The law courts are the scene of a legal showdown over EPCOR today.
Union groups are trying to convince a Court of Queen's Bench judge that the city had no legal right to privatize EPCOR's power generation assets. Union leaders say it's all about the public interest, not about jobs or union contracts.
"We're paying thousands of dollars in lawyers to fight this kind of thing. They have a whole army of lawyers to fight this kind of thing, of which actually they're using our taxpayers' money to fight us with," says Dave Loken of the Coalition of Edmonton Civic Unions. "The whole things stinks to high heaven."
"Our case is really about democracy," says Alberta Federation of Labour president Gil McGowan (above). "There is a process the city should have followed, and that process is outlined in the Municipal Government Act."
EPCOR is taking a wait-and-see approach.
"EPCOR believes the case is without merit and we will vigorously defend ourselves," says Tim LeRiche with EPCOR. "Beyond that, the proper place for the issue to be discussed is in the courtroom."
Court is hearing arguments from lawyers on all sides today.
iNews880, Fri Sept 11 2009
It'll be a long day at court tomorrow as the City of Edmonton, EPCOR and various labour unions argue whether or not the decision to privatize EPCOR's power generation assets was legal.
The group of labour organizations, which includes the Alberta Federation of Labour and CUPE Local 30, argues that city council breached key provisions of the Municipal Government Act when they decided on the sale behind closed doors last April.
"If they did not have the legal right to make the decision, the decision cannot be considered valid," AFL President Gil McGowan in a release.
Both EPCOR and the City of Edmonton have filed extensive responses to the group's statement of claim, but spokesman Tim Le Riche told Metro EPCOR was ready for its day in court.
"EPCOR believes this claim is without merit and we will vigorously defend ourselves," he said.
The hearing begins at 10 a.m. today.
Metro News, Fri Sept 11 2009
Byline: Carmen Wall
The Alberta Federation of Labour and the city's two largest unions will be in an Edmonton courtroom on Friday.
They'll be arguing that the privatization of EPCOR's power generation should be declared invalid according to the president of the Alberta Federation of Labour.
"Basically what were saying is that those asset's have been owned by the citizens of Edmonton for the last 118 years," says Gill McGowan. "And that under all the legislation governing the way that city council does its business, they had no right under that legislation to make a decision of this magnitude without going back to the people who own the assets, and that's the citizens of Edmonton."
McGowan says they're asking the court to reverse the sale and put the question of privatization back into the hands of citizens.
iNews880, Thurs Sept 10 2009
Sept. 10 (Bloomberg) -- Capital Power Corp.'s purchase of electricity-generating plants from the City of Edmonton, which led to a C$500 million ($463 million) initial share sale in June, is being challenged by Alberta unions.
The Alberta Federation of Labour and the city's two biggest unions plan to ask a provincial judge tomorrow to block the sale of the plants that had been owned by Epcor Utilities Inc., the city-owned utility, the unions said in a statement today.
"We are arguing that city council had no legal authority to make the decision to privatize Epcor's power generation," Gil McGowan, AFL's president, said in the statement. "If they did not have the legal right to make the decision, the decision cannot be considered valid."
Capital Power, in the biggest IPO in Canada in 18 months, sold 21.8 million shares at C$23, and used the money to buy Epcor's power-generating business. The company produces about 3,300 megawatts from 31 plants in Canada and the U.S.
An Alberta judge on July 3 denied the unions' request to delay the closing of the IPO, ruling that he wasn't satisfied that there was any real merit in the unions' application, according to July 7 statement from Capital Power.
Capital Power and Epcor have denied any wrongdoing.
Bloomberg.com, Thurs Sept 10 2009
Byline: Joe Schneider
Several labour groups allege Edmonton city council broke the law when it voted behind closed doors to sell off some publicly owned assets.
Lawyers for the groups will be in court tomorrow to argue that the privatization of Epcor's power generation should be declared invalid. The assets were spun into a new publicly traded company called Capital Power.
The Alberta Federation of Labour and the city's two largest unions are among the groups challenging the sale.
iNews880.com, Thurs Sept 10 2009
The group includes the Alberta Federation of Labour and the City of Edmonton's two largest unions, CUPE Local 30 and CSU 52.
They argue that Edmonton City Council breached key provisions of the Municipal Government Act when it went behind closed doors to privately decide to privatize EPCOR's power generation assets.
"We are arguing that City Council had no legal authority to make the decision to privatize EPCOR's power generation," says AFL President Gil McGowan. "And if they did not have the legal right to make the decision, the decision cannot be considered valid."
Representatives of the group - including McGowan and Dave Loken from the Coalition of Edmonton Civic Unions - will be available on Friday before and after the hearing to take questions from the media about the case.
Friday, September 11, 2009
Media Availability: 9:30 a.m.
Court Hearing Begins: 10:00 a.m.
Edmonton Law Courts
1A Sir Winston Churchill Square
Both EPCOR and the city of Edmonton have filed extensive responses to the groups' statement of claim. The hearing is expected to take the bulk of the day.
