The District of Kitimat has lost its appeal against a decision won by Alcan to sell power to B.C. Hydro.

The B.C. Court of Appeal upheld Rio Tinto Alcan's unrestricted right to sell the electricity it produces at its Kemano power plant at Kitimat.

In a bid to protect jobs at the Alcan smelter, the municipality of Kitimat had argued the power was intended for the production of aluminum and should not be sold to profit the company.

But the court has disagreed with that interpretation of the provincial legislation under which Alcan was granted water rights.

Kitimat Mayor Richard Wozney was not happy with the court's decision.

"We are not surprised by the ruling because the provincial government sided with Alcan in court," Wozney said.

"Council will always defend the interests of the people that we were elected to represent," he said. The outcome would have been very different if the provincial government had done the same."

Wozney said the ruling undermines the aluminum industry as it now must compete for power with bulk sales to the North American grid.

Despite record prices for aluminum, the company has closed part of its Kitimat smelter and shed 400 jobs in order to sell power, he said.

"We respect the court's decision," Wozney said. "But we will continue to try and hold Rio Tinto Alcan to account for the many promises they've made over the years."

The company has gone to its board of directors for approval of a $2 billion plan to modernize its Kitimat smelter.

Rio Tino Alcan's president was pleased with the decision.

"We are satisfied with today's decision, and we hope that Rio Tinto Alcan and the District of Kitimat can now focus on working together to address the economic challenges and opportunities of the region," said Jacynthe Cote, Rio Tinto Alcan Primary Metal President.

Rio Tinto Alcan has sold clean and renewable Kemano power since the 1950's and BC Hydro has recognized Rio Tinto Alcan-supplied power as an important resource to support the North Coast region.

The conclusion of the B.C. Court of Appeal states: "I conclude the Chief Justice made no error in concluding as he did that Alcan was not precluded from selling the power it generates under either Act or the Agreement."

"We hope that this legal challenge, which has caused so much uncertainty in the region, is now ended and we can focus our collective energies on bringing the Kitimat Modernization Project to fruition" said Jacynthe Cote. "A project that will allow a reduction of more than 400 000 tonnes of GHG emission, is in line with our sustainability approach" she added.