Monday 7 May 2012

A thing called Keeyask

A belated follow-up to the earlier post $1.1 Billion deficit might not be our biggest problem. In that post I discussed some of the enormous risks facing Manitoba Hydro:

  • over 11 billion dollars in investments in northern Hydro megaprojects, almost exclusively to sell power to a very weak export market in the US
  • a track record of escalating costs
  • a development with the Cree Nations partners that, fairly or not, places the entire burden of risk on Hydro while sharing potential profits of the Keeyask project.
I'm going to dive a little deeper into this Keeyask thing here. In addition to the Joint Keeyask Development Agreement that I talked about last time, there are Adverse Effects Agreements that layout the process for compensating ... hey ... wait! Where are you going? It's not that boring. Really. Stick around!


Okay. As I was saying ... there are these agreements. There are four of them -- one for each of Tataskweyak Cree Nation, War Lake First Nation, Fox Lake Cree Nation, and York Factory First Nation. Their purpose is "to provide appropriate replacements, substitutions or opportunities to offset unavoidable Keeyask Adverse Effects on practices, customs and traditions integral to the distinctive cultural identity" of the First Nations.

I don't want to lose your attention again so let's get straight to the money: how much will these replacements, substitutions and opportunities cost Manitoba rate payers? Well, it's complicated, but let's start with $7 million. That's not compensation. That's the cost of constructing and furnishing buildings to administer the compensation.

There are two buildings: the TCN Keeyask Centre, and the Fox Lake Gathering Centre in Gillam. Both serve purposes other than administration, for example storage, displaying artifacts, conducting educational seminars, etc..

The Keeyask Centre looks something like this, and is budgeted for $4 million:


I believe this beauty, designed by Friesen Tokar Architects, might be the Fox Lake Gathering Centre that was agreed to in the plan, except that its cost is $7.5 million, not the $3 million that was budgeted:

Okay, moving on ...

There are numerous "offsetting programs" funded under these Adverse Effects Agreements: language programs, educational programs, grave site restoration programs, youth wilderness traditions programs, etc...  There is an access program for TCN that funds up to 52,000 miles of air transportation for hunting, fishing and trapping each year.

There are budgets for this. On an annual basis for the life of the project, Tataskweyak Cree Nation is funded for $2,124,000 in 2008 dollars, indexed for inflation, with any unspent amounts carried forward.War Lake gets $266,000 each year. Fox Lake gets $710,000 per year, decreasing over time to $100,000 per year. York Factory First Nation gets total funding that adds up to $8,520,000 discounted present value.

In addition to all this there are other aspects to these agreements, including lump sum amounts for Residual Compensation:
Tataskweyak Cree Nation: $3,000,000
War Lake First Nation: $255,000
Fox Lake Cree Nation: $1,581,000
York Factory First Nation: $490,000

There are other clauses that allow for additional losses from traditional activities, other amounts for water levels above or below normal levels ($4,500 per foot per day, adjusted for inflation) and so on.

So what to make of all this? Certainly if you were adding up the costs of lost revenue from hunting and trapping on the 45 square kilometers of flooded land, it would be a miniscule amount by comparison. However intangibles are extremely hard to place a value on -- I know because I've done it in a previous life -- but also there is value in building willing partners with the First Nations.

Whether you feel this is way over the top or fair compensation, it is a cost to Hydro. These tens of millions of dollars will add to the burden, and represent thousands more megawatts of power to be exported to a weak US energy market.

10 comments:

Pylons15 said...

All elements to this story that are rarely, if ever, mentioned in the MSM. Thanks for shedding some light on this.

Pylons15 said...

Further, we have a mutual friend who used to work in Hydro's Mitigation Dept. That group spends some serious money every year and it's not all on resolving legitimate issues around water damage - there are some very happy law firms in town.
One of my favourites is Hydro paying for consultants and legal representation who will argue in the Band's interests AGAINST Hydro.

cherenkov said...

That's a good point. The agreements I'm talking about here resulted in giant legal bills as well.

Anonymous said...

Giant Legal Payments to silence bands ... they earn their Hydro Money ...

Anonymous said...

Clean Environment Commission is hearing Hydro Application for the BiPole 3 ... ANOTHER $4 Billion construction loan now ...
Hydro is in debt $15 Billion NOW and wants another $10 Billion Debt
to build the Keyask ...
Then another $10 Billion debt for Connawhopper ...
$ XX Billions for the Converters and U.S. Feeder-lines...

And as Always ...

Manitobans SUBSIDIZE ALL EXPORT SALES to the U.S.A. !

TAXPAYERS GUARANTEE the HYDRO DEBT

DavidCoutu said...

Cherenkov ... you obviously know more than the fact Native Bands "may" profit in the future ...
There is NO guarantee of Profit to these OWNERS of the Dam Projects ...
Unless Hydro jimmies the books ... as they are wont to do!

I sat in on the signing of documents to invest Native Heritage Money for a 33% interest in Wuskwatim.

They ONLY actually bought in to the Massive Hydro Debt that stands unpaid today at OVER $ 15 BILLION !

By 2020 the Debt will be over 50 Billion ...

Hydro cannot pay the interest on their debt by 2050

Natives Snookered Again ...

cherenkov said...

I didn't research Wuskwatim so I don't know the arrangement there, but the Cree Nations partners don't have to buy in to Keeyask until the financial picture becomes much clearer, and whether they buy in or not they receive millions of dollars in compensation. It may or may not be an appropriate amount of compensation, but they will be financially better off regardless.

DavidCoutu said...

DavidCoutu
I have not researched Keyask yet.

Keyask is not viable without the BiPole 3 ...
which has the only purpose of carrying power to the U.S.
and we have no sales
Wuskwatim has no sales ... why did we build it?

FYI ... The NCN Cree Nation bought 33% of the Wuskwatim Dam ...
I was there when they did the paperwork for the last 6% ... %26 Million.

Anonymous said...

I would like for someone to contact me that knows about all the conflicts of interest relative to payments made to lawyers from Manitoba Hydro.

Investigative Journalist said...

Please contact Janie Duncan at 233-3439 for information about all the lawyer conflicts.

 
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