EPCOR sale renews the Conservative energy debate

You’d be forgiven if you missed the fact that much of the Edmonton-owned EPCOR will soon be sold off. Discussions over the sale of EPCOR’s power plants (its real profit drivers) have been brewing for a year, and decisions were made behind closed doors by city council 17 April, three weeks before being announced on 8 May. In the weeks that followed, outrage was aimed at city council, predictably centered on the loss of democracy and corrupt politicians. Beyond that, though, the roots of these issues were not exposed: the provincial Conservative party.

The misguided outrage is understandable. After all, we are the city that has been publicly agonizing over the future of the City Centre Airport for over a decade, with no end in sight. Even with the recent transfer of our only waste-water treatment plant from direct city ownership to EPCOR, city council pandered to us by allowing months of public input. Our mayor even consoled us by reminding us that they wouldn’t be sold. Unlike most decisions in Edmonton, the EPCOR sale was swift to avoid public bickering.

Fortunately, many of Edmonton’s more astute commentators were able to point out two critical factors: first, that the sale was likely necessary for EPCOR to thrive, and second, that the insulting secrecy is beneficial for these kinds of sensitive negotiations, to avoid devaluing the assets for sale. No one, however, has gone further to examine how we have arrived to this inevitability.

Realistically, EPCOR is a bit player in the power generation game. Building new facilities requires massive investments from a small company—particularly when their future depends on ridiculously expensive carbon-captured gasified coal projects to meet new emissions standards. The lack of investment in transmission infrastructure across the province leaves EPCOR few options for growth, other than replacing its own aging coal plants with costly new ones. Without the ability to raise cash from investors, they’d struggle to survive in this high-stakes market.

Deregulation of Alberta’s power market in 2003 further left EPCOR vulnerable. Unlike the situations surrounding BC Hydro in the west and SaskPower in the east, selling power in Alberta is a free-for-all. In those cases, power plants are built with long-term contracts to ensure revenue. Pop up a plant here, and pray the power prices for the next 30 years are nice to you, right? And billion-dollar gambles are fine for an obese base of investors, but absurd if the only shareholder is a city the size of Edmonton.

Our tiny tax base, in fact, is exactly why city council gambled their jobs to make this landmark deal in darkness. These councilors could hardly be labeled as typical free-market thumping Albertans—they had to make an arduous decision to prop up the city coffers in the short term with what boils down to, essentially, a politically stupid move.

Provinces legislate how municipalities can raise revenues. In Alberta, cities are constrained by property tax pittances and occasional handouts—and they’re forced to borrow cash for infrastructure. Coupled with the Alberta’s hands-off approach to regional cooperation, this means surrounding suburban towns help grind Edmonton’s infrastructure to dust, while the big city foots the entire bill. Edmonton is forced to sell off our assets for short term benefits—the sale of Ed Tel to Telus, the shambles of South Edmonton Common—to supplement the massive costs of running a functional city.

It’s naive to simply blame this sale on shady politicians, or write it off as inevitable. The despicable optics of this move reeks of desperation, but are, in actuality, a mere symptom of the ideologically driven structures of the complacent provincial Tories.

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-Noncommercial-Share Alike 2.5 License.