Financial results showing that EPCOR lost $56 million in the third quarter of 2009 should be a wake-up call for members Edmonton City Council who voted six months ago to relinquish control over $5 billion worth of electrical power generation assets previously owned by the citizens of Edmonton through EPCOR.
"In 2008, before the City spun off EPCOR's power generation assets, EPCOR was so profitable that it generated a $130 million dividend for the City of Edmonton which allowed them to keep municipal taxes 25 per cent lower than they would have been otherwise," said Gil McGowan, president of the Alberta Federation of Labour, one of three union groups that took the City of Edmonton to court in a bid to stop the spin off.
"Without the power generation assets, which were responsible for something like 70 or 80 per cent of EPCOR's profits, EPCOR will never be the cash cow that it was for the citizens of Edmonton. And that means the City will either have to increase taxes dramatically or consider deep cuts to basic services. Obviously, neither of these options is particularly appealing."
McGowan says the 3rd quarter results are illuminating not only because they show that EPCOR lost $56 million (compared to a profit of $76 million for the same three months last year) but also because they show that EPCOR has been dramatically diminished as a corporation.
"With the spin-off of power assets to Capital power and the privatization of 30 per cent of those assets, EPCOR has been transformed from a corporation with nearly a billion dollars worth of revenue each quarter to a corporation with only about $350 million of revenue each quarter," says McGowan.
"EPCOR CEO Don Lowry called a news conference today to reassure Edmontonians that the new EPCOR, minus its most valuable assets, will somehow continue to generate similar level s of income for the City. But he's living in a fantasy world if he thinks his dramatically diminished corporation will ever generate $130 million in dividends for the citizens of Edmonton. You can't give away the assets responsible for 80 per cent of your profits and expect to continue making the same kind of money. The numbers just don't add up."
McGowan says he hopes EPCOR's dismal results will convince members of City Council to admit a mistake was made and stop the anticipated sale of the 70 per cent of power generation assets that have not yet been privatized by Capital Power.
"The good news is that there's still a chance for City Council to do the right thing and reassert their control over our city's remaining power assets. But that will require strong leadership and political will. Let's hope that members of Council have the internal fortitude to do the right thing."
For more information call: Gil McGowan, AFL President @ (780) 218-9888