating aspect of the business already had a publicly traded side in Epcor Power LP, which Epcor owned just 30 percent of.

"Functionally, Edmonton Power was privatized into Epcor; it was privatized in 1996," Iveson says. "So I understand the frustration that it's not under public ownership, but ownership does not mean that it was under our control. This is really just a restructuring of our ownership, not a restructuring of control that we didn't really have."

But Zwicker insists something has changed, and he says the Our Power campaign aims to let Edmontonians know what they might be missing out on now that the sale has happened.

"If you look at when they deregulated power to make it easier to invest in power generating assets, the risk for producing power is nil. Everyone needs power," Zwicker says. "By owning our own portion we can control how much we put into the grid. Even though the rate is not controlled there is a return to Edmontonians and a security of supply, instead of shipping it down off the border, which I fear will happen. I am frightened for the future of our public resources."

But it's precisely that deregulated market, including the federal government's recent changes to rules on income trusts and future environmental regulations on fossil fuel-based industries, that Iveson says made city council think twice about continuing to be in the power generation business.

"Epcor representatives suggested, as the electricity-generating aspect of the company is the riskiest, we should look at a model to reduce the risk and potential fluctuations in our dividends," he says. "So the decision was the power-generating business would be put into Capital Power, and sell a portion of that company to raise money to grow the three stable lines of the company: fresh water, waste water and electricity transmission."

Despite voting in favour of the deal—only councillors Ben Henderson and Amarjeet Sohi voted against it, while Linda Sloan was absent from the meeting due to a family emergency—Iveson has been outspoken about his discomfort with the process through which council arrived at such a critical decision.

"I was really uncomfortable with the private nature of the decision. I asked an awful lot of questions of our legal counsel, Epcor's legal counsel and their independent counsel," he says. "Then we talked about it as a city council a great deal to do this decision publicly and it was ultimately decided that we had to put the whole decision together first and then make the decision public."

The whole experience, Iveson says, has made him realize some changes are required to ensure adequate public input on similar decisions in the future.

"On July 22 I'm bringing forward a motion to council to move us closer to public disclosure on decisions as Epcor shareholders," he says. "It will look at amendments to our bylaws, the Epcor shareholder agreement and their bylaws as a corporation to ensure, particularly with assets owned by the City of Edmonton, that any further business cases for sale would have to come to the City of Edmonton, rather than these closed-door sessions as shareholders."

It's a sentiment that Zwicker can definitely agree with. He argues that the way the decision was made, and the overlapping roles of city councillors and Epcor shareholders means the decision was a violation of the Municipal Government Act, and something that needs to be clarified before similar decisions are made in the future.

"City councillors pretended they were shareholders of Epcor to make the decision," he says. "They didn't need to and we believe we have strong legal grounds that it violates the act." V 

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