City Council had no legal right to privatize EPCOR's power generation assets

    Closed-door meetings breach Municipal Government Act, group charges in

    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 investment outfits that bought stocks in Capital Power," says
McGowan. "But, frankly, the interests of investors need to take a back seat to
the interests of the citizens of Edmonton who own the assets in question. The
most important thing to come out of this case would be public accountability.
City Council does not get to act with disregard to the public interest. And
they don't get to use their so-called delegation powers to do an end run
around the democratic process."
    "The citizens of Edmonton were shut out of the decision to privatize one
of our most important assets. We need to get those assets back - or at the
very least, make sure this never happens again," concludes Loken.

For further information:

For further information: Gil McGowan, AFL President @ (780) 218-9888;
Dave Loken, Coalition of Edmonton Civic Unions @ (780) 448-8981 (office),
(780) 237-8656 (cell)

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Alberta Federation of Labour

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