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For more information call:
Gil McGowan, AFL President @ (780) 218-9888
Dave Loken, Coalition of Edmonton Civil Unions @ (780) 448-8981 (office); (780) 237-8656 (cell)
The Alberta Court of Queen's Bench today is hearing a case that could potentially overturn the multi-billion-dollar deal that saw EPCOR's power generation capacity spun off into a new company and a portion of the shares sold to investors in a public offering. The case has been launched by three labour union groups, including the Alberta Federation of Labour, CUPE 30 and CSU 52.
The case revolves around whether Edmonton City Council acted in a legal manner when it held a "behind-closed-doors" shareholders' meeting to make the decision to spin off the assets, valued at $2.8 billion.
"The legal point, at its core, is both simple and important," says AFL President Gil McGowan. "Municipalities are required under law to operate in particular ways. We suggest that when it made the EPCOR privatization decision, the City failed to meet its obligations to the public under the Municipal Government Act."
The Municipal Government Act (MGA) requires that all decisions by a City Council be made in public. It also clearly restricts to whom a City Council can delegate its authority. A City Council cannot delegate its decision-making powers to anyone it chooses - there are strict limitations to whom it may delegate, namely only to a Council Committee, the Chief Administrative Officer or Designated Officer.
The City argues that when making decisions about EPCOR, Council is not acting as a City Council under the MGA, but as a "shareholder," and therefore the rules under the MGA do not apply. The legal validity of this "shareholder" status is the key point at issue in the lawsuit. The groups contend that the "shareholder" has no legal validity under the MGA, as the Council is prohibited from delegating to such a collection of individuals.
"For years, City Council has ducked public accountability for its EPCOR decisions by hiding behind the cloak of 'the shareholder'," says Dave Loken, spokesperson for the Coalition of Edmonton Civic Unions. "As it turns out, this cloak may be illegal."
If the court declares the decision invalid, it is unclear what will happen next. Potentially the judge could order the share offering invalid, and the Capital Power deal would have to be reversed.
"There's no doubt this could cause a huge headache for the big institutional investment outfits that bought stocks in Capital Power," says McGowan. "But, frankly, the interests of investors need to take a back seat to the interests of the citizens of Edmonton who own the assets in question. The most important thing to come out of this case would be public accountability. City Council does not get to act with disregard to the public interest. And they don't get to use their so-called delegation powers to do an end run around the democratic process."
"The citizens of Edmonton were shut out of the decision to privatize one of our most important assets. We need to get those assets back - or at the very least, make sure this never happens again," concludes Loken.
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For more information call:
Gil McGowan, AFL President @ (780) 218-9888
Dave Loken, Coalition of Edmonton Civic Unions @ 780-448-8981 (office); 780-237-8656 (cell)
Gil McGowan, President of the Alberta Federation of Labour
Good afternoon. In a way, I am here today in two capacities.
I'm here first as the President of the Alberta Federation of Labour, which is our province's largest labour organization, representing 29 unions and 115,000 members.
As a provincial advocacy organization, our focus is usually on issues of provincial policy.
But every once in a while, a local issue comes along that has the potential to affect a broad range of our members, not just as workers and union members, but also as taxpayers and citizens.
The proposal in front of us today - to transfer $8 billion of City owned and controlled assets to EPCOR - is one of those issues. That's the first reason I'm here.
The second reason I'm here is more personal. As some of you may remember, up until very recently, I was chair of community planning for the Strathcona Community League. Even though I've moved on from that position, I'm still a proud Edmontonian and issues of municipal planning and development are still near and dear to my heart.
Given my background, and the magnitude of the decision Council is about to make, I simply could not remain on the sidelines.
At this point I'll admit that there are probably many other people better versed in the technical details of this proposal. So I won't try to delve into the intricacies of the transfer.
Instead, I simply want to raise a few questions that continue to float in my head (pardon the pun).
The first question is this: why are we trying to fix something isn't broken?
The Drainage Branch is a very well run city service. It's regarded as one of the highest quality systems in North America. The Goldbar plant is one of the best examples of environmental stewardship and effective water treatment on the continent. And even more importantly, Edmontonians, are very satisfied with the service.
So why, if we've got such a good thing going, do we want to mess with it?
EPCOR has indicated it wants to combine its expertise with the expertise from the Drainage Branch to create a Centre of Excellence. What I don't understand is why we need amalgamation to have cooperation. Surely EPCOR and the Drainage Brach can collaborate within the existing corporate structures.
My second question comes in two parts: why does EPCOR want the assets? And what's in it for citizens?
Reading the Price Waterhouse report and hearing the discussions up to this point it seems to me that this proposal is about two things - getting lower interest rates on loans for EPCOR, and making EPCOR more competitive for contracts outside of Edmonton.
But, is what's good for EPCOR necessarily good for the citizens of Edmonton? Is it really worth giving up direct control of our City's largest asset in order to help EPCOR shave a quarter point off the loans they need for corporate expansion?
On the subject of loans, I'm also concerned that any gain for EPCOR might be balanced by a loss for the City. If they get lower interest because of increased assets couldn't the city face higher rates because of reduced assets? Just as importantly, this proposal would essentially mean that our public assets would be turned into debt to help finance corporate expansion. I'm pretty sure that most taxpayers would feel justifiably uncomfortable having their public assets used to underwrite potentially risky business ventures.
