Thank you, Minister

McLeod. We’ll go to Premier Floyd Roland.

Thank you, Mr. Chairman. I

know that this one piece draws attention to the one project. As stated, if it were to proceed — because there are some huge hurdles yet this project needs to go over — this money would be capitalized. Otherwise, we’ve already, for example, looked at it. We felt as the Government of the Northwest Territories that we needed to do some serious work in either hydro expansion, biomass expansion or wind energy. So we’re starting to go down that. There are a whole number of initiatives we need to look at as the Government of the Northwest Territories to reduce the cost of living in the Northwest Territories.

For example, right now there’s been a request for us to be involved, in a sense, through the Power Corporation. If it were to go ahead, it would be a business deal that would see the Power Corporation’s share retain earnings from the sale of power. This would then, overall, help the Northwest Territories, so we would get fewer of those rate riders in our communities farther north. Bigger than that is the fact that if we got involved and said, “Let’s try to go around the lake” — which is something I believe is worth another look at — we would then, as the Government of the Northwest Territories, have to come up with the public money to make that section go. If that’s the case, then I would see where the Member’s concern comes from. That project would then only help those communities that would be hooked up.

I think we can go back to the original Taltson project. The original Taltson project was built by the mining company out in Pine Point. It supplied them. It wasn’t until that mine shut down that that power was then hooked up to the other communities in the South Slave part of the territory. This could go down that route as well. Right now it is a business case to supply power to a mine to make earnings happen for the Power Corporation. As the Government of the Northwest Territories, if we want to expand that, we could, but then we would become directly involved in the sense of trying to offset those costs for going around another route. I think it’s worth having that discussion.

But on the bigger picture, as the Government of the Northwest Territories, we’re looking at a whole number of factors here that are going to require investment by the Government of the Northwest Territories. We have to look at how far we can take biomass into our communities — talking about the power rate structures right now. Technology is coming into play that could see us convert some of our diesel generators into a much cleaner burning fuel system as well as lowering the cost of power in our communities.

I would ask the Minister, when we do this and that report comes out, to actually look at the costs we

would have to become a player if were to hook up communities and go up and down the valley. The Bear Rivers project was one tied with the pipeline. We were hoping the last government would tie that together and supply communities to the north. Sahdae Energy out of the Sahtu is still somewhat actively involved in looking at that development. So there’s still potential there.

This piece is the start of where we can go as the Government of the Northwest Territories. I would say that we’d be prepared as a government when we look at the biomass piece and the wind energy piece…. We’re going to have to put more money than we announced in the budget into some of the tests for wind energy. We’re going to have to step up to the plate fairly large, and we’ll be coming back to Members during the business plan process to further identify those.

We’re going to have to expand the way we go. I agree with the Member; we can’t afford to keep paying these higher rates. But it is a fact that we have to look at some of these options to go forward and see if, in fact, they are viable options for us.

Thank you,

Mr. Premier. Mr. McLeod.

Thank you. I was watching the clock.

What I heard from both responses is that…. It didn’t seem like there was going to be any immediate benefits to the people of the northern part of the Northwest Territories. I think a question I could probably ask out of all of this, and I think the Premier touched on it…. When we talk about the cost of living and all that…. I suppose if you ran it around the route my colleagues were mentioning, then some of our costs of living farther north may go down. You never know. There are people who get stuff out of some of the communities down here. I’m just firing that out there. They may not.

What I think I would ask, though, is if this project were to go ahead and it has all the benefits we’ve been hearing about, could the people of the Beaufort-Delta and the Sahtu expect their power bills and their rates to go down?

That would be our

expectation. We are undertaking an electricity review. I guess until such time as we do this additional work and these additional studies and we negotiate these power purchase agreements…. At that time we’d have a much better idea of the impact it would have with regard to power.

Thank you, Minister

McLeod. Ms. Bisaro.

Thank you, Mr. Chair. I have some

questions as well on this particular project. My

questions have been somewhat answered already. I will try not to go over the same ground again. I want to state for the record that I firmly believe we need to take the western route around the lake or across the lake. It definitely needs to be looked at, in terms of its feasibility. I don’t see much sense in providing power to the mines for 15, 20 years and then having a hydro line going nowhere. My colleague to my right advises me that this power line isn’t even going to go to Lutselk’e. It’s going to pass somewhere to the south of it, and that seems pretty ridiculous. So I certainly agree that this route, the western route, needs to be looked at, and I’m happy to hear that it will be.

