1
1 MANITOBA CLEAN ENVIRONMENT COMMISSION
2
3 VERBATIM TRANSCRIPT
4 Volume 1
5
6 Including List of Participants
7
8
9
10 Hearing
11
12 Wuskwatim Generation and Transmission Project
13
14 Presiding:
15 Gerard Lecuyer, Chair
16 Kathi Kinew
17 Harvey Nepinak
18 Robert Mayer
19 Terry Sargeant
20
21 Monday, March 1, 2004
22 Radisson Hotel
23 288 Portage Avenue
24 Winnipeg, Manitoba
25
2
1 LIST OF PARTICIPANTS
2
3 Clean Environment Commission:
4 Gerard Lecuyer Chairman
5 Terry Sargeant Member
6 Harvey Nepinak Member
7 Kathi Avery Kinew Member
8 Doug Abra Counsel to Commission
9 Rory Grewar Staff
10 CEC Advisors:
11 Mel Falk
12 Dave Farlinger
13 Jack Scriven
14 Jim Sandison
15 Jean McClellan
16 Brent McLean
17 Kyla Gibson
18
19 Nisichawayasihk Cree Nation:
20 Chief Jerry Primrose
21
22
23
24
25
3
1 LIST OF PARTICIPANTS
2
3 Manitoba Conservation:
4 Larry Strachan
5
6 Consumers Association of Canada/Manitoba Society of Seniors:
7 Byron Williams
8
9 Manitoba Hydro:
10 Ed Wojczynski
11 Ken Adams
12 Elvis Thomas
13 Carolyn Wray
14 Ron Mazur
15 LLoyd Kyczek
16 Cam Osler
17 Stuart Davies
18 David Hicks
19 George Rempel
20 Campbell MacInnes
21 David Cormie
22
23
24
25
4
1 INDEX OF EXHIBITS
2
3 Number Page
4 CEC-1000 - Correspondence dated April
5 25th, 2003 to the Chairman of the
6 Environment Commission from the
7 Minister of Conservation
8 Steve Ashton 14
9
10 MC-1000: Mr. Strachan's overhead
11 transparencies from Manitoba 26
12 Conservation
13
14
15 MH/NCN-1000: Presentation transparencies 51
16
17
18
19
20
21
22
23
24
25
5
1 MONDAY, MARCH 1, 2004
2 Upon commencing at 9:11 a.m.
3
4 THE CHAIRMAN: Good morning, ladies and
5 gentlemen, and welcome. Just before calling the
6 public hearing on the Wuskwatim Generation and
7 Transmission Projects to order, I wish to begin by
8 thanking all of the participants for their
9 involvement and the efforts they have put in this
10 process leading up to this event.
11 The interrogatory process alone has resulted
12 in a significant amount of information being made
13 available to the participants, to the panel and the
14 public which would not likely have been possible
15 during the public hearing alone.
16 My name is Gerard Lecuyer. I am a member of
17 the Manitoba Clean Environment Commission and the
18 panel chairperson of this Commission, Wuskwatim
19 Generation and Transmission Projects review. With me
20 today are four other commissioners serving on this
21 panel. Ms. Kathi Avery Kinew, Mr. Robert Mayer to my
22 right, Mr. Terry Sargeant, Mr. Harvey Nepinak. And
23 of course you have heard that Mr. Terry Sargeant here
24 has been appointed recently as Chairperson of the
25 Manitoba Clean Environment Commission.
6
1 In addition to the panel, I would like to
2 introduce staff and advisors that are assisting us
3 with this review including the Commission Secretary,
4 Mr. Rory Grewar, sitting at the table to my left, the
5 Commission Administrative Secretary, Ms. Joyce
6 Mueller who we don't see. She's at the registration
7 table near the entrance. Commission counsel, Mr.
8 Doug Abra sitting right here of the firm Hill, Abra,
9 Dewar. And from our technical advisory team, Ms.
10 Jean McLellan, Ms. Kyla Gibson of Price Waterhouse as
11 well as Mr. Brent McLean. They are all sitting at
12 the table over there. Mr. Dave Farlinger and Mr. Jim
13 Sanderson of Energy Consultants International sitting
14 in the back. Dr. Robert Hecky with the University of
15 Waterloo and Mr. Mel Falk of Environmental
16 International sitting here.
17 Before continuing, I would like to explain
18 that the Manitoba Clean Environment Commission is an
19 arm's length provincial agency that encourages and
20 facilitates public involvement in environmental
21 matters and offers advice and recommendations to the
22 government.
23 The Commission exercises its mandate through
24 public hearings, investigations, mediation and
25 education. Please see our website at
7
1 www.manitobacec.ca for information about the
2 Commission and this public hearing.
3 The Commission operates under the authority of
4 the Manitoba Environment Act. It is also directed by
5 procedural guidelines to ensure that the hearings
6 remain fair and open forums for the exchange of
7 information and ideas and that they provide full
8 opportunity for public involvement and the
9 environmental assessment process in Manitoba.
10 We are here today at the request of the
11 Minister of Conservation to conduct an integrated
12 public hearing respecting the Manitoba Hydro and
13 Nisichawayasihk Cree Nation proposal for the
14 development of the Wuskwatim generation station and
15 associated transmission lines.
16 These two words have been in the air for quite
17 some time. Even I can now say them. I sure couldn't
18 a few months back.
19 The Commission was mandated to conduct the
20 hearing to consider firstly the justification, need
21 for and alternatives to the Wuskwatim proposals. And
22 secondly, the potential environmental socioeconomic
23 and cultural effects of the construction and
24 operation of the Wuskwatim proposals.
25 The Commission has requested to conduct the
8
1 hearing in general accordance with the process
2 guidelines respecting public hearings which include
3 procedures for prehearing meetings or conferences and
4 proprietary information.
5 Following the public hearing, the Commission
6 shall provide the report to the Minister of
7 Conservation pursuant to section 7 subsection 3 of
8 the Environment Act.
9 Before continuing, I would like to call on Mr.
10 Rory Grewar to read for the record the scope of the
11 Commission's review of the Wuskwatim projects into
12 the public record.
13 MR. GREWAR: Thank you, Mr. Chairman.
14 Correspondence dated April 25th, 2003 to the Chairman
15 of the Environment Commission from the Minister of
16 Conservation, Steve Ashton. I'll read the
17 correspondence.
18 "The Environmental Approvals
19 Branch of my department is in the
20 final review stage of the Environment
21 Act Proposals from Manitoba Hydro for
22 the proposed Wuskwatim Generating
23 Station and associated transmission
24 facilities (Wuskwatim proposals).
25 A copy of the Terms of
9
1 Reference for the public hearing is
2 enclosed. If possible, the report on
3 the hearing should be submitted to me
4 on or before December 1, 2003.
5 Mr. Larry Strachan, Director of
6 Environmental Approvals Branch will
7 coordinate department participation in
8 the hearing."
9 The background and terms are as follows:
10 Mandate of the hearings.
11 "The Commission shall conduct
12 an integrated public hearing, in
13 appropriate locations in Winnipeg and
14 Northern Manitoba as determined by the
15 Commission, to consider:
16 - Firstly, the justification,
17 need for and alternatives to the
18 Wuskwatim Proposals; and
19 - Secondly, the potential
20 environmental, socio-economic and
21 cultural effects, of the construction
22 and operation of the Wuskwatim
23 Proposals.
24 The Commission shall conduct
25 the hearing in general accordance with
10
1 its Process Guidelines Respecting
2 Public Hearings which include
3 procedures for Pre-Hearing Meetings or
4 Conferences and Proprietary
5 Information.
6 Following the public hearing
7 the Commission shall provide a report
8 to the Minister of Conservation
9 pursuant to section 7(3) of The
10 Environment Act.
11 The Commission may, at any
12 time, request that the Minister of
13 Conservation review or clarify these
14 Terms of Reference."
15 I'll read into the record, Mr. Chairman, the
16 scope of the review.
17
18 "For the justification, need
19 for and alternatives to the Wuskwatim
20 Proposals component of the hearing,
21 the Commission shall:
22 - Consider whether all
23 alternative resource options have been
24 considered and whether the Wuskwatim
25 Proposals have been selected on
11
1 reasonable grounds, including economic
2 viability as an export market driven
3 project and relevant technical
4 factors. The review of economic
5 viability shall consider the Wuskwatim
6 Proposals in their entirety.
7 - Include the effect, if any,
8 of the Wuskwatim Proposals on Manitoba
9 Hydro customer rates and the
10 Corporation's financial stability.
11 The partnership between the
12 Nisichawayasihk Cree Nation and
13 Manitoba Hydro and the associated
14 arrangements for such partnership are
15 to be described to the degree such
16 information is required to understand
17 the financial analysis.
