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Hydro dam deal gets makeover

Northern Cree to vote on amended agreement

The Wuskwatim station on the Burntwood River in northern Manitoba.


The Wuskwatim station on the Burntwood River in northern Manitoba.

Manitoba Hydro and a northern Cree community have again gone back to the drawing board to rewrite the agreement that would finalize the band's 33 per cent ownership of the Wuskwatim generating station.

It's called Supplement 2 of the project development agreement and it will be discussed tonight in Winnipeg at a special meeting for Nisichawayasihk Cree Nation (NCN) members living in the city.

On the table is a proposal to move about $40 million from two NCN trust funds to secure the First Nation's one-third stake in the 200-megawatt dam on the Burntwood River west of Thompson. One trust was set up in 1996 as part of the Northern Flood Agreement and the second in 2006 as part of the Wuskwatim development agreement. The trust funds would be used in place of third-party loans.

The province's Clean Environment Commission submitted its report to the province April 17 following almost five months of hearings on the environmental impact of the proposed $6.5-billion Keeyask generation station on the Nelson River.

The report was submitted to Conservation and Water Stewardship Minister Gord Mackintosh, who is weighing whether the government should accept the commission's recommendations on the 695-megawatt dam project.

Manitoba Hydro wants to start construction on the dam this summer to take advantage of lucrative export power sales to the U.S. Midwest.

If approved, the first of seven turbines would start producing electricity in 2019.

The Public Utilities Board is holding hearings over whether the need for Keeyask makes economic sense. The PUB's report is due June 20.

Manitoba Hydro says it and NCN also recently renegotiated their co-ownership deal so NCN sees a consistent benefit during the life of the project.

"The supplement is intended to provide enhanced benefits and smooth out those cash flows over time," Hydro spokesman Scott Powell said. "It's simply just a reflection of the changing economics compared to the original agreement. It was always intended to make sure the community was better off with the project than without it."

The band has spent about $110 million on the project, most of it borrowed from Hydro.

Hydro has already renegotiated its 2006 profit-sharing deal with NCN so the First Nation did not have to contribute to Hydro's overall losses and still be in a position to repay its loan and see some revenue. Under the old agreement, NCN would have had to contribute $14 million in 2012 and $24 million in 2013-14.

The losses and NCN's increased stake are due to the timing of Wuswatim's construction -- it went into operation in late 2012 -- and the onset of the U.S. recession in 2009. The dam cost $1.4 billion to build, almost twice its 2004 estimate of $800 million, and the recession chopped what were to be big profits from selling surplus power to the United States.

Power generated from Wuskwatim was costing 7.2 cents per kilowatt hour (kWh) to produce while the average export sale price of electricity was 3.9 cents per kWh. However, Hydro says domestic demand for power is increasing by 80 megawatts per year, which means Manitoba will be able to absorb Wuskwatim's production. Export sales also recovered in the past year due to last winter's colder weather.

Powell said the agreement includes a formula in which the band will see "blended" revenue -- revenue not just from export power sales but domestic sales, too.

Acting NCN Chief Marcel Moody was unavailable, but band briefing material recommends community members approve the trust amendments. A vote is to be held before the end of June.


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