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First Nations communities jumping into the 20th century

Local generation is real economic development. It creates permanent jobs and builds community capacity.
David Robinson Economist, Laurentian University Director, Institute for Northern Ontario Research and Development.

The 20th century is creeping toward the fly-in communities in the northwest. It takes the form of a project to build 1,800 Kilometres of high-voltage transmission lines to connect 20 First Nations communities. This is a $1.35-billion project. It may be the wrong project for the 21st century.

There is no doubt that a new energy system is needed. The estimated cost for diesel generation for Wataynikaneyap's 16 remote communities in 2013 was $43 million and rising. The diesel infrastructure they have is inadequate, wearing out and polluting. The estimated cost of the system over the next 40 years is $3.4 billion. This is for a population of under 11,000. In other words, to pay the hydro bill up front you would need more than $3 million per person.

The communities have partnered with FortisOntario and RES Canada (Fortis-RES).

FortisOntario is a Newfoundland electric utility that owns and operates Canadian Niagara Power Inc. and Algoma Power Inc. RES Canada is a global company that engineers and builds energy grids. The First Nations of Wataynikaneyap Power will be majority owners and have the option to become 100 per cent owners over time. As a group they are well equipped to build the system Wataynikaneyap wants.

Unfortunately, the system they want may not be the one they need. The first modern transmission lines were installed in the 1880s. They became the foundation of 20th century industrialization. They are sophisticated, expensive and probably the wrong solution for the Northwest.

According to the financial model, communities will buy $2.3 billion worth of electricity in present value terms — much less than the diesel system would cost. The $2.3 billion will pay for the transmission lines and for the profits for both FortisOntario and the communities that own the project. Depending on how PriceWaterhouseCoopers did their calculations, $2.3 billion would mean a bill of between $2,000 and $10,000 per year per person. The average Ontario household with 2.6 people pays about $1,800 per year.

There is no doubt that this is the 20th century solution to the problem of providing reliable, clean electricity for the communities of the Northwest. The big question is whether a 21st century solution would be better.

The Federal Government seems to have a different idea. In March, the government committed $10.7 million for renewable energy projects in off-grid Indigenous and Northern communities. Decentralized power generation seems to be the future. The federal program will support bioenergy plants utilizing local wood.

Under the federal program, communities could each buy a Finnish biomass system for as little $20 million. The total capital cost would be about $440 million, less than half the somewhat optimistic estimate for the transmission lines. The technology is thoroughly proven. The annual cost per person for fuel might be as low as $675.

The transmission line project will create just 261 construction jobs in Northwestern Ontario. That is an average of 13 jobs per community, spread out over the years of construction. Installing a co-gen system would have a smaller up-front impact but would create permanent jobs collecting biomass and running the system. Instead of sending money south, money would circulate in the community.  

With a co-gen plant communities use waste heat from generating electricity to heat homes and community buildings or for industrial purposes, like drying lumber. With local operators and owners communities may be able to create new businesses, incorporate other energy sources, and even export power for nearby developments.

Wind, solar and small hydro would also create more jobs than the Wataynikaneyap Transmission Project will. They can all provide cheaper power. They all reduce greenhouse gasses and air pollution. 

Local generation is real economic development. It creates permanent jobs and builds community capacity. Buying power from outside weakens a local economy. Transmission lines are like a straw sucking money out of each community. That’s true even if the community owns the straw.

The Wataynikaneyap Transmission Project would be a terrific idea for an Ontario Hydro-style electricity company in 1960. It is a bad approach for 21st century Northern communities. When the government selected Wataynikaneyap to deliver power to the Northwest, it demonstrated again that it understands neither electricity nor economic development.