The city of Penticton has reached an agreement with FortisBC on the purchase of a 12 kilo volt transformer for the Westminster Avenue Substation.
The agreement was reached after several months of negotiations, after an extra commercial compensation fee was added to the upgrade by Fortis.
"I don't know that the shock has worn off, just the realization in dealing with a big corporation like FortisBC, communities like ours are limited in their options," said Councillor Wes Hopkin. "But we've come to an agreement and accept their terms and hope to quickly work to improve the security of our electrical utility."
In September of 2011, the city's Electrical Distribution System Plan was completed. One of the significant projects was the installation of the transformer at the substation.
The project would increase system security by allowing more flexibility to transfer electrical loads between substations in the event of an emergency.
The first phase, at a cost of $3 million, is part of the approved 2013 budget and the second phase, also $3 million, is included as part of the 2014 budget.
In July of 2013, Fortis, prepared an estimate for the required work and asked for a deposit of nearly $1.9 million to commence procurement of the transformer. In October, the city provided a cheque in that amount.
But Fortis then announced they would also require commercial compensation in the amount of $750,000.
Council considered the matter in January, with many members expressing concern. The city subsequently took the matter to the B.C. Utilities Commission, which encouraged them to resolve their dispute.
The result was a reduction in the fee to $550,000.
The agreement now reached outlines the terms around the upgrade. The $550,000 is not due until 2015.
As the city has been planning for the financial investment for several years, the funds will come from the city's electrical reserve account.
Work is scheduled to begin with ordering of materials, which will commence in the next few weeks.
"We look forward to helping the city upgrade and enhance its electric system," said Bob Gibney, FortisBC senior manager, municipal and aboriginal relations. "And that we were able to come to an agreement on how the work will be fulfilled."