An Alberta MLA has filed an objection to the proposed sale of electrical transmission company AltaLink to Warren Buffet’s Berkshire Hathaway.
Joe Anglin said many questions surround the $3.2 billion deal, in-cluding the legalities of potential Berkshire Hathaway price increases in both Alberta and the United States.
Anglin raised his concerns at an Oct. 23 meeting of the Southern Alberta Council of Public Affairs.
The province’s electrical system has long been an interest for Anglin, who spearheaded the Lavesta Area Group objections to a southern Alberta transmission line from 2006-10 before he was elected as a Wildrose Party MLA.
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“There’s so many questions and so few answers,” said Anglin.
“Then the overriding question is, should we continue with this sale? And I have filed an objection with the Alberta Utilities Commission that we should not.
“I’m not even necessarily opposed to Berkshire Hathaway owning AltaLink. What I’m opposed to is the way we’re going about it and all the unanswered questions moving forward.”
AltaLink is the former transmission arm of TransAlta Utilities, which was separated and sold when the province restructured the electrical system. It was purchased by SNC-Lavalin of Montréal for $800 million.
Anglin said the price was 33 percent more than book value at the time.
“That’s an odd purchase if you know anything about utilities. Utilities generally sell for book value,” he said. “So why would a company with lawyers and accountants pay 33 percent more for an asset? Nobody knows.”
Berkshire Hathaway has now offered $3.2 billion for AltaLink, and Anglin estimates it is worth roughly $2.6 billion.
“They’re overspending by $600 million for this asset,” he said.
“We don’t know how you’re going to pay for it, but you will pay for this somehow. They just haven’t told us how they plan on making that money back, but I can guarantee you Warren Buffet has no intention of leaving $600 million on the table up in Alberta. He has every intention of making that money back.”
In an interview after his talk, Anglin said the pending deal has implications for farmers and agricultural businesses, who are already concerned about high electrical rates.
“They are directly and adversely affected, without a doubt,” he said.
LeRon Torrie, a farmer from Grassy Lake, Alta., who served on an advisory council when Alberta deregulated its system in 2003, has monitored electrical rates for years, partly because it is a major irrigation cost. He analyzes his bills for charges related to energy, transmission and distribution.
Torrie said his 2013 figures show the combined transmission and distribution costs on his bills were 148 percent of the energy cost. In 2012 they were 162 percent.
However, in 2003, those two combined charges were only 79 percent of the cost of energy.
Evidence that delivering electricity to the user costs more than the energy itself is a major concern in terms of potentially rising costs, Torrie said.
AltaLink’s possible sale to Berkshire Hathaway is another concern.
“Anytime we start selling essential services to an out-of-Canada, out-of-Alberta group, I’m very concerned just on general principle.”
In his talk, Anglin said Albertans are major investors in the province’s electrical system but they won’t see any returns from the AltaLink sale.
He plans to introduce Bill 201, the public interest amendment act, at the next legislative session. It would include a system in which funds from the sale of such assets could in part be reallocated to Albertans.
Anglin also said AltaLink was initially separated from TransAlta to eliminate the possibility of price manipulation in cases where one company had generation, transmission and distribution capability.
AltaLink was prohibited from involvement in power generation, but Berkshire Hathaway has considerable assets in American power generation.
“You have a regulated monopoly that would have certain market control that I think is detrimental to you, the consumers,” said Anglin.