The third big question I have is: how is all of this going to affect the City's future development planning?
If EPCOR owns the drainage assets, then they control the decisions about how those assets will be deployed, expanded and updated.
This has huge ramifications for Edmontonians for future development.
What leaves me feeling particularly unsettled is knowing, as I do, that not a single City Councillor sits on the EPCOR board - and that all interaction between EPCOR and City Councillors as shareholders is secret.
As a citizen, I would feel much more comfortable knowing that decisions about the future development of the city will be made here in this chamber, in an open forum and by people who are directly accountable to voters - rather than by corporate managers behind closed doors.
The fourth unanswered question I have is this: how is this transfer in the public interest?
When preparing for this presentation, I went searching for tangible ways that Edmontonians would benefit from the transfer. And you know, I was hard pressed to find any.
Will it lead to lower rates for taxpayers? Apparently not.
Will it lead to better service? I've seen no evidence it will. EPCOR's plan is to use the new assets to build its portfolio outside of Edmonton. Improving service here in the City is secondary.
Will it help us plan for our future better? No, it will actually take planning power away from accountable, elected officials and put it in the hands of unelected corporate managers whose interests may not coincide with the public's interest.
In the end, I think there are simply too many troubling questions attached to this proposal.
I urge you to think about these questions, and only move forward if you are completely confident about the answers. Let's not sacrifice public control over development for the sake of corporate empire-building.
On June 30, 2009, an action was commenced in the Court of the Queen's Bench of Alberta, Judicial District of Edmonton by Gil McGowan on his own behalf and on behalf of all of the affiliates of the Alberta Federation of Labour, Terry Jardine on his own behalf and on behalf of all of the members of the Canadian Union of Public Employees, Local 30, and Leo Derkach on his own behalf and on behalf of all of the members of Civic Service Union 52, making claims relating to Capital Power Corporation's proposed initial public offering and related transactions.
The claim names The City of Edmonton, EPCOR Utilities Inc. and Capital Power Corporation as defendants and alleges, among other things, that certain purported actions taken by the City of Edmonton in connection with the proposed initial public offering were outside the jurisdiction of the municipality under the Municipal Government Act. Based on its review of the available information, Capital Power Corporation believes that this claim is without merit and intends to vigorously defend itself.
This communication does not constitute an offer of securities for sale in the United States, and the securities referred to in this communication may not be offered or sold in the United States absent registration or any exemption from registration.
EPCOR's wholly-owned subsidiaries build, own and operate power plants, electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada and the United States. EPCOR, headquartered in Edmonton, Alberta, has been named one of Canada's Top 100 employers for nine consecutive years, and was selected one of Canada's 10 Most Earth-Friendly Employers.
Stockhouse.com, Tues July 7 2009
The $500 million IPO by Capital Power Corp. of Edmonton doesn't show the IPOs are bouncing back, but may be one of several "hopeful signs" for the market, Ross Sinclair, leader of the consulting company's income trust and IPO services, said in a news release.
"We're starting to see the market regain some of its appetite," he said. "The volumes are still very small but the Capital Power issue, along with some significant activity in secondary equity offerings and debt issues across the markets, point to a level of financing activity that has been absent for some time."
In fact, two other IPOs closed Tuesday, but missed the PricewaterhouseCoopers' report, which covered the first half of the year.
About $850 million worth of stock in mortgage insurer Genworth MI Canada Inc. began trading Tuesday. Most of the shares were sold by its U.S. parent company.
Issued at $19 each, the stock slid 61 cents to $18.39.
Magma Energy Corp., a geothermal power company, said it raised $100 million selling stock at $1.50 a share. It fell two cents to $1.48.
Companies that are not publicly traded are considering IPOs, and investors, looking for better returns than the low interest rates on bonds, are becoming more open to equity issues, Sinclair said.
The Capital Power issue was sold at $23 a share and began trading on the TSX on June 26, exchange data show. It has dropped since, falling 60 cents to $21.05 Tuesday.
Capital Power, an electricity generating company spun out of Epcor, the utility owned by the city of Edmonton, was the only TSX IPO in the second quarter this year and first since the comparable period on 2008, PricewaterhouseCoopers said.
Including the TSX junior venture exchange and "other" issues, total IPOs were $514.8 million in the quarter.
There were seven TSX IPOs worth $434 million in the second quarter of 2008.
The figures do not include issues of stock by companies which were already publicly traded, and do not include mutual funds — which raise money to invest in existing listed companies — which have come bounding back in the second quarter of 2009 after sagging at the end of 2008 and the first quarter of 2009.
Capital Power will use the money raised to buy Epcor's power generation business, including its 30.6 per cent interest in Epcor Power LP. Epcor has about 3,300 megawatts of owned and/or operated generation capacity at 31 plants in Canada and the United States.
The Alberta Federation of Labour has tried to block the sale legally, but failed, Epcor said.
CBC News, Tues July 7 2009