Council moving ahead on possible utility sale

Tuesday, 24 July 2012 02:00 Kelowna Daily courier  Ron Seymour 
The proposed sale of Kelowna's municipally-owned electrical utility to FortisBC was given a preliminary endorsement Monday by city council.   Councillors unanimously agreed to sign a memorandum of understanding aimed at developing the specific terms of the possible sale, which might net the city as much as $50 million.   "I think a partnership is the way to go," said Coun. Andre Blanleil.   "It's a very interesting, complex proposal," said Coun. Robert Hobson, adding the public will want to be assured the proposed sale is in the municipality's best financial interest.   Public meetings on the proposal will be held this fall, and the deal analyzed by an independent third-party, council heard.   The so-called alternate approval process would be used to gain citizen support and the sale, if approved by the British Columbia Utilities Commission, could be finalized next spring.  A key reason the city is considering selling the utility is that estimates are the aging, relatively small system will require $70 million worth of upgrades within the next two decades.   "The reality is the utility business is getting more specialized and complicated, and its not something the city has expertise in," Blanleil said.   Although the utility is owned by the city, its day-to-day operation and maintenance has been contracted out to FortisBC for more than a decade.   The utility currently generates a yearly profit of $2.1 million for the city, with that money directed into general revenues.   If the utility were sold for the projected price of $50 million, the city would take that money and invest it back into FortisBC. Those investments, council heard, are expected to generate an annual return that is at least equal to $2.1 million.   Current customers of the city utility would not likely notice any difference in the service, and the rates they pay are already equivalent to those charged to FortisBC customers elsewhere in Kelowna.   "It would truly be a seamless service change," senior city staffer Derek Edstrom told council.   Under the alternate approval process, the sale would automatically go ahead unless 10 per cent of city voters, or about 9,000 people, signed a petition against it.  If that were to happen, council would have the choice of abandoning the sale proposal, or putting the idea to voters directly in a referendum.