18 - Give consideration, at a
19 conceptual level, to the
20 environmental, socio-economic and
21 cultural effects of the Wuskwatim
22 proposals relative to available
23 alternative resources.
24 - Consider Manitoba Hydro's
25 electricity generation capability,
12
1 market prospects and risks as they
2 pertain to the Wuskwatim proposals
3 including:
4 - load growth in export
5 jurisdictions;
6 - energy supply situation in
7 the export jurisdictions; and
8 - energy pricing trends and
9 industry restructuring.
10 For the potential environmental,
11 socio-economic, and cultural effects
12 of the Wuskwatim Proposals component
13 of the hearing, the Commission shall
14 consider the Environmental Impact
15 Statement, and public concerns, and
16 with consideration of the evidence
17 received on the justification, need
18 for, and alternatives for the
19 Wuskwatim Proposals, provide a
20 recommendation on:
21 - Whether Environment Act
22 Licences should be issued to Manitoba
23 Hydro for the Wuskwatim Proposals.
24 Should the Commission recommend the
25 issuance of Environment Act Licences
13
1 for the Wuskwatim Proposals, then
2 appropriate recommendations should be
3 provided respecting:
4 - Measures proposed to mitigate
5 any adverse environmental,
6 socio-economic, and cultural effects
7 resulting from the Wuskwatim proposals
8 and where appropriate, to manage any
9 residual adverse effects; and
10 - Future monitoring and
11 research that may be recommended in
12 relation to the Wuskwatim Proposals.
13 The Clean Environment Commission's
14 recommendations shall incorporate,
15 consider and directly reflect, where
16 appropriate, the Principles of
17 Sustainable Development and Guidelines
18 for Sustainable Development as
19 contained in Sustainable Development
20 Strategy for Manitoba."
21 That's the direction from the Minister and the
22 scope of the hearings as contained in the terms of
23 reference for the Clean Environment Commission public
24 hearings on Manitoba Hydro Wuskwatim Proposals, Mr.
25 Chairman. And with your leave, I'd like to enter
14
1 those as an exhibit.
2 A word of explanation in terms of the exhibit
3 procedure. The Commission will issue the prehearing
4 Exhibit list later this week and that will include
5 all of the exhibits that were filed as part of the
6 prehearing process. For the purposes of the
7 proceedings today and forward, we would like to begin
8 with numbered series 1000 and beyond. And so this,
9 as the first exhibit, will be CEC-1000. And it's the
10 correspondence as dated and read and terms of
11 reference as attached.
12
13 (EXHIBIT CEC-1000 - Correspondence dated April
14 25th, 2003 to the Chairman of the Environment
15 Commission from the Minister of Conservation
16 Steve Ashton)
17
18 THE CHAIRMAN: Thank you, Mr. Grewar. The
19 Commission is convening the hearing in Winnipeg over
20 a three week period between March 1st and 17th. We
21 will then travel up north to continue the hearing in
22 Thompson on March 22nd and 23rd and in The Pas on
23 March 25th and 26th. The hearing will then reconvene
24 in Winnipeg on April 6th for closing statements. And
25 it is our expectation that the proceedings will wrap
15
1 up on April 7th.
2 We will begin today with opening remarks by
3 Mr. Larry Strachan of Manitoba Conservation on the
4 environmental assessment and review process
5 undertaken to date and the licensing process to
6 follow the public hearing. There will be no
7 cross-examination of Mr. Strachan at this time. This
8 will occur later on in the process, I believe on the
9 15th when the public administration team makes its
10 overview presentation.
11 The co-proponents Manitoba Hydro and
12 Nisichawayasihk will then give a presentation on
13 their need for and alternatives for the Wuskwatim
14 Generation and Transmission Projects and the
15 environmental impact statements to the project. This
16 will be followed by cross-examination or questioning
17 of the co-proponents by the Commission and/or its
18 counsel, then by the registered participants
19 according to alphabetical order and by any member of
20 the public in attendance. This process might well
21 take a number of days.
22 After the full cross-examination of the
23 co-proponents has concluded, the project
24 administration team consisting of members of the
25 Province and the Federal Governments will then make a
16
1 presentation on the results of the cooperative
2 environmental assessment process and then will be
3 available for cross-examination.
4 We will then proceed to hear the presentations
5 prepared by the various registered participants who
6 will present in alphabetical order unless prior
7 arrangements have been made with the Commission
8 secretary to do otherwise.
9 Throughout the proceedings, the co-proponents
10 and their counsel will lead cross-examination or
11 questioning followed by the Commission and/or its
12 counsel and then in alphabetical order, by each
13 registered participant and/or their counsel.
14 Following this, an opportunity will be provided for
15 any member of the public in attendance to ask
16 questions of the presenter. All presenters at the
17 end of their cross-examination will have an
18 opportunity to re-examine their witnesses.
19 And just before I make my final comments, I
20 would like to go back to Mr. Grewar. I believe
21 you've already presented your items on the public
22 record?
23 MR. GREWAR: Yes, Mr. Chairman. It was just a
24 clarification on the exhibit process.
25 THE CHAIRMAN: Thank you. So just a few more
17
1 words to do with the housekeeping issues. Firstly,
2 in regards to registration. Please ensure that you
3 register and indicate if you will be giving a
4 presentation. All registrants will be provided with
5 a copy of the report of this public hearing.
6 Secondly, please provide 30 copies of your
7 presentation to Mr. Grewar. The copies are needed by
8 the panel members, technical staff and for the public
9 record. Submissions will also be shared with the
10 participants. And if you have not the required
11 copies, the Commission staff can assist you with the
12 preparation of copies. All you have to do is see Ms.
13 Mueller at the registration desk to help you with the
14 preparation of the required copies. Ms. Joyce
15 Mueller has a schedule of the proceedings with the
16 names of the presenters and will provide copies to
17 the media and to others who may require it.
18 Fourthly, please use the microphones, identify
19 yourselves clearly for the record when you give
20 presentations or ask questions. If you don't, I will
21 simply have to interrupt you and ask you to do so.
22 Verbatim transcripts of each day of the
23 proceedings will be posted on the Internet the
24 morning following each session. The website is
25 www.reidreporting.com. And that is Reid spelled
18
1 R-E-I-D. I repeat www.reidreporting.com. You can
2 also make arrangements with the transcription service
3 to purchase copies of the transcripts in various
4 formats. Reid Reporting Services can be contacted by
5 calling 947-9774 here in Winnipeg, 947-9774.
6 And finally, at the conclusion of the
7 hearings, the Commission will make a report, will
8 prepare a report containing advice and
9 recommendations for the Minister of Conservation.
10 The Environment Act allows 90 days following the
11 closure of the hearing for this report to be
12 submitted. Following submission of the report, the
13 Minister will determine the date upon which the
14 report will be released to the public.
15 And lastly, just before we begin these
16 deliberations, I want to call upon the Great Manitou,
17 God, the Divine Master, whatever you call Him, to
18 look favourably upon this meeting to help us think
19 clearly, to help us speak the truth, to guide us into
20 use of proper decorum and respect of our fellow
21 participants and to help us come forward with the
22 decisions that are in the best interests of
23 Manitobans for today and for future generations. And
24 I would like to call upon Elder Sam Dysart to come
25 and speak, to bring blessings upon this gathering.
19
1 ELDER DYSART: Thank you. Please stand.
2 First thing I would like to say, it's an honour for
3 me as an Elder from Nelson House. My name is Sam
4 Dysart. I had been standing here for the last 30
5 years. I was first on the Northern Flood Agreement,
6 now on the Future Development Agreement. And I had a
7 lot of fights and I had a lot of good times with
8 people and I had a lot of griefs. But I hope that
9 this will come in better for my children,
10 grandchildren and great-grandchildren and I pray that
11 we have a very good meeting today for it's a nice day
12 outside. Let's be happy, let's be honest with each
13 other and let us tell the truth for the truth is the
14 only thing that is survival in our community and in
15 life. Let us pray in our language and let us ask God
16 to help us in Manitoba, in the whole world.
