Questions unanswered on northern Ontario transmission project

A much needed connection for remote First Nation communities brings questions about funding

What connection is there between Dutton Dunwich township in Southwestern Ontario and Deer Lake First Nation of Northern Ontario? Deer Lake First Nation is 180 km north of Red Lake, or 1,915 km from Dutton Dunwich by road, so the two communities are far apart. What connects them is how the Ontario government manages the electricity sector.

Ontario’s Energy Minister issued a directive to the Ontario Energy Board or OEB on July 29, 2016, stating “the construction of the Remotes Connection Project, including the Line to Pickle Lake, is needed as a priority project.”

Deer Lake First Nation and three other of the 16 First Nation communities to benefit from being connected to the recently announced $1.6-billion Wataynikaneyap (Watay) Power grid, are also named as partners in the Strong Breeze Wind Farm (57.5MW) in Dutton-Dunwich. They were brought into the project by U.S.-based Invenergy LLC which resulted in a points advantage in the procurement bid process administered by the Independent Electricity System Operator or IESO.

The Watay Power Project is a different story: it will be a much-needed connection for 16 First Nations to the Ontario power transmission grid. The 16 First Nations represent a population of over 14,000 who currently rely on diesel for power generation. It will be owned by 22 First Nations.

Who is putting up the cash, and is it a loan or a grant?                                                                                                                    

There appears to be a disconnect on the announcements associated with the $1.6-billion project as MP Bob Nault’s website stated: “Today, the Honourable Bob Nault, along with the Honourable Jane Philpott, Minister of Indigenous Services Canada, announced $1.6 billion in federal funding for Wataynikaneyap Power to connect 16 First Nations to the provincial power grid.”

The CBC’s report had a different view of the funding, however: “Premier Kathleen Wynne and Ontario Energy Minister Glenn Thibeault along with the Minister of Indigenous Services Canada, Jane Philpott, announced an investment of $1.6 billion dollars to connect 16 First Nations in Northwestern Ontario to the electrical grid.”

The report quoted Ontario’s Premier, who said “We are putting the money up front and then the federal government is coming in and back filling that money, so the province is putting up over $1.3 billion in order to facilitate the project … in order for the project to get going, someone had to take the risk.”

There is a lack of clarity for taxpayers in the federal and provincial statements. Who is really providing the money? And is it $1.6 or $1.3 billion? Is it a loan or is it a grant? Taxpayers should be told.

Delivery costs

Grid-connected electricity for the 14,000 residents of the 16 First Nations communities works out to about $114,000 each and (assuming 3.5 residents per household) $400,000 per household. If one assumes a lifespan of 40 years* for the transmission system the delivery cost annually is $10,000 per household, without factoring in either electricity or interest costs on the debt (if it is debt).  Somehow, I doubt the 14,000 residents of the 16 First Nations will get the bill; will it fall on the taxpayers or ratepayers in Ontario, or all Canadian taxpayers to pick up the bill?  If it is Ontario ratepayers, should not the cost of this initiative properly be part of an indigenous support and development program, rather than adding to already beleagured ratepayers’ bills? Clarity on this issue would be appreciated from both the federal and provincial governments.

Environmental and health impacts                                                                                                 

An IESO “Panel Discussion: Engagement at the Local Level indicated grid connection to Ontario’s remote First Nation’s communities would: “Save $1 billion compared to diesel generation (PWC Study)” and that $472 million of the social value includes the “present value” of 6.6 million tonnes of avoided CO2 equivalent and $304 million of “adverse health impacts” over 40 years in the $1 billion reputedly saved, according to the PWC report of June 17, 2015.

What Watay Power won’t provide                                                                                                  

The website for Watay Power has a “Frequently Asked Questions” page, where two interesting questions posed. One concerns future power outages and the other asks whether the $1.6-billion transmission system will connect to the undeveloped Ring of Fire?

The first intriguing question was, “What options do communities have for back-up power during outages?” The answer was “A back up study is being prepared to develop options on how each community local distribution plans to address outages. The Wataynikaneyap Transmission Project is solely responsible for transmission.”

The second question was: “Will this line connect to the Ring of Fire?”** The answer to that question was, “The Wataynikaneyap Transmission Project is not proposing a connection to the Ring of Fire at this time.”

So, it would appear no backup plan is included in the estimated $1.6 billion cost, nor is a connection planned to the Ring of Fire which is regarded as “ Ontario’s version of the Oil Sands, the deposit has been said to contain $60-billion in mineral wealth.”

The Watay Power project poses many questions for Ontarians and Canadians. While the project is worthy in connecting remote communities to the power grid, Queens Park and Ottawa need to provide more details on who is really paying for it.

Parker Gallant                                                                                                                                 April 16, 2018

* “Studies have shown that building the transmission infrastructure to these remote communities would save over $1 billion compared to continued diesel generation over the next 40 years.”

**”Ten years after a large chromite deposit in Ontario’s James Bay lowlands was first discovered and declared a “game-changer” for the Canadian economy, the Ring of Fire mining development is flaming out in a dispute over who is talking to whom.”

Parker Gallant is an independent commentator on energy issues

 

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