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Great Lakes Article:

Giant power sale to Ontario moves closer
Conawapa dam, hydro line to undergo feasibility study
By Mia Rabson
Winnipeg Free Press
06/21/03



KAKABEKA FALLS, Ont. -- The premiers of Manitoba and Ontario believe a deal to have energy-rich Manitoba sell electricity to energy-desperate Ontario could be just 18 months away.

Premier Ernie Eves and Premier Gary Doer met in front of picturesque Kakabeka Falls near Thunder Bay yesterday and signed an agreement to do a feasibility study on both the Conawapa dam project and a new hydro transmission line from Manitoba to Ontario. They said if Ottawa co-operates, power could be flowing east far sooner than expected.
"I don't see why we can't be starting construction sometime in 2004," Eves said.

The premiers met in Kakabeka Falls partly because of the symbolism of the waterfall and partly to accommodate Eves' schedule.

The dam itself, estimated to cost anywhere from $3 billion to more than $5.5 billion, would be built on the Nelson River about 800 kilometres north of Winnipeg.

The dam, which is expected to produce 1,250 megawatts of power annually -- enough to power about 600,000 homes -- will take 10 to 12 years to complete. Manitoba already produces 40 per cent more power than it uses. Most of that excess power is currently exported to the United States, but if a suitable transmission line is available it could go to Ontario, said Manitoba Hydro president Bob Brennan.

The existing connection between Manitoba and Ontario can only handle 200 megawatts, so a new line will have to be built. Brennan said the transmission line will be finished before Conawapa is completed.
"We're hoping to build the transmission line faster, and if we can do that we can sell power faster," he said.

The transmission line could be built in two or three years.

It won't be clear until the deal is signed how much power can flow before Conawapa is built, or even how much power Ontario will buy over the longer term. But Manitoba would be in a position to shop its power around, selling exports to the highest bidder and reaping more profits.
Ontario is now desperate for more power. Last winter, proposed deregulation of Ontario Hydro saw hydro bills skyrocket and power become a premium commodity. Brownouts in the dead of winter forced the Ontario government to ask its residents to turn down the heat and turn off any unnecessary appliances. Canada's most-populated province cannot produce enough electricity to meet its own needs and depends on imports from Quebec, the northern United States and Manitoba. And Ontario will need even more power in the future because of its commitments to reduce greenhouse gas emissions under the Kyoto treaty.

It plans to phase out all of its coal-powered generating plants by 2015.
The transmission line and new dam could reduce Ontario's emissions by one-sixth and keep six megatonnes of carbon dioxide from being emitted.

The key to getting the transmission line built quickly is Ottawa, according to both Eves and Doer. Doer said it is ridiculous that it takes only 18 months to get an environmental licence for a coal-powered generating station while a licence for a hydro project takes upwards of four years. He's hoping Ottawa's Kyoto-friendly attitude will change that.

This is not the first time the two provinces have tried to come to a major agreement on electricity sales.

In December 1989, then-Ontario Premier David Peterson signed a deal with then-Manitoba Premier Gary Filmon for Ontario to buy $13.5 billion worth of electricity from Manitoba Hydro over 22 years. The deal was set to go into effect in 2000, following the opening of a transmission line and the building of Conawapa.

Two years later, the economy was tanking fast and Ontario's power needs appeared to have waned, and Ontario backed out. Ontario paid a $150 million penalty to Manitoba Hydro, and with nowhere for the power to go, Conawapa and the transmission line died on the drawing board.

Brennan and Doer say that was obviously a mistake. "If it had proceeded, Ontario would probably be a little better off today," Brennan said.

Eves won't throw stones at his former colleagues, however. "You can always look back 10 years and say, 'If we would have done this, if we have done that, we might have had a different result.' "

In 1992, Ontario Hydro was facing a $36-billion debt and believed it had a surplus of power. Conawapa just wasn't needed then, but Eves said it is now.

Because Manitoba has more power than it needs already, any new Hydro dams would be built only for export purposes.

Ontario will have another 2,500 megawatts of power come into its system this year, thanks to two new nuclear power plants and one natural gas plant. But Eves said that is just enough to help in the short term, and Conawapa will help in the long term. He said he'd like to see his province return to the position it was in 20 years ago, when it had 20 per cent surplus power, and wasn't just scraping by.

The feasibility study the provinces agreed upon yesterday will take six months and cost about $2 million. Ottawa agreed to contribute $300,000 to study the transmission line and will likely kick in more money to help build it.

Ontario will pay for the transmission line in its jurisdiction and Manitoba will pay for the line in Manitoba and the dam. The study will specifically look at the capital costs involved, the estimated in-service dates, comparable alternatives -- such as power from Quebec or the northeastern United States -- and environmental and regulatory requirements.

First nations will also be consulted during the process.
The transmission line's location is still up in the air, Brennan said.

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