Cree fortunes hitched to Hydro wagon

What about aboriginal partners?

Winnipeg Free Press, March 20, 2017

By Will Braun

Nearly 20 years ago, Manitoba Hydro began working toward the two largest aboriginal business ventures in the history of the province. Ultimately, five First Nations became partners in supposedly lucrative multi-billio- dollar dams. Chiefs spoke about prosperous futures. Hydro spoke proudly about the partnerships. 

What does Hydro’s grim financial situation mean for its northern partners?

Nisichawayasihk Cree Nation (NCN) bought a 33 per cent share in the $1.9-billion Wuskwatim dam. Wuskwatim is losing millions annually, largely due to weak export markets.

To prevent a situation in which NCN would have had to pay Hydro millions to cover its share of the dam’s losses ($10 million last year alone), the parties rejigged their agreement. Hydro’s last report to the Public Utilities Board said those adjustments are expected to cost Hydro $15 million annually for 20 years. Much of that $300 million is essentially borrowed from future payments to NCN, so Hydro hopes to recoup some of it in future.

According to Hydro, Wuskwatim should start turning an annual profit in 2022.

The other major venture is a partnership between Hydro and the four “Keeyask Cree Nations” — Tataskweyak, Fox Lake, York Factory and War Lake — related to the Keeyask dam. The centrepiece of that agreement is the First Nations’ opportunity to purchase a combined share of 25 per cent in what will be the most expensive project in Manitoba’s history. That’s a big deal, or it could have been.

In its PUB filings, Hydro now assumes the Keeyask nations will end up with a combined 2.17 per cent share rather than 25. A final decision comes after the dam is complete.

The lesser share would be risk-free, with guaranteed returns regardless of the dam’s performance. The four First Nations are expected to get about $5 million annually to divide amongst themselves in the early years of the dam, minus whatever advances they receive before then.

No one is saying why the Keeyask nations are leaning toward the 2.17 per cent share, but much has changed since 2009 when the agreement was ratified. The cost of the project has jumped from $5 billion to $8.7 billion and the completion date pushed back from 2019 to 2021. The average price Hydro gets per kilowatt hour in the export market has decreased by about a third. Natural gas, Hydro’s main competition in the U.S., is about a third the price it was when the Keeyask nations locked into the partnership. The rosy predictions of 2009 saw Hydro profits of $300 million in 2015-16; the actual figure was $39 million.

On top of all this bad news, Hydro’s northern partners, like the rest of us, now face annual hydro rate increases expected to fall between 3.95 per cent (Hydro’s projection) and “double digits” (Hydro board chair Sandy Riley’s public speculation). This will function almost like a partial claw-back of benefits.

If the Keeyask nations had known how things would play out, surely they would not have ratified the partnership. Even with the bold predictions of the time, Tataskweyak, the largest of the Keeyask nations, voted just 61 per cent in favour.

Since Keeyask is linked to firm export contracts it should fare somewhat better than Wuskwatim, but still, the Keeyask nations are not eager to invest in their own project.

For now, a significant number of people from the Keeyask nations are employed in construction of the dam, but long-term employment is different. Last year, Hydro reported that the number of NCN members with full-time employment at Wuskwatim was two.

The Keeyask Cree Nations deserve better than all this. Consent to another mega-project in their homeland is no small thing.

Hydro will pay a “water rental fee” to the province for use of water flowing through the dam. Perhaps that payment — somewhere in the range of $12 million annually — should go to the Keeyask nations. Perhaps it could be invested in a comprehensive social enterprise plan so as to multiply the benefits.

Hydro might also consider returning to a commitment that was temporarily on the table in 1976, when a draft of the Northern Flood Agreement called for a range of measures to ensure that 80 per cent of long-term Hydro jobs in the vicinity of affected communities would go to members of those communities within 10 years.

Our government said it would not build new dams without First Nations consent. It then made a big deal of that consent, with the former premier telling a Washington, D.C., audience about the “phenomenal social licence” it yielded. For the current government, the task of giving meaning to the term partnership is a question of honour.

Hydro’s misfortunes should not be visited upon communities that have already sacrificed so much for so long for the utility’s pursuit of power.

Will Braun works for the Interchurch Council on Hydropower.

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