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B.C. Hydro has announced plans to purchase the remaining two-thirds share of Waneta Dam in Trail for $1.2 billion, making it the sole owner of the 63-year old facility.

The purchase supplants a deal struck by seller Teck Resources and Fortis Inc. in May after Hydro, which already has one-third ownership interest in the 490-megawatt hydroelectric dam, exercised its right of first refusal and matched Fortis’ offer of $1.2 billion.

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The agreement also includes a 20-year lease agreement that stipulates electricity generated from the two-thirds portion will continue to supply power to the Teck smelter in Trail at fixed prices. Teck has the option to extend this lease by another 10 years.

“As a result, this decision has no impact on B.C. Hydro’s energy supply and demand balance,” said Hydro in a statement released Tuesday.

Hydro purchased one-third of Waneta Dam in 2010 for $825 million, using the power generated by that share to supply Hydro customers.

Teck, which built the facility in 1954 to generate power for its smelter, said payments will start at about $75 million a year, increasing by two per cent annually, which is equivalent to an initial power price of $40 a megawatt-hour.

Teck will pay Fortis a “break fee” of about $28 million.

B.C. Hydro’s purchase is subject to a number of conditions, including approval by the B.C. Utilities Commission. The transaction is not expected to be finalized until early 2018.

chchan@postmedia.com

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