17
18 (PRAYER)
19
20 ELDER DYSART: Thank you.
21 THE CHAIRMAN: I now call upon Mr. Strachan,
22 Larry Strachan of the Environmental Approvals,
23 Manitoba Conservation to come and present an
24 assessment process overview. Mr. Grewar.
25 MR. GREWAR: Could you please state your name
20
1 for the record.
2 MR. STRACHAN: Larry Strachan.
3 MR. GREWAR: Mr. Strachan, are you aware that
4 it is an offence in Manitoba to knowingly mislead
5 this Commission?
6 MR. STRACHAN: Yes, I am.
7 MR. GREWAR: Do you promise to tell only the
8 truth during proceedings before this Commission?
9 MR. STRACHAN: Yes, I do.
10 MR. GREWAR: Thank you, sir.
11 MR. STRACHAN: Good morning, Mr. Chairman,
12 commissioners, participants, ladies and gentlemen.
13 As Rory just indicated, my name is Larry Strachan.
14 I'm employed as the Director of the Environmental
15 Approvals Branch for Manitoba Conservation. And
16 through that process, it's my responsibility to
17 administer the environmental assessment and licensing
18 process under the Environment Act.
19 For this particular public hearing and review
20 for the Manitoba Hydro NCN proposals, I also, as
21 Chair of the project administration team, to
22 administer the cooperative process. I am going to
23 talk and give you a brief overview of the cooperative
24 environmental assessment process that Manitoba and
25 Canada carried out on the proposals under review.
21
1 As you know, there are two projects under
2 review. There's a generation station and associated
3 transmission lines. Under the Environment Act, they
4 are two separate development proposals and so we
5 sought two separate development applications from the
6 proponents. We agreed to review the two proposals
7 concurrently under the Environment Act and we also
8 developed information in that regard.
9 Manitoba Environment licences are required for
10 both proposals. And under the federal legislation,
11 there is what is known as a comprehensive study
12 report and review required for some aspects of the
13 generation station and some of the stream crossings
14 of the access road to the generation station.
15 Because both Manitoba and Canada had approving
16 authorities, we agreed, pursuant to a cooperative
17 agreements we have with Canada, to enter into a
18 cooperative environmental assessment process for the
19 two proposals. I must stress it's a cooperative
20 process because it's only cooperation between the two
21 levels of government. At the end of the day, there
22 are separate and independent decisions required by
23 both Manitoba and Canada for the proposals.
24 To administer and guide the proponents through
25 the process, we developed and formed what is known as
22
1 a project administration team under the agreement.
2 The team consists of representatives of both Manitoba
3 and Canada. And as I indicated, I chaired the team.
4 One of my staff, Mr. Trent Hreno participated, Mr.
5 Dan McNaughton from the Canadian Environmental
6 Assessment Agency was on the team and Ms. Beverly
7 Ross from Fisheries and Oceans Canada was also on the
8 team.
9 Ms. Ross is the federal responsible authority
10 for the generation project and she must take
11 decisions under the federal legislation for the
12 generation station.
13 To generate the information required in the
14 cooperative process, we agreed to use the Manitoba
15 Environment Act provisions, Section 11 and Section
16 12. To further guide the proponents, we developed
17 two sets of draft environmental assessment
18 guidelines; one for the generation station, one for
19 the transmission line project.
20 We then asked the Clean Environment
21 Commission, your body, Mr. Chairman, to hold meetings
22 on the draft guidelines and provide some advice to
23 the department and the Minister following the
24 meetings. This was done and then we finalized the
25 guidelines and that formed the guidance documents for
23
1 the proponents to prepare the information on the two
2 proposals and the environmental assessment
3 documentation.
4 We also subjected the guidelines, not only at
5 the public review but to technical government review
6 where he sought information from both levels of
7 government to insert information from their
8 perspective into the guidelines.
9 The process formally started with the filing
10 of proposals in December of 2001. As I indicated, we
11 developed the environmental assessment guidelines and
12 they were actually finalized in April of 2002. It
13 took about a year for the proponents to prepare the
14 environmental assessment documentation and that
15 documentation on both the needs and alternatives for
16 the generation station and the environmental
17 assessment documentation was filed with the
18 department in April of 2003.
19 Under the Environment Act, we seek advice by
20 distributing material to both the public venue and to
21 a technical advisory committee venue. Normally, the
22 public venue is administered by the department
23 without a public hearing but because we are now
24 before a public hearing for these proposals, we are
25 relying very strongly on the Commission process for
24
1 the public input on the proposals. However, the
2 technical review was conducted through what is known
3 as a technical advisory committee. It's a committee
4 composed of a number of federal and provincial
5 government representatives and they review the
6 information provided to them and provide advice back
7 to myself and the Minister on the information under
8 review based on their area of expertise, their
9 experience and other information they have available
10 to them.
11 As a result of the public and technical review
12 of the documentation, we required two supplemental
13 filings from the proponents to further clarify and
14 get more information on issues that were under review
15 and identified by mainly our technical reviewers. I
16 must say the public input to our process was quite
17 minimal and I expect that is because of the Clean
18 Environment Commission process and people were
19 waiting to participate in your process, Mr. Chairman,
20 to provide that public input to the information under
21 review.
22 One of the challenges of environmental
23 assessment in Canada is that there are requirements
24 of both the provinces in Canada for environmental
25 assessment matters and the legislation, although
25
1 complimentary in some areas, is quite different in
2 other areas. And one of the areas that is quite
3 different is the specific requirements that Fisheries
4 and Oceans require to carry out their
5 responsibilities under both the Federal Environmental
6 Assessment Legislation and the Federal Fisheries Act.
7 And as a result, they require a lot more real
8 specific information than the province generally does
9 in these matters. And so they generally go forward
10 independently and seek and work out that specific
11 information with the proponents.
12 And they are doing that in this case. They
13 have requested a number of specific information
14 documents and the proponents have provided that to
15 Fisheries and Oceans Canada and that documentation is
16 currently under review. And it will be considered,
17 at the end of the day, in the federal decision-making
18 process.
19 As a result of our technical review of the
20 information, we determined in October of 2003 that in
21 respect of the initial documentation filed and the
22 supplementary filed information filed as a result of
23 our request for further information, we were
24 satisfied that the documentation at that stage
25 addressed the intent and scope of the two sets of
26
1 guidelines that we provided for the generation
2 station and the transmission line.
3 We recognize that there will be further
4 information generated through the public hearing
5 process and we also recognize that, as I just
6 indicated, that the Fisheries and Oceans information
7 would be forthcoming as the process unwound.
8 We, therefore, made a determination at that
9 point in time that the documentation would be
10 sufficient for you to consider through this public
11 hearing process, Mr. Chairman, and that is the stage
12 of the process that we are now in.
13 I just want to conclude by indicating that as
14 part of our process and in fact as part of the
15 federal process, the public information and advice
16 from this public hearing is a very important
17 component to our final decision making. We are
18 looking for a full and complete public hearing
19 process and we will very strongly consider your
20 advice and recommendations following the conclusion
21 of your deliberations. Thank you, Mr. Chairman.
22 THE CHAIRMAN: Thank you.
23 MR. GREWAR: Mr. Chairman, if we might enter
24 Mr. Strachan's overhead transparencies as Exhibit
25 MC-1000 from Manitoba Conservation.
27
1 THE CHAIRMAN: Thank you, Mr. Grewar.
2
3 (EXHIBIT #MC-1000: Mr. Strachan's overhead
4 transparencies from Manitoba Conservation)
5
6 THE CHAIRMAN: I realize there's a number of
7 people standing in the back and hopefully we'll find
8 a way of providing relief in terms of chairs somehow
9 during this process. And I don't know that we can
10 address that this morning but we'll make an attempt
11 to do that for the ongoing process this afternoon.
12 We will take a break sometime around 10:30
13 but we are a long ways from there. At this point, I
14 call upon the proponents to get started with their
15 presentation of their proposal.
16 MR. PRIMROSE: Good morning, everybody. Good
17 morning, Mr. Chairman. My name is Jerry Primrose.
18 I'm Chief of the Nisichawayasihk Cree Nation. I
19 would like to thank you and the Commissioners and the
20 other participants to hear the opportunity to make
21 our presentation on the Wuskwatim Generation and
22 Transmission Project. I would also like to
23 acknowledge the other interested people from the
24 public and various groups attending this hearing.
