Business
City Council had no legal right to privatize EPCOR's power generation assets
City Council had no legal right to privatize EPCOR's power generation assets
About this update from Capital Power Corporation
[{"type":"text","content":"\n\n\n\nSep. 11, 2009 (Canada NewsWire Group) -- EDMONTON, Sept. 11 /CNW/ -- 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 investmen...