Power agreement not in jeopardy: town, mill

No matter what happens with Abitibi-Consolidated’s application to the Ontario Energy Board to transfer ownership of the hydro-electric generating facilities to a separate income trust, the 1905 historic power agreement is not in danger.
That’s the message the town, Fort Frances Power Corp., and Abitibi is trying to get across to residents of Fort Frances in light of comments to the contrary made by CEP Local #92 recording secretary and council candidate Al Bedard and fellow candidate Nick Wihnan.
In a Nov. 2 letter from Abitibi-Consolidated Company of Canada to the FFPC’s legal firm Ogilvy Renault LLP, Abitibi’s senior legal counsel Stephanie Leclaire stated:
“ACCC and its corporate predecessors have had a long-standing obligation, deriving from a 1905 agreement, to deliver a specified quantity of electricity [2,984 kW] to the town, at a fixed price.
“This obligation is currently being honoured by ACCC through a physical bilateral contract with FFPC, with the town’s consent.
“I take this opportunity to you and your clients directly, as Mr. Sidofsky did in his letter to the OEB, that ACCC’s intention has been, and continues to be, that the obligation to deliver the quantity of power that is subject of the 1905 agreement will be transferred to ACHLP (ACH Limited Partnership) as the owner of GS-1 (the hydro-generating facility here).
“The obligation will be transferred upon the closing of the transaction that gives rise to the ACCC licence amendment application.”
“We give credit to Abitibi for putting it in writing that they recognize that obligation with the generation station,” FFPC CEO Jim Kibiuk said yesterday.
“We’ve got to give them recognition for saying that right off the bat as this process begins with the Ontario Energy Board.
“It’s never been an issue,” Kibiuk added. “They recognize the obligation based on the Supreme Court of Canada decision [of 1983].”
Town CAO Mark McCaig, the former CEO of the FFPC, said Monday that the town and FFPC has shown due diligence in regards to ensuring the power agreement will remain in place regardless of what happens.
“From a personal perspective, having spent my first 25 years with the town with the power corporation, the last few of them in a senior management role there, I can assure every resident of this community that when you work for the power corporation as the senior official, or you’re on the board of directors, or you were an elected official and were a member of the Public Utilities Commission, your primary role in those capacities was to serve the long-term viability and existence of the 1905 power agreement.
“It’s one of the defining characteristics of our town,” McCaig stressed.
“For anyone to suggest the Fort Frances Power Corp., the Public Utilities Commission, or the Town of Fort Frances mayor and council would have their head in the sand about the ongoing preservation of the power agreement is misguided, unreasonable, and ill-informed, to say the least,” he added.
“Many people that sit on the board of directors for the power corporation, and many people that worked at the Fort Frances public utilities, had to go through a very arduous process whereby the mill challenged the power agreement.
“It went to the Supreme Court of Canada [in 1983] and that agreement was solidified.
“There was a win for both sides, moreso for the mill than the local community,” conceded McCaig. “But it enabled the residents of this town to get the lowest power rates in the province.”
McCaig explained that back on Aug. 9, the town requested intervenor status in Abitibi’s application for an amendment to the Ontario Energy Board to transfer ownership of its power-generating facilities to a separate trust.
That was “long before the union appeal to the Ontario Municipal Board” of the local committee of adjustment’s approval of Abitibi’s application to sever the dam property here from the rest of the mill with the aim to start a separate hydro-generating asset.
“The power corporation, as custodians on behalf of the shareholder, which is this mayor and council of the Town of Fort Frances, were already actively pursuing it,” said McCaig.
“To suggest that anybody else needed to tell the town what to do is very ill-informed,” he argued.
McCaig stressed the bottom line is the terms of the 1905 power agreement will remain no matter what.
“Whoever owns the generating asset will absolutely be responsible to deliver the benefits to the Town of Fort Frances,” he remarked. “To suggest that someone was going to abdicate the responsbility—it ain’t gonna happen.
“If the river is going to be dammed, somebody has to do good to the Town of Fort Frances. Let’s be clear on that. That will happen,” McCaig vowed.
“In the unforeseen catastrophic event that there wasn’t a manufacturing institution or whatever there, and the river was being dammed for power purposes, I don’t know who would be controlling that generation station but I tell you what—they would be responsible for the 1905 power agreement benefits to the town.
“In closing, I would like to say this mayor and council have absolutely exercised due diligence in making sure the power agreement was not threatened,” added McCaig.
“And that the board of directors of the power corporation absolutely made sure the benefits of the power agreement were maintained,” he stressed.
Bedard could not be reached for comment yesterday, but some of his first comments regarding his fear of the power agreement being in jeopardy were made at the Aug. 28 council meeting, at which time he and other local union reps expressed concern about the consequences of Abitibi having a separate hydro-generating company.
Then, during the all-candidates’ forum held on Oct. 17, Wihnan stated he felt the current council was not working in the best interests of the citizens they were elected to represent.
“The straw that broke the camel’s back deals with the power dam and its separation from mill property to form an income trust company,” he had said in his four-minute address.
“The consequences of this decision was ignored or hidden from the public,” he had charged. “Not one legal opinion was in place before this issue was caught by a local resident, who filed objections before the Ontario Municipal Board and Energy Board.
“I’m afraid this council will not do what is necessary to protect the interests of the 1905 power agreement, let alone the jobs of those employees who work in our mill,” he added.
Then in Monday’s edition of the Daily Bulletin, an ad from CEP Local #92 stated the town has not done anything regarding the separation of the power dam from the mill, and that “the 1905 power agreement could be affected.”
It went on to state:
“Why would you not seek to roll [the] 1905 power agreement into the power trust as a liability against the trust company. This resolution is clean, inexpensive, and is the resolution required to protect this agreement, as told to you by Mr. Bedard and Mr. Wihnan.
“If you are not willing to support the mill, mill employees, and the community and district job base, at least support the 1905 power agreement,” the ad concluded.