The environmental assessment is currently being done based on the route to the east, and should we decide that it’s the route to the west that we would want to go with, would the environmental assessment continue on the east, or can it be stopped midway and then change the route and go west?

Thank you,

Ms. Bisaro. Minister McLeod.

Thank you, Mr. Chair. Just a

couple of points. The power-sharing agreement with the diamond mines, when and if negotiated, would go a long way to offsetting the costs of building the Taltson hydro expansion.

The reason Lutselk’e was not included is because the Lutselk’e band government has other arrangements in place with other operators that, if I recall, precluded them from getting involved even if they wanted to.

I forget the last part of the question.

Interjection.

Oh, yeah. Sorry, Mr. Chair.

Deze is the business case proponent. As the Premier mentioned, if we were to get them to change, depending on the feasibility of going the other route, I’m sure that if it’s cheaper and saves money, they would probably embrace it. If it’s going to cost more money and is something that the government would see as being in the public interest, then we would make alternative arrangements, as has been suggested

To my question about the

environmental assessment, if it’s currently underway for an eastern route and the decision is made to change the project and go the western route, does the environmental assessment continue on the east to its conclusion, or can it be stopped midway and then started again on the other route?

My expectation is that would

be dependent on Deze Energy. If we were to make

a business case proposal that would be in their best interests, I’m sure they would want to see the environmental impacts they can change and have the assessment address it.

One more question, and I have to say

it up front. I find this relationship of the Deze Energy Corporation to GNWT to be very convoluted. We’re many times removed. However, the government is contributing $3

million to the NWT Energy

Corporation, which is passing it down the line, and eventually it’s getting to Deze Corporation, of which, I gather, we are going to be a one-third partner or owner. So my question. The other two partners, who I assume are also one-third each: how much money are they putting into this project at this point? Is it matching dollars?

My understanding is that

they’re not providing matching dollars at this point. But we would have to get more detail and provide the Member with that information.

I think that’s the answer I expected,

but it doesn’t really please me. I understand that we may get some capitalization out of this $3 million somewhere down the road, but it’s also quite likely that this is money down the toilet.

Is there an expectation, as this project goes forward, that Deze Energy will be cost-shared three ways evenly?

The proposal is that it would

be debt-financed. We indicated that the previous investments of the government would be capitalized, and the expectation is that the GNWT will see their investments returned

Thank you, Minister

McLeod. Ms. Bisaro?

No, thanks.

Thank you,

Ms. Bisaro. Mr. Krutko.

This is like déjà vu all over again.

I think one thing you have to do is turn to page 2-27 and realize that the government has expended $2 million already in regard to the environmental assessment review, collecting data. The $3 million is now taking us into an environmental process in regard to that process. So we’ve already made a capital investment.

But I also have to point out that a large portion of the money that’s listed there came from the federal government through federal green initiatives. Also, there was legislation passed in this Legislature prior to the end of the 15th Assembly, in which legislation

was developed — the Hydro Corporation Act — which formulated the corporation specifically for this

project, in which it will receive certain types of exemptions. It is exempt from the PUB process, and also, it’s a business deal between the mining companies to sign on to a power purchase agreement and Deze Energy.

I think one thing people have to realize — and I found it kind of alarming to hear — is that the government is now looking at rerouting. I know we looked at the feasibility of that proposition, to look at the second phase of an expansion in regard to the Snare Cascades system, eventually running power to places like Fort Providence and other places. This work has already been done.

I know we looked at the amount of money to run a line from Behchoko all the way down to Providence and vice versa, to go from Hay River to Providence. You’re looking at somewhere in excess of a $70 million investment.

I think that at the end of the day you have to realize that until we have an energy plan of some sort to really identify where we’re going — I know Mr. McLeod touched on the issue of where we’re going with the diesel communities — what’s the benefit to the Northwest Territories?

I think also, at the end of it all, what happens after 20 years of mining development in the diamond mines? There is a lifetime for these diamond mines, and they will run out. So you had to design this in such a way that you were able to move the line to where it’s probably going to be used in the next ten or 15 years, and the most ideal place was going directly to Yellowknife. You’re already in that grid. It’s a matter of running from the diamond mine back around to Yellowknife or tie into the southern grid.

I think that from what I hear here, a lot of that information is out there. It’s just a matter of having it tabled in this Legislature for people to see. The history is there; the process is there.