25 Today we are here with Manitoba Hydro, my
28
1 colleague, Ken Adams. I speak with pride today for
2 the people of Nisichawayasihk Cree Nation, the
3 descendants of our Cree ancestors who have lived in
4 Northern Manitoba for 7,500 years. I would like to
5 give you some background about our people.
6 Until the 20th century, our people had a
7 thriving lifestyle supported by fishers, hunters and
8 gatherers. Over the past 100 years, our once
9 thriving way of life was almost eliminated by groups
10 who had no respect for our environment and our
11 traditional ways and also our culture. Reserves were
12 created and Indian agents controlled our day-to-day
13 lives. Our children were taken away to residential
14 schools. Lobbyists destroyed the fur trade, an
15 economy that sustained us. And finally, the
16 Churchill River Diversion flooded our lands.
17 We have suffered but slowly we are putting the
18 past behind us through new treaties and agreements
19 and by taking responsibility for our own destiny. In
20 1908, Nelson House Indian Reserve was created as a
21 result of the adhesion by the Nelson House First
22 Nation to Treaty number 5. We were then an isolated
23 community but fully dependent on the surrounding land
24 and resources.
25 Until the late sixties and early seventies,
29
1 our community didn't have electricity or telephones
2 nor running water. But when we got them, we embraced
3 these modern conveniences with open arms. I still
4 remember in the late sixties when we first got
5 electricity, looking out at the lights in our small
6 community. I remember the first time I phoned my mom
7 from high school in Portage La Prairie. When I first
8 got there, I phoned at home. This is 1974.
9 Prior to 1977, our people continued to depend
10 on our traditional economy but the massive flooding
11 caused by the Churchill River diversion meant people
12 could not fish and hunt as they used to.
13 In the early eighties, the fur lobbyists began
14 its campaign and the price of fur plummeted, taking
15 our industry with it. It didn't take long for social
16 chaos to set in with an increase in alcohol
17 consumption, suicides and other related social
18 problems.
19 In 1977, the Northern Flood Agreement was
20 signed and it brought a lot of hope to our people.
21 But the implementation of this agreement was slow and
22 very frustrating. By the fall of 1992, we felt we
23 had to decide to look for a new approach in order to
24 bring benefits for our community. Our community took
25 charge. We appointed a local negotiation team from
30
1 Nelson House and we hired consultants and advisors.
2 We worked to find solutions. We didn't listen to
3 people who had never even visited our community but
4 who still thought they knew what was best for us.
5 We looked after our own best interests. We
6 entered into comprehensive negotiations and finally
7 in 1976, we settled our negotiations and developed a
8 compensation package which not only provided economic
9 support but gave us control over development of
10 resources in our traditional lands. We will never be
11 fully compensated for our losses but we have moved
12 forward to create a better future for our children
13 and our grandchildren.
14 We cannot forget the past but we must focus on
15 our future. With close to 5,000 members, we have a
16 rapidly growing population. Over 60 per cent of our
17 people are under 30 years. Half of our members are
18 of school age. One-third of our adults have less
19 than a grade 9 education. Our rate of unemployment
20 is five times the provincial average. We must
21 address these issues.
22 Today is an important step in this process.
23 What we have gained through long negotiations and
24 hard work over the past few years has given us the
25 ability and the means to be in a position to jointly
31
1 develop the proposed Wuskwatim Generation and
2 Transmission Project with Manitoba Hydro. We are
3 very proud that our proposed development respects the
4 environment and our traditional way of life while
5 providing opportunities that will offer a brighter
6 future for our people and be good for Manitoba's
7 economy. And we believe this project proposed to be
8 built within our traditional territory will help
9 provide after our own interests towards
10 self-sufficiency. It will also provide for our young
11 people as opportunities they deserve to have basic
12 opportunities other Canadians take for granted. We
13 believe this project will be among the things that
14 will help us fulfil our dream of self-sufficiency.
15 We also believe this project will be safe for
16 our water, lands, plants and animals and for the
17 people of Northern Manitoba where we live. This is
18 important to us because the north is our home, our
19 backyard. Just as the south where your cottages and
20 lake homes provide you with a spiritual place to be,
21 the north is our spiritual place.
22 So in approaching this project, we have been
23 especially concerned to do it right. We have made
24 our decisions independently to serve the interests of
25 Nisichawayasihk people whom we represent. Since we
32
1 began this process, we have heard more radical
2 opponents to the projects speak of environmental
3 terrorism, racism and a new colonialism implying that
4 we are incapable of looking after our own interests
5 towards self-sufficiency.
6 Whatever the motivation for proposing this
7 development, I think these groups are engaged in what
8 is for us economic terrorism. The Nisichawayasihk
9 Cree Nation stands to lose a once in a lifetime
10 opportunity to be self-sufficient because of the
11 interference of these outside sources.
12 Big corporations are not exploited in the
13 Nisichawayasihk Cree Nation as some opponents of this
14 project have alleged. We have firsthand experience
15 with hydroelectric developments. We understand what
16 can happen when the environmental issues are not
17 fully considered and provisions aren't made for
18 people to prosper with training and job
19 opportunities. Everything gained from our experience
20 is part of where we are today. We have been
21 cautious. We have been very careful and I'm sure to
22 Hydro's frustration, sometimes we have not just
23 accepted Hydro's plans, in many ways we have modified
24 their plans in important ways.
25 As an example, our First Nation was
33
1 influential in the decision for the low-head design
2 chosen for Wuskwatim. It is a design that would
3 create the least amount of flooding of any
4 hydroelectric project ever developed in Manitoba.
5 Less than one-half square kilometre. Or for people
6 in the city that understand maybe same size as an
7 average golf course.
8 We played a direct role in undertaking
9 environmental impact assessment studies which are at
10 the centre of this Clean Environment Commission
11 hearing. Not only did the assessment involve the
12 latest scientific methods but the process
13 incorporated the traditional knowledge of our elders
14 and resource users and other Aboriginal people in the
15 area. Our spiritual beliefs and culture are part of
16 this traditional knowledge.
17 For example, two possible routes for an access
18 road to the generating station were eliminated
19 because one was too close to a spiritual site while
20 the other route would have been too close where there
21 was an area where Caribou had been sited. Like any
22 development project anywhere, there will be change.
23 But our studies prepared cooperatively with Manitoba
24 Hydro show the project will have little impact on the
25 lands, plants and animals.
34
1 I am thankful our First Nation and our Cree
2 people were shown this respect for our knowledge and
3 for our culture. That was a crucial factor in our
4 decision to proceed to participate in this project.
5 Because based on the our past experience resulting
6 from the Churchill River Diversion, we are not
7 prepared to move ahead at any cost although we
8 believe we are a very progressive First Nation,
9 economically and socially. We face many of the same
10 challenges of other First Nations in Manitoba and
11 across Canada, poverty, inadequate health care and
12 social services, poor housing and lack of training,
13 skills and jobs. So we need to find ways to develop
14 and sustain a secure economic base for our First
15 Nation that provides the social and community
16 services we need along with meaningful well-paying
17 jobs and opportunities for our people and especially
18 for our youth.
19 For us, economic support is not abstract. Its
20 absence is a daily soul-destroying reality. This
21 development gives us an opportunity to become a
22 partner with up to 33 per cent ownership of a project
23 in our resource area that will provide us long-term
24 stable revenues. It is a tangible step into a
25 brighter future.
35
1 The new Atoskiwin Training & Employment Centre
2 of excellence in our community is already a direct
3 benefit of the development process leading to
4 Wuskwatim. The centre offers training for jobs and
5 skills needed in the north. Whether or not Wuskwatim
6 goes ahead, it provides our people with the
7 opportunity to participate in the broader economy of
8 Manitoba and of Canada. So the centre, people have
9 already completed training and are engaged in work
10 experience. Once it is fully operational, it will
11 become part of the post-secondary training program
12 for Northern Manitoba with a capacity of 100 students
13 per year.
14 Our NCN members and northern Aboriginal people
15 will have the required skills, will be given
16 preferences for the jobs on the project. Jobs will
17 include heavy equipment operators, carpenters,
18 electricians, labourers, clerical, catering and
19 others. Apprenticeships and journeyman opportunities
20 will provide for long-term skills that will serve our
21 members long after Wuskwatim is built. The project
22 also offers contract opportunities for new and
23 existing First Nation businesses to supply products
24 and services needed for the project.
