City council has agreed to transfer the city’s drainage business to Epcor. It was a narrow 7-6 vote that saw some frayed nerves at one point in the meeting. The total book value of the transfer is $1.1 billion. However, the deal was pitched as making the city’s drainage services more efficient, and improving the city’s bottom line because Epcor would be able to increase the size of the dividend it pays Edmonton.
“You should see marginally lower taxes next year,” said Mayor Don Iveson. The dividend will increase by $20 million.
The swing vote belonged to Coun. Andrew Knack who in the past had been against the transfer. He was happy to get in writing performance promises on how the utility would respond to customer concerns. “Getting verbal assurances was one thing. Actually seeing what that looks like in writing and in practice was something entirely different,” Knack told reporters.
It was a rocky council meeting, with more emotion than normal. Things spilled over during a debate led by Coun. Dave Loken, who wanted the item pushed off until after this October’s election. “I didn’t see any reason to make a change.”
“I can pick up a phone and I can call somebody,” Loken explained to reporters about the current situation. “I can get action right now. I can answer citizen’s complaints right now. We don’t have that same ability here because it’s a different relationship. Doesn’t mean it’s going to be bad, I just didn’t want to lose control over a major asset like this.”
Coun. Michael Walters said he was encouraged by Epcor’s environmental expertise that he expects to increase when the utility company will have under its control all aspects of the business – the drinking water, the pipes, the treatment plant and the drainage system.
“They have the whole package now,” he said in an interview. “We can expect more engagement with the citizens, more commitment to innovation around renewable energy and energy transition and achieving greenhouse gas emission reductions, and more environmental stewardship and strategies to deal with flooding.”
Epcor president and CEO Stuart Lee confirmed to council that as much as 15 percent of the revenue Epcor earns comes from markets outside of Edmonton. That out-of-town growth happened since 2009 when Epcor got out of the power generation business. “If we’ve done that 15 percent growth in those markets over a period of eight years, I’d like to see that happen again.”
Lee said there are two benefits to improve the dividend that’s paid to the city. They’ll be able to run the business more efficiently than the city. “The second benefit is the fact that we can take that expertise and grow it outside the city and sell it to other communities.”
Lee wouldn’t give a firm prediction on how the dividend would perform for Edmonton residents, who are the sole owners of Epcor, but he said, “When EPCOR was formed, the dividend was $60 million. In 2018, with drainage, the dividend is going to be $166 million. Over that 20 year period, it’s not quite tripled, but almost tripled.”
Epcor is in the water business in Arizona, serving several communities, and in Regina. Mayor Don Iveson anticipates more out-of-Edmonton work is on the horizon. “There’s hundreds of billions of dollars’ worth of this kind of infrastructure aging all around this continent in communities that don’t necessarily have the capacity to undertake either financially or in terms of technical expertise to overhaul that infrastructure. I think we’re going to continue to see some municipalities choose to work with partners.”
Epcor is wholly-owned by the citizens of Edmonton, so the majority on council argued that nothing significantly changes in this new relationship. It’s a view that came under scrutiny by the Edmonton and District Labour Council, who commissioned a poll and issued the results in a news release in the days leading up to Wednesday’s council meeting.
“That is what is called a push poll,” Mayor Iveson said, as several councillors questioned the validity of the info in it.
Coun. Bryan Anderson thought it was misleading. “I read a set of survey questions by an organized opposition that asked the public, ‘are you aware council is privatizing drainage assets?’ Second question was,’are you in favour of drainage handed over to a for-profit company?’ The third question was, ‘have you had enough opportunity for input?'”
“This has been, I think personally, falsely branded as a privatization. And that has stirred a lot of fear and anger out there,” said Coun. Scott McKeen.
Epcor takes over the drainage branch September 1.