We’ve already made a major investment of $2 million, and what’s here in front of us, $3 million, so it’s going to be a $5 million investment on this specific project, which is a business deal between the Power Corporation, Deze Energy, and the mining companies. It’s a business deal. I think I’d just like to point out that we’ve made all these investments, so to hear now that you’re going to talk about rerouting….

I think the other thing you have to realize is that as soon as you reroute that route, you’re crossing other people’s traditional territories, and they will want buy-in. You’re talking about the Deh Cho; you’re talking about the Tlicho communities, if you’re going around the other route. I mean, again, you’re trying to bring out something that at the end of the day.... It’s the cost of going back and starting

over. I think you’re basically going to delay this project to a point where right now it’s questionable if it’s economically viable.

Basically, BHP only has maybe five or eight years of life left in that mine. Once they’re off the grid, the economics of this project is questionable.

So I’ve been sitting here, hearing what’s been discussed here. I

mean, legislation has been

passed in this Legislative Assembly to take on this project. We’ve got federal money — basically, the majority of this money is federal money — to fund this project. They did look at the possibility of rerouting this thing, and the economics of rerouting are just not there. It’s not a viable project if you reroute the route from the Taltson phase

2

expansion to the other area.

I’m not too sure if I can explain it a little better than that, but I think someone is either misleading the process by way of saying, “Let’s do something else,” or telling the mining industry, “Well, sorry; we’re reneging on our commitment to you.” My view is that this is a business deal, and you either change the rules or let us know now. From what I’m hearing, the practicality is not there.

Since I’m on a roll, I might as well also mention the number that you mentioned, the 45 megawatts. I believe you’re only talking 35 megawatts, because there’s a ten megawatt surplus in the Taltson system right now, and that’s what’s being used for the projects in Fort Smith by way of electric heat processes. Those ten megawatts are owned and controlled by the Northwest Territories Power Corporation, to decide at the end of the day if they’re going to sell it to the companies or keep it for the communities. I don’t know if you’ll want to respond to that or not.

Thank you,

Mr. Krutko. Minister McLeod.

Thank you, Mr.

Chair. I

couldn’t have said it better myself, and I’m glad that the Member was able to clarify the issues very succinctly.

I would just add to that that we have committed to go back and review the financial information with the standing committee members.

Thank you, Minister

McLeod. Mrs. Groenewegen.

Thank you. Well, I feel like

we’ve just been on a big chase around the mulberry bush here, because this all started when the issue of the routing came up. We were told that even though this had gone to environmental assessment, in fact the routing could be reconsidered. There are

a lot of implications in that, and I guess it’s not probably likely.

But to the issue of the money that we’re putting into this — if this is good deal…. You know, I’m having déjà vu on the Deh Cho Bridge here. I’ll tell you why. We have to put money into something in order to see a project get off the ground. We’ve got “investors” — I say that in quotation marks — coming to the table probably, really, with nothing, except that they have control over the lands that this project is going to go over. We once again are taking all the risk. We’re taking all the risk to try and facilitate a deal to get economic and cleaner energy to diamond mines which have an undetermined lifespan.

There are a lot of things happening in the global economy right now. We don’t know how long diamonds are going to be in big demand. The forecasts are predicting that 100 million people on this planet are going to be starving soon. I don’t know what kinds of global pressures could come to bear or could affect markets for diamonds. But I just have this sixth sense that we are once again footing the bill, holding the bag, taking all the risk, and a project may or may not go ahead.

We don’t have any way to recover our costs if this project doesn’t go ahead at all. We’re putting all the investment money on the table. You know, we say, “If it goes ahead, we could recover the costs. If the diamond mines.... If we can negotiate a good deal with them....”

Like I said, I’m just having a moment here thinking about how we went down the path to the Deh Cho Bridge and all the risks that we took on that and still are taking on that.

So I have a question: if the cost to build the transmission line to the mines is undertaken — I mean, if those costs are expended — and something happens to the market, i.e. the diamond mines, who is left holding the bag, the risk, for the 690-kilometre transmission line to nowhere if there’s no diamond mine at the end of it?

Anyway, we have lots of other things to talk about here tonight, Mr. Chairman, so I don’t want to belabour this any longer. I don’t think this is maybe even the right forum to have this kind of in-depth debate about this project, but I just wanted to comment that I think there’s a lot of information that we’re not able to delve into here tonight, and I have serious concerns and questions. Thank you.