25 This may provide incentives for NCN
36
1 entrepreneurs to establish businesses that provide
2 income and create jobs for others. As Chief in
3 Council of NCN, we establish a future development
4 portfolio, currently held by Councillor Elvis Thomas
5 and also our own future development team that was
6 assembled to work towards the development of this
7 project. We lead and direct our own independent
8 legal team, communication consultants and technical
9 and scientific advisors to ensure the project is
10 environmentally responsible. Any partnership with
11 Hydro is equitable and beneficial to our people.
12 In 2001, a majority of NCN members voted to
13 approve an agreement in principle to development
14 Wuskwatim with Manitoba Hydro and we have worked with
15 Hydro to prepare and submit what we believe to be
16 possibly the most comprehensive environmental impact
17 statements ever undertaken in Manitoba. We have also
18 just completed a Summary of Understanding or SOU
19 which is like a preview of the final project
20 development agreement.
21 Even though we are here today at the CEC with
22 Hydro, our people will still have the opportunity to
23 vote on the final project development agreement in a
24 secret ballot referendum to decide if NCN will
25 participate. It will be their decision. The
37
1 planning and cooperative work that has gone into this
2 project between Manitoba Hydro and ourselves
3 represents a ground-breaking positive approach that
4 we believe will change the way resource development
5 is done in Manitoba forever. We wanted to dispel the
6 issues of the Churchill River Diversion and replace
7 litigation, confrontation with cooperation,
8 understanding and trust.
9 In conclusion, we believe this is a good
10 project and an opportunity for our First Nation,
11 everyone in the north and all of Manitobans. We ask
12 that you consider the hopes and aspirations of our
13 people when you hear from the groups opposed to this
14 project. They may be well-intentioned but in my
15 mind, they are misguided if they think they represent
16 our best interests.
17 The evidence we present you with today will
18 demonstrate that the extensive joint planning
19 undertaken by NCN and Manitoba Hydro can positively
20 impact resource development to the benefit of all
21 Manitobans.
22 Wuskwatim can create the conditions to allow
23 our people to bring their full talents to the world.
24 This will help everyone in Manitoba. It can be our
25 gift and our legacy to our children and grandchildren
38
1 and their children for many generations to come.
2 That is my vision and a dream of our council
3 and of my people. With that, Mr. Chairman, I thank
4 you.
5 THE CHAIRMAN: Thank you very much.
6 MR. ADAMS: Good morning, Mr. Chair,
7 Commission members, ladies and gentlemen. My name is
8 Ken Adams and I'm the vice-president of Power Supply
9 of Manitoba Hydro. I am the member of Manitoba Hydro
10 Senior Executive Team and I have primary
11 responsibility for the projects that are under
12 consideration today.
13 Today we are pleased to present for your
14 review the Wuskwatim Generating and Transmission
15 Projects. We look forward to what I'm sure will be a
16 very vigorous discussion and we are confident that
17 when we're finished, we'll be able to demonstrate the
18 essential merits of the project and be able to
19 proceed with it.
20 Assuming that we do proceed with these
21 projects, it will be the first northern generating
22 station that we have started construction in nearly
23 20 years. And in that 20 year period, we have
24 thoroughly reviewed our approach to such development.
25 Our new way of cooperating with local Aboriginal
39
1 people and our commitment to environmental
2 stewardship is embodied in our present plans.
3 In 1992, Manitoba Hydro became one of the
4 first major companies in Canada to adopt its own
5 Principles of Sustainable Development. These
6 principles enlisted in the Sustainable Development
7 Report included in the April 2003 need an alternative
8 submission. Along with our corporate vision and
9 mission statement, our Sustainable Development
10 Principles provide the backdrop against which we
11 evaluate all potential projects and programs.
12 Hydro has an extremely rigorous internal
13 decision-making process. In part, it's designed to
14 measure a project against these criteria and in part,
15 it's designed to ensure that any recommendation
16 regarding major investments that we, as the executive
17 management team, make to our Board is in the best
18 overall interest of our customers.
19 Manitoba Hydro operates in a complex
20 continually evolving business environment that
21 reflects the changing and diverse perspectives of our
22 customers, our owners and other stakeholders
23 throughout the province and throughout the rest of
24 North America.
25 Our business environment is also affected by
40
1 unfolding events throughout North America such as the
2 structural changes in the electricity industry and by
3 global issues such as climate change. The Wuskwatim
4 project we are proposing has been shaped by all of
5 these influences.
6 We firmly believe that the Wuskwatim
7 development is an excellent project when reviewed
8 from each of the environmental, the financial and a
9 social perspective. That is the concept of the
10 so-called triple bottom line that is prominent in
11 most areas of corporate governments these days.
12 I personally have worked in the hydro power
13 industry for nearly 40 years and I'm convinced that
14 this project is a prime example of sustainable
15 development action. It reflects the core values and
16 strategic priorities recommended by the World
17 Commission on dams in 2000 and is fully consistent
18 with the International Hydro Power Association
19 sustainability guidelines just released.
20 As I noted earlier, Wuskwatim marks the
21 introduction of a fundamentally new and different
22 approach to development of Manitoba's hydroelectric
23 resources.
24 I would like to emphasize five aspects. The
25 first is that we're proposing to advance its
41
1 inservice date by about ten years from what would
2 have been required if we were building only to meet
3 Native Manitoba customers. This will help us
4 continue to participate in the highly competitive and
5 very lucrative export market. Continued success in
6 this export market is needed to allow us to continue
7 to offer low electricity prices in Manitoba.
8 The financial success of the project requires
9 us to construct it on schedule, to operate it in
10 accordance with the various licences and agreements
11 and to continue to sell the electricity it produces
12 profitably to wholesale customers in other provinces
13 and in the United States. Collectively with a lot of
14 experience in all of these areas and I'm confident
15 that our managers and their staff are fully capable
16 of ensuring that the project will be a success.
17 The second aspect is that based in large part
18 on what we learned through our consultations,
19 Wuskwatim has been deliberately designed as a low
20 impact project. As Chief Primrose said, the original
21 design was revised to reduce the size from about 350
22 to 200 megawatts to virtually eliminate any new
23 flooding. Its operation will be restricted to daily
24 run of river in order to limit water level
25 fluctuations both upstream and downstream. Also
42
1 through the consultation process, we have selected
2 transmission line, access road and construction camp
3 locations that respect environmental, cultural and
4 local community values.
5 The third aspect is the unprecedented extent
6 of the consultation that has taken place. Five years
7 ago, we initiated monthly meetings with members of a
8 number of Manitoba environmental organizations to
9 discuss issues and concerns related to potential new
10 Manitoba Hydro developments.
11 While these meetings were not part of the
12 formal consultation process for the Wuskwatim
13 project, they provided an excellent forum for
14 exchanges of information and perspectives on future
15 energy development and they have helped shape our
16 approach.
17 We started consulting with NCN in 1998.
18 Subsequently, in 2001, well starting in 2001,
19 Manitoba Hydro and NCN have consulted with every
20 community in the project area whether they are in the
21 immediate vicinity, upstream, downstream, near the
22 proposed transmission facilities or just in the
23 region and interested in the project.
24 There has been unprecedented website access
25 for all interested parties since 2002. More recently
43
1 all of the materials that have been filed for this
2 review have been placed on the website. In January
3 2003, we participated in an ENGO forum and an open
4 house in Winnipeg.
5 In June 2003, approximately six months after
6 filing with this Commission, we held a three day
7 workshop with the federal/provincial TAC. And in
8 July, we held another workshop with a number of
9 participants in this review.
10 Excluding our meetings with NCN members and
11 excluding the meetings with the regulatory
12 authorities and excluding proceedings in front of
13 this Commission, we have participated in almost 100
14 meetings with various interested parties. And to
15 date, we file binders with over 10 lineal feet of
16 written material explaining the project.
17 I doubt there has ever been a comparable
18 project in Canada with such a comprehensive community
19 consultation and public participation process.
20 The forth difference from previous projects is
21 that we have worked with the provincial and federal
22 governments and the community situated along the
23 Burntwood and lower Nelson rivers to establish a job
24 training program well before the project starts.
