Fortis blindslides City Council

TUESDAY, 28 JANUARY 2014 02:00 JOHN MOORHOUSE Penticton Herald
An unexpected $750,000 "mark-up fee" charged by FortisBC on a planned $5-million upgrade to Penticton's Westminster Avenue substation has city council saying "Whoa." Council unanimously deferred a decision Monday on whether to enter an agreement with Fortis on the project. With only four council members present at the special meeting, the issue was postponed until next month. Acting Mayor Andrew Jakubeit said afterwards the city didn't receive word of the additional fee until about two weeks ago, despite months of discussions with the utility. "It's a tough pill to swallow," Jakubeit said. "Maybe after Fortis hearing council's disappointment with this last-minute, exorbitant premium that we have to pay, maybe they'll reconsider things." Coun. Katie Robinson described the mark-up fee as "totally unacceptable" especially after the project has been in the planning stage for the past two to three years. She noted a $1.87-million deposit towards a new transformer was paid by the city last fall. Council agreed in December to complete negotiations with Fortis and finalize the project. The city was informed of the mark-up fee at a meeting on Jan. 7. Fortis officials were also present at Monday’s council meeting to explain the situation. Spokesperson Neal Pobran said afterwards such 15 per cent fees for third party contract work are not uncommon within the industry. "This is a pretty standard going rate that a lot of contractors do charge," he said. Pobran added the money eventually goes back to all FortisBC customers through rate reductions in 2015. Mitch Moroziuk, the city's director of operations, said the substation upgrade to 12 kilovolts is one of the key projects planned by the city's electrical utility over the next few years. "It gives us more flexibility to transfer loads between substations, should we need to do that," he said. "It's probably the No. 1 project in our electrical area." He pointed to Moroziuk said the delay could also have an impact on when construction can begin, since such work can only be carried out in the spring or fall when electrical consumption is traditionally at its lowest.