Edmonton mayor shocked by $10-million exchange-rate mistake

CBC NEWS City staff didn't factor in drop in Canadian currency when buying U.S. equipment

An error by city administration staff who didn't factor in a drop in value of the Canadian dollar when buying waste-processing equipment in the U.S. has cost the City of Edmonton $10 million, said Mayor Stephen Mandel on Wednesday. "When I go to purchase something I know I'm going to purchase in a country not being Canada, I hedge my bets," said Mandel. "Many people have invested in the United States [in the] last little while, and they've hedged the American dollar, and I'm just shocked that our administration wouldn't do that. … It's a $10 million hit that was really unnecessary." The city decided to buy equipment worth $40 million US in 2007 for the garbage processing and transfer facility being built at the Edmonton Waste Management Centre in Clover Bar.At the time, the Canadian dollar was worth more than the U.S. dollar, but since then, the loonie has sunk to about 80 cents US, driving up the price of the equipment by about 25 per cent.Mandel said staff should have locked in U.S. currency at the time so they would know how much they were actually going to pay.City manager Al Maurer couldn't explain why that wasn't done."We have done it in the past; we did it on the LRT project," he said.

The issue came up when city council was asked to borrow $88.7 million to set up the transfer facility, which will turn some trash into pellets for use in the new gasification plant and prepare other garbage to be shipped to the Village of Ryley landfill just east of Edmonton once the Clover Bar landfill closes later this year.The centre's budget has soared from the original $27.5 million because of the currency loss, multiple increases in the size and the rising costs of construction and materials.