25 This program will ensure that Northern Aboriginal
44
1 people can develop the skills needed to qualify for
2 the higher skilled, higher paid jobs that will be
3 available on this project and on any future projects
4 that we or others may undertake in the region. It
5 will also help in prepare for long-term employment in
6 the operation and maintenance of our facilities and
7 at other locations.
8 The fifth aspect of this project which makes
9 it fundamentally different from any that we have ever
10 done before and the one for which we are the most
11 proud is our partnership arrangement with
12 Nisichawayasihk First Nation. As Chief Primrose
13 explained, NCN has participated as a full partner in
14 all of the planning activities, the public and
15 community consultation process, the open houses, the
16 environmental assessments and all other aspects of
17 the project. We look forward to a long and mutually
18 beneficial association with NCN.
19 Before we move to the detailed presentation of
20 the Wuskwatim project, it is appropriate for me to
21 confirm Manitoba Hydro's intentions with regard to
22 certain other potential sources of electricity
23 supply. We will continue to pursue energy
24 conservation and demand management, or PowerSmart as
25 we call it, to the maximum extent at which they are
45
1 economically and financially viable. We have
2 developed the best possible estimates of what is
3 achievable and we have provided for the attainment of
4 these in our financial plans. But if it turns out we
5 can do better, we will pursue them with vigour and we
6 will achieve what we can.
7 We will continue to pursue system efficiencies
8 in our existing system or supply site enhancement in
9 our terminology again to the maximum level of which
10 it is economically viable. We have upgraded most of
11 our older facilities over the last 15 years or are in
12 the process of upgrading a few of them. And we are
13 reaching the point of diminishing returns. But
14 again, if there's a megawatt hour to be gained or
15 saved in the existing system and it is financially
16 viable, then we will invest to achieve it. We
17 continue to explore the possibility of
18 non-traditional or returned energy sources and we
19 have assumed that over the next five years, we will
20 be able to purchase or construct at least 250
21 megawatts worth. If and when we're presented with or
22 if we can identify a technically and economically
23 viable option, we will pursue it. And again, if
24 higher amounts prove to be economic, we won't stop at
25 the 250 megawatts. In fact, we don't see these
46
1 energy sources as competitors to the Wuskwatim
2 project but rather as complimentary. They are not
3 mutually exclusive.
4 Returning to Wuskwatim, Hydro is fully aware
5 of the importance of these activities in Manitoba and
6 that our actions today will leave a legacy for future
7 Manitobans. So are the people we engage to undertake
8 the designs, the evaluations and the assessments of
9 our projects.
10 And I'd like to spend a few minutes to talk
11 about these people. The overwhelming majority of
12 people involved in the preparation for the Wuskwatim
13 project are Manitobans. They are very highly
14 qualified principled professionals. They are
15 accountable for their work to their peers, to their
16 colleagues, to their friends and relatives and to
17 future Manitobans. And in most cases, they will be
18 responsible for delivering on the programs and
19 projects that they recommend and they will ultimately
20 be responsible for dealing with the consequences.
21 They do not take these responsibilities
22 lightly. However, recognizing that in some areas we
23 need assistance, we do, where appropriate, engage
24 experts from other parts of North America to ensure
25 that the best available minds have been brought to
47
1 bear on all aspects of our deliberations.
2 Manitoba Hydro and Nisichawayasihk Cree Nation
3 are confident that individually and collectively,
4 their staff and consultants have performed their work
5 very well. We are confident that in its entirety
6 over the next few weeks, the body of work will
7 demonstrate Wuskwatim will provide a clean source of
8 renewable energy that will displace fossil fuels
9 elsewhere in central North America. It will provide
10 financial and reliability benefits to Manitoba
11 Hydro's domestic customers and it will be profitable
12 to both Manitoba Hydro and NCN.
13 We suggest the work will also demonstrate that
14 the environmental effects of the project are not
15 significant. And in fact, when viewed on a global
16 basis, there is a net environmental benefit. We will
17 demonstrate that the project will provide an economic
18 stimulus to Manitoba, particularly in northern
19 Manitoba. And we will show that the risks associated
20 with the proposed development are relatively low and
21 readily manageable.
22 At this point, I will turn the presentation
23 over to Councillor Elvis Thomas of NCN who holds a
24 future development portfolio amongst others. And Ed
25 Wojczynski who is Manitoba Hydro's Division Manager
48
1 of Power Planning and Development. Ed has the
2 responsibility for directing all of Manitoba Hydro's
3 development planning activities and is the corporate
4 executive responsible for overseeing our
5 participation in this review. Ed and Councillor
6 Thomas will chair and coordinate NCN and Hydro's
7 presentation of the project.
8 Mr. Chairman, I thank you.
9 THE CHAIRMAN: I thank you, Mr. Adams, and
10 Chief Primrose. And maybe this is a convenient time
11 for us to have this first break for a few minutes, a
12 ten minute break, while your colleagues get ready to
13 continue with the presentation. Thank you very much
14 again.
15
16 (PROCEEDINGS RECESSED AT 10:16 A.M. AND
17 RECONVENED AT 10:30 A.M.)
18
19 THE CHAIRMAN: I will ask the members
20 of the presenting panel to introduce themselves to
21 be sworn in.
22 MR. WOJCZYNSKI: Thank you,
23 Mr. Chairman. I'm Ed Wojczynski, I'm the division
24 manager of power planning and development at
25 Manitoba Hydro, and Councillor Elvis Thomas and
49
1 myself are going to call forward and introduce the
2 witnesses, if that is suitable. Mr. Ken Adams,
3 the vice president of power supply is one of our
4 witnesses, Ken; and Carolyn Wray, division manager
5 of treasury and business analysis; Lloyd Kuczek,
6 division manager of energy management and
7 conservation; Dave Cormie, manager of power sales
8 and operations.
9 THE CHAIRMAN: Maybe you want to call
10 the witnesses as they will come up to testify, or
11 do you want them all up at the front now?
12 MR. WOJCZYNSKI: Mr. Grewar had
13 suggested that we have them all up at once and
14 have the swearing in of all witnesses at one time,
15 Mr. Chairman.
16 THE CHAIRMAN: Thank you.
17 MR. THOMAS: For the other witnesses,
18 we are calling on Dave Hicks who is in charge of
19 N.D.Lea. They are the advisors for the
20 transmission part of the project. I have got
21 George Rempel, who is also sitting here in front
22 with TetrES. And we will call upon Cam MacInnes
23 who works for UNIES in particular with regard to
24 providing us with engineering advice. We have got
25 Cam Osler, who is with Intergroup, and we have got
50
1 Stuart Davies with North/South Consultants, and
2 then you have myself and Ed Wojczynski.
3 In terms of the swearing in ceremony,
4 I will be holding an eagle feather while we do the
5 swearing in ceremony. The eagle feather
6 represents truth, honour and respect in our
7 culture, and when we do something like this in
8 public, this is one of the things that we do as
9 First Nations people. So I'm going to be holding
10 one while you swear us in. Thank you.
11 MR. GREWAR: I wonder if I could have
12 clarification, is Ron Mazur there, please?
13 I will read the names and then I will
14 ask you to affirm your truthfulness. Ken Adams,
15 Elvis Thomas, Edward Wojczynski, Carolyn Wray, Ron
16 Mazur, Lloyd Kuczek, Cam Osler, Stuart Davies,
17 David Hicks, George Rempel, Campbell MacInnes,
18 David Cormie.
19
20 Ken Adams, Elvis Thomas, Edward
21 Wojczynski, Carolyn Wray, Ron Mazur,
22 Lloyd Kuczek, Cam Osler, Stuart
23 Davies, David Hicks, George Rempel,
24 Campbell MacInnes, David Cormie:
25 SWORN
51
1
2 MR. WOJCZYNSKI: We would like to
3 distribute copies of the presentation now, if that
4 would be acceptable. We have copies for the
5 Commission, and we have copies for everybody in
6 the audience. We have put a binder together, a
7 cerlox binder that has the presentations for the
8 whole day, for everybody's convenience.
9 Particularly, recognize that in the
10 back it will be kind of hard to see the projector,
11 so we thought that might make it a bit easier for
12 everybody. So we are just distributing copies.
13 If you don't want one, please just indicate that
14 when the people are coming around.
15 MR. GREWAR: We will enter this as a
16 single exhibit, as the presentation transparencies
17 or overhead projections, and it will be assigned
18 number, Manitoba Hydro NCN 1000, so MH/NCN-1000.
