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Enron woes trickle down to Powerex
Hydro arm files $100-million claim
Chris Nuttall-Smith
Vancouver Sun
Thursday, February 21, 2002
The Enron Corp. debacle came to roost in B.C. Wednesday as B.C. Hydro's
power trading arm turned to a New York bankruptcy court to press its laim for
$100 million US in power the U.S. giant was supposed to supply.
Hydro's claim, announced with a press release and calls to reporters,
involves not only the Crown corporation and subsidiary Powerex, but also Alcan
Inc., which according to Hydro, is on the hook for $100 million.
Alcan reacted angrily to Hydro's announcement, saying it was "astonished" at
Hydro's move.
In an interview from Alcan's head office in Montreal, company representative
Marc Osborne said the company has been in negotiations with B.C. Hydro to
resolve the problem.
"With the release they put out, it's not conducive to fruitful discussions,"
he said. "We'll go over that."
The fight stems from a complex 1997 agreement between Alcan Inc., B.C.
Hydro, Powerex Corp., Enron Power Marketing, Inc. and its parent company,Enron.
In the early 1990s, Alcan contracted to sell surplus energy from its Kemano
generation project -- built to power its smelter operations in Kitimat -- to
B.C. Hydro.
However, the provincial government cancelled the controversial Kemano II
generation project. Without the extra generating capacity the project would have
given Alcan, the company sold part of its ower-supply contract with Hydro to
Enron Power Marketing.
The deal supplied surplus power that Hydro projects would be worth about $8
million US a year in profit until 2014, to Powerex, which would flip the power
into U.S. markets.
When Enron claimed bankruptcy last December, it also told Powerex it could no
longer supply the energy, Doug Little, Powerex's vice-president of trade policy
and development, said in an interview Wednesday.
To complicate the matter, Hydro says the 1997 deal that transferred Alcan's
commitment to Enron stipulated that Alcan would be responsible for Hydro's lost
revenue up to U.S. $100 million should Enron default on the agreement.
cnuttall-smith@pacpress.southam.ca
© Copyright 2002 Vancouver Sun
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11:05 2/21/02
http://www.canada.com/vancouver/vancouversun/story.asp?id=730DB023-266C-4BD6
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