2021 has been a rough year for Sault Ste. Marie businesses, in many respects.
We've also had some big economic development projects getting underway in Sault Ste. Marie, including Algoma Steel's $700-million changeover to electric arc furnace steelmaking, a $30-million replacement for the McMeeken Centre, an $18-million reconciliation centre at Algoma University, a $17.8-million upgrade to Extendicare Van Daele Manor, a $16-million centralized Social Services building on Albert Street, Ben Pino's $15-million retail complex and an $8.4 million downtown plaza.
Capping all that as we approach year's end will be the Sault's second-largest announcement of 2021: a PUC transmission project valued at $100-million, SooToday has learned.
An announcement expected as early as Thursday morning will offer details of a 10.5-kilometre-long, 230-kilovolt transmission line that will run from the Hydro One substation on Third Line (near Prouse Motors) to an area near Algoma Steel.
The massive project is expected to almost double the book value of electrical assets under PUC's management. It will also create between 15 to 20 permanent local jobs, many on the regulatory and financial side of the business.
PUC Transmission Co., a new corporate entity, will be created to manage the transmission line, which will supply power to Algoma Steel's electric-arc furnaces (EAFs) and other businesses expected to take advantage of the new high-voltage line.
Known informally as TransCo around PUC headquarters on Second Line, the new business division will be jointly owned by PUC and Axiom Infrastructure Inc., a Montreal-based investment company.
Kelly McLellan, PUC's vice president of finance and corporate support, dropped a few hints about the new division at a PUC board meeting in December.
"You've most recently probably heard about TransCo, which will require extensive resources next year to get us ready," McLellan said. "When we speak about increasing enterprise value, we focus on making strategic re-investments in our capital infrastructure. Our capital programs for 2022 and beyond will increase our rate base significantly, thereby increasing our enterprise value for our shareholder."
"Supporting the infrastructure upgrade at Algoma Steel will result in 70 per cent less emissions from Algoma Steel, which is the equivalent of taking a million cars off the road." "TransCo will result in PUC adding rate base the equivalent of PUC Distribution, almost doubling our size," McLellan told her board.
Spinoff savings from sharing management of PUC's electric and water utilities with the new high-voltage transmission division can be expected for both utilities and their customers, she added.
Rob Brewer, president and chief executive officer of PUC Services Inc., said Algoma Steel's two electric-arc furnaces will need about 300 megawatts of power. "If you take that in context, the entire PUC Distribution system peaks at around 120 megawatts," Brewer tells SooToday.
"From a scale perspective, it's a massive amount of power.
"We think this is a project that has some very significant benefits for the community," Brewer said. "It reduces emissions from the plant by 70 per cent, which is transformative."
"We're really appreciative of the leadership we've seen from Algoma in making this investment. They're investing about $700 million into that EAF process. You'll see additional returns from the transmission company going to the city, which will help keep our taxes down."
Brewer said adding to the west end's power supply opens up a lot of new business possibilities.
"It's a big project for Algoma, a very significant project for PUC."
"Bringing power into the west end would enable other opportunities in the west end, which could be things like businesses associated with steelmaking. Once Algoma makes the transition to EAF, there may be other businesses that end up co-locating. Having a power source there will enable that... There's been previous announcements from the city with respect to a smelter in the west end."
"We have ourselves a connection that we will likely make into the distribution system from the west end," Brewer said. "There are some other developments that we're anticipating in the west end that will need a transmission line. We think there's an opportunity for a lot of angles here. It really makes sense for the city in terms of the city's growth."
Some of the 15 to 20 permanent local jobs will be with PUC, Brewer said, while others will be with other service providers.
Most of the Sault region’s electrical needs are supplied through Hydro One's 230/115 kilovolt Third Line transformer station. PUC already has an easement running from there east to Allens Side Road. It's examining a number of possible routes from there to the bottom of Allens Side Road near the steel mill.
PUC is planning to build a new transmission station near Algoma Steel. Some of the needed properties have already been acquired. PUC is working on environmental assessments on the potential routes, after which property owners will be contacted.
"Once we have 230 service into the west end, then it will give PUC Distribution opportunity to connect at another source, which gives us additional reliability," Brewer said.