19
20 (EXHIBIT MH/NCN-1000: Presentation
21 transparencies)
22
23 THE CHAIRMAN: Thank you, Mr. Grewar.
24 You may now proceed.
25 MR. WOJCZYNSKI: Thank you, Mr. Chair.
52
1 I would like to introduce the
2 presentations that we are making today. As you
3 know, Manitoba Hydro and Nisichawayasihk Cree
4 Nation have prepared a great deal of information,
5 over ten feet of binder material. Today we can't
6 possibly present everything that we have prepared,
7 but we can summarize and illustrate for you the
8 most important things that we have learned in our
9 work.
10 We are going to do four presentations
11 today. The first presentation will be a
12 description of the Wuskwatim developments. It
13 will give you an overview of what the developments
14 are, and what they would look like and where they
15 would be located. After that, after we have shown
16 you the what and where of the Wuskwatim
17 developments, we are going to explain how the
18 Wuskwatim development fits into the Manitoba power
19 system and its operation. We expect to complete
20 these presentations by lunch time.
21 After lunch we will be moving to the
22 need for and alternative justifications for
23 developing Wuskwatim at this time. We will then
24 provide an overview of major issues that we
25 addressed as our environmental assessment of the
53
1 proposed Wuskwatim development. Finally, we will
2 provide a short conclusion and we expect and hope
3 to have this done by the end of the day.
4 I would like to now introduce you to
5 the first presenter, and that's George Rempel from
6 TetrES Consultants, who will be presenting the
7 project on behalf the NCN and Manitoba Hydro.
8 MR. REMPEL: Thank you,
9 Mr. Wojczynski. Is this mike turned on?
10 I'm going to be describing the two
11 projects. We have in this Wuskwatim development
12 two projects, the generation project and the
13 transmission project. Each of these have been
14 described in very substantial detail in the
15 individual environmental impact statements and, in
16 fact, in each of the EIS's there is a supporting
17 document which describes the project in greater
18 detail. What I'm going to be doing is providing
19 you an overview of the two projects, as the
20 project description is a very important step in
21 the environmental assessment. In fact, it is
22 typically the first step, you try to understand
23 how the project will be constructed, how it will
24 be operated, and then you look at potential
25 environmental effects. So I'm going to give you
54
1 this overview today.
2 Firstly, I will begin by providing
3 some context. This is a map of Manitoba which
4 shows some of the key features of the Manitoba
5 Hydro system. We have a Hydro system here that is
6 primarily hydroelectric based, over 90 percent of
7 the power generation comes from hydroelectric.
8 And much of this is dominated by three plants in
9 the lower Nelson, three plants on the lower
10 Nelson, 3600 megawatts of power in three plants in
11 the lower Nelson. They are primarily fed from
12 outflows from Lake Winnipeg into the Lower Nelson,
13 and those are regulated somewhat by Lake Winnipeg
14 to better conform, better shape the outflows to
15 the demand of Manitobans.
16 We also have a Churchill River
17 Diversion, a good portion of the flows in the
18 Churchill were diverted into the Rat/Burntwood
19 system in the early '70's to help feed flows,
20 deliver flows to these large plants in the Lower
21 Nelson.
22 The proposed Wuskwatim generation will
23 be placed on the Burntwood system, below Notigi,
24 which is a control structure for the diversion.
25 It will be 200 megawatts, so it will be about
55
1 4 percent of the overall Manitoba Hydro system
2 capability.
3 As I mentioned, 200 megawatts is the
4 capacity of this station. It will be Taskinigup
5 Falls on the Burntwood River. It will have an
6 associated access road, it is a critical part of
7 the construction of the project. It will also be
8 a permanent access road in that will help service
9 the plant after it is in operation. There will be
10 a construction camp. That camp will be dismantled
11 after construction and the site rehabilitated.
12 And there will be other infrastructure which we
13 will describe later. A six year construction
14 schedule is contemplated which would result in
15 first power some time in 2010.
16 In terms of the transmission project,
17 with new power comes a need to develop -- to tie
18 this into the existing distribution system. So we
19 have the project here. It will involve bringing
20 power from Thompson to the site for construction,
21 and then lines will be constructed to tie this
22 plant into the existing lines near Thompson, Snow
23 Lake and The Pas. About 350 kilometers of
24 transmission line will be required to tie this
25 into the existing system.
56
1 I'm going to turn now to a bit more
2 detail on the generation project. This is a
3 picture of the site showing the outlet of
4 Wuskwatim Lake and Wuskwatim Falls, and below
5 these falls are Taskinigup Falls, and this is
6 where we are proposing to build this dam. There
7 is about a one and a half kilometer distance
8 between these two falls, and the area that Chief
9 Primrose referred to for new flooding will be
10 associated in this immediate forebay that we are
11 talking about here, where the water will be raised
12 about 7 meters with the construction of the dam,
13 resulting in some peripheral flooding along the
14 existing shore line. I will talk about this in
15 greater detail later.
16 This project is located just
17 downstream of Wuskwatim Lake, Taskinigup Falls.
18 It is about 37 kilometers from the community of
19 Nelson House. This is the resource management
20 area of Nelson House. This shows the community of
21 Nelson House, the community of South Indian Lake,
22 and this distance here is about 37 kilometers, I
23 believe it is, from Nelson House to the station,
24 and the distance from this station to Thompson is
25 about 45 kilometers.
57
1 Further downstream we have communities
2 on Split Lake, the York Factory First Nation,
3 Tataskweyak Cree Nation, and further downstream we
4 have Gillam.
5 Now, this plant proposed here for
6 Wuskwatim will capture about 22 metres of drop or
7 head. When we referred to a low head before, we
8 were talking about the drop that is encountered
9 across these two falls, and this dam will capture
10 that head or energy and convert it into
11 hydroelectric power.
12 As the Chief and Ken Adams mentioned,
13 this project has been deliberately designed to be,
14 to have minimal flooding, it is a low head design.
15 We will tell you a bit more what that means. What
16 it does is it minimizes environmental effects
17 because the flooding is reduced to about a half a
18 square kilometer.
19 This low head design, as I mentioned,
20 has capacity of about 200 megawatts. Earlier
21 options that were considered, considered power
22 capacity up to 350 megawatts. So a lot more power
23 with this high head design, but it also came with
24 a lot more flooding, about 140 square kilometers,
25 54 square miles. So that design was rejected and
58
1 we now have a low head design which in fact has
2 the smallest amount of flooding of any existing
3 Hydro plant in the system.
4 I would like to discuss the water
5 level changes with this low head design. I have a
6 graphic here that shows the typical water profile
7 below Notigi control structure. That is the
8 control structure that controls flows from the
9 diversion downstream into the Rat/Burntwood
10 system.
11 So the brown is the shore line, or the
12 lake bottom or the river bottom, and we have the
13 blue showing the typical water line profile,
14 Threepoint Lake tumbling down the Early Morning
15 Rapids. Then again we have falls, Wuskwatim
16 outlet, Taskinigup Falls, and we have some
17 additional falls as the river proceeds downstream,
18 Opegano Lake, and we have Thompson, Birchtree
19 Lake and then Thompson over here.
20 What will happen with the new project
21 is that there will be a dam built in this area
22 here, and this will increase the water levels
23 between Taskinigup Falls, and this area here,
24 shown in the heavy blue. So you will have this
25 immediate forebay, this is where the flooding will
59
1 occur, the half square kilometer, and will also
2 stabilize the water levels on Wuskwatim Lake.
3 They will be stable in the high end of where they
4 have been in the last 25 years. The water level
5 influence will stop below Early Morning Rapids.
6 This is what we call a hydraulic break, in that
7 this water level here will not influence water
8 levels further upstream either in winter or
9 summer.
10 This is again the site that we have
11 shown earlier, but I'm showing more detail here.
12 Here is Taskinigup Falls. This is where the main
13 dam will be built. There will be a powerhouse
14 built over here which will comprise three
15 turbines, fix play design, there will be a
16 spillway as well. So the flows will now be
17 diverted, shunted over to here where the turbines
18 will be located, and the flows will typically go
19 through one or two or three turbines, depending on
20 how much flow is being taken down the system. If
21 the flows exceed the capacity of the turbines, the
22 three turbines, the spillway will bypass the high
23 flows and take them down into the river here.
