Cheap hydro may lure firm

December 9, 2000

Cheap hydro may lure firm

Peter Dalla-Vicenza

An Alberta company is considering a move to Manitoba to escape sky-high electricity costs in that province, an executive with the family-owned company says.

John Davies, vice-president of engineering and operations at Lethbridge Iron Works, said rate increases that could see his bills nearly triple in 2001 are too difficult to swallow.

"Do I want to leave Lethbridge? No. Do I want my company to die? No," Davies said yesterday.

Davies said he has already been contacted by the Brandon Economic Development Board about the possibility of moving to the Wheat City.

Davies and other Alberta business executives are digesting the potential impact of deregulation of the electricity prices in that province that go into effect at the beginning of the new year.

"The government has been extolling the virtues of electricity deregulation. They have been saying it will bring competition to the marketplace and lead to lower prices," he said. "No one has been knocking at our door."

He said his company paid $70,000 in January 2000 for hydro power. That figure is expected to jump to $200,000 in 2001.

"Right now we are simply planning to survive the first few months of next year. But we have to make some long-term plans," he said. "Manitoba appears to be eager for us to locate there. Alberta, on the other hand, appears not to give a damn."

Marlow Kirton, general manager of the Brandon Economic Development Board, said cheap hydro electric power has become a major selling point to out-of-province industry.

He said the recent announcement that Albchem Industries will build a $40-million plant in Virden early next year and Nexen Chemical's planned $50-million expansion in Brandon are directly attributable to affordable hydro power.

"This is an unsung advantage," Kirton said. "We haven't done a good enough job selling it."

Meanwhile, Davies said he is in no position to pass on increased hydro costs to customers because his competition in Manitoba pay five cents per kilowatt hour while he pays 15 cents.

Lethbridge Iron Works has been in business for 102 years and currently employs 100 people. Plant workers earn $14 - $15 per hour making iron castings for farm implement and other manufacturers.

For now, Davies said he is hoping the Alberta government changes its minds and rejects deregulation.

But if it doesn't, relocation is a serious option. He said he will be looking at any community that has a workforce large enough to support his family's company.

"What city in Manitoba is closest to the mountains," Davies joked.