24 In building this project, most of the
25 material actually comes from the site. When this
60
1 excavation is done here, that will yield rock,
2 soil, clay and silt that will be used for the dam,
3 and the rock will be used for cofferdams, crushed
4 for gravel or concrete aggregate. The only thing
5 that will be brought into the site in terms of
6 construction material, rock or earth, will be
7 granular material, aggregate from an area close by
8 the access road. The rest of it will be found on
9 site. In fact, there will be extra material
10 deposited in this area here. There will be
11 excavation done here to ease the flow from
12 Wuskwatim Lake into this immediate forebay to make
13 it easier for the flow to get to the powerhouse.
14 When this dam is built, there will be
15 an increase in water level, I mentioned about 7
16 metres increase in this area here, that will
17 result in a band of flooding here of about 25 to
18 300 metres, depending on the steepness of the
19 slope here along this shore line. The shore line
20 will be cleared in advance of this flooding, and
21 this is where the half square kilometer of
22 flooding will occur. This is a computer rendition
23 of the same development showing the channel
24 excavation, the excavated materials being placed
25 here. We now see the spillway a bit better here.
61
1 This is where the powerhouse is, and here you see
2 the three turbines. So the water will typically
3 go through those three turbines, either through
4 one or two or three. Almost always the flow will
5 be entirely directed through these turbines. Only
6 occasionally will there be a need to spill some
7 water over the spillway.
8 I would like to turn now to the
9 operation of the Churchill River Diversion.
10 Wuskwatim will not change the operation of the
11 Churchill River Diversion. The designing and
12 planning of this plant is assumed that the
13 patterns that have existed for the last 25 years
14 will continue in the future, and that includes the
15 annual modifications that are made to the interim
16 licence, where slightly additional flows are
17 allowed to be diverted from the Churchill River on
18 the Rat/Burntwood system. That has been in place
19 since 1979, and the design assumes that that will
20 continue.
21 There will be no change to the CRD
22 flow patterns. The amount of flow that is
23 diverted varies, depending on how much
24 precipitation and snow melt occurs in the
25 Churchill River and the Rat/Burntwood systems. So
62
1 those flow patterns that vary annually will
2 continue, and the only difference will be that
3 there will be some daily flow shaping in the local
4 area associated with the Wuskwatim Generating
5 Station. So in the local area there will be small
6 changes to the water level regime, but not on the
7 diversion in general.
8 The flows will normally equal, the
9 flows in will normally equal the flows out over a
10 24 hour period. So on a given Tuesday, Wednesday,
11 whatever, whatever flow arrived at Wuskwatim Lake
12 will also have left the lake.
13 Further on operation, the Wuskwatim
14 Lake will now be kept pretty much all of the time,
15 about 97 and a half percent of the time, at about
16 234 metres above sea level. Right now the lake
17 levels varies from 232.6 to 234.3, about a 1.7
18 metre variation; and that is dependent on the
19 different flow patterns along the diversion
20 itself. With this project, it will be held pretty
21 constant at 234, the higher end of what it
22 experiences now.
23 The generation station will operate in
24 what we call a modified run-of-the-river mode. A
25 true run-of-the-river mode means that all flow, as
63
1 it arrives at the station, would be sent out the
2 station. By modified run-of-the-river, we mean
3 there will be various units on or off during the
4 day. And that is to take advantage of the
5 efficiency of the turbines. It is something like
6 running your car, depending on the speed that you
7 are going, either you are in first gear, second
8 gear, or third gear. Depending on the flow that
9 arrives here, there will be either one, two, or
10 three units operating, there will be intervals
11 during the day when there might be say three units
12 operating, that is the best efficiency, and other
13 times it will be two units. And that will reflect
14 in small changes in the Wuskwatim Lake water level
15 and further downstream. Downstream the plant
16 level and flows will vary depending on how many
17 turbines are in operation.
18 I'm going to take some time to show
19 you where those variations will occur using this
20 map. And just for future reference or later
21 reference, this is the same map that you see here
22 on a different scale. Just to give you some
23 orientation, Notigi is actually over here, off the
24 map. Here we have Threepoint Lake, there is
25 Footprint Lake and the community of Nelson House.
64
1 As we proceed downstream on the Burntwood River,
2 we have the Early Morning Rapids that we showed
3 earlier. Here are some ancillary lakes to
4 Wuskwatim, Sesep, Cranberry. Here is Wuskwatim
5 Lake itself. There is the generating station
6 proposed site, and then we have the Burntwood
7 River continuing through Opegano Lake, Birchtree
8 Lake and Thompson. And this distance here is
9 about 45 kilometers, this distance here is about
10 37, to give you some scale.
11 I would like to show you on this map
12 then how this station here, placed at this site
13 here, will affect water levels in this area.
14 Firstly, there will be no changes in the water
15 level fluctuations on Threepoint Lake or Footprint
16 Lake. These areas are upstream of the Early
17 Morning Rapids, that is a control point, so there
18 will be no change in water levels as have been
19 experienced in the last 25 years in that area.
20 Going further downstream from this
21 site here, going up to Early Morning Rapids, that
22 is where the water level will be held very
23 constant, almost always at the upper end of its
24 present range, 234 metres. There will be small
25 daily fluctuations, depending again as to when
65
1 one, two, or three turbines are in place, and when
2 they are switched on or off. So that will be
3 about 5 inches or so, that is excluding wind and
4 wave effects. So it will be a very stable water
5 regime upstream of the site itself.
6 Just downstream, that is where you are
7 going to see more variation, because it is a
8 narrow river system here, and again it will depend
9 on what units are in operation. There the
10 variation will be about 1.3 metres under normal
11 open water operating conditions. And that begins
12 to dissipate as you go down through the falls and
13 to Opegano Lake. At Opegano the median daily
14 water level variation will be about 4 inches, .1
15 metres, and the maximum of 1 and a half feet or
16 .45 metres. As the river flows go further
17 downstream, by the time you get to Birchtree Lake,
18 the daily water levels will not be noticeable in
19 terms of variation. It will be about .1 metres
20 again excluding wind and wave effects, that is
21 about 4 inches of daily variation.
22 In terms of the access road, that is
23 an important component of this development. It
24 will involve 48 kilometers of a permanent access
25 road, a robust road, a key part of the structure
66
1 construction, it will continue in operation
2 permanently. There will be a construction camp
3 that will house at the peak about 625 people, that
4 will be a temporary one.
5 The preferred locations for the camp
6 and the access road were identified by
7 representatives of Hydro and NCN, and a lot of
8 consideration went into it, the Chief mentioned
9 various alternatives were ruled out because of
10 sacred sites or sensitive areas for the
11 environment -- environmental effects were
12 considered, the benefits and drawbacks, whether
13 access would be improved as a benefit or if it
14 would be a drawback. Effects on the cost and
15 schedule were obviously considered. Traditional
16 knowledge, as I mentioned, was a big factor. And
17 overall, the road and camp were selected in terms
18 of sustainability.
19 This shows the location of the access
20 road, this is PR 391. There is a 48-mile access
21 road to the site through largely uninhabited area.
22 We have aggregate sites in this area here. They
23 are not unique to the area, but there are located
24 in a good area, a good site to access those and
25 bring them on to the site for construction
67
1 purposes.
2 There has been a lot of interest in
3 controlling access because it is putting a road
4 into a new area. Hydro and NCN have prepared an
5 access management plan which identifies ways that
6 you can maximize the positive sides of this
7 access road and minimize the concerns. This plan,
8 as I say, has just been developed. It will
9 specify how access will be managed, it will be
10 relatively easy to do this during construction,
11 but it will also consider the operation aspects.
12 And the intent is to keep the benefits, which will
13 include providing access for resource harvesting,
14 but with it there are some concerns about
15 overhunting, overfishing, maybe vandalism. And
16 this management plan will describe how that can be
17 mitigated.
18 I would like to turn now to the
19 Transmission Project. As I mentioned, with new
20 power comes a need to connect this generation
21 source into the existing system. We have Thompson
22 over here, there is an existing station there, a
23 switching station. We have existing stations at
24 Snow Lake, and at Ralls Island at The Pas. What
25 is contemplated is that there will be a new
68
1 station built just south of Thompson called the
2 Birchtree Station, and there will be lines built
3 firstly to bring power in, and then to connect the
4 station into these new and existing sites. So we
5 will have about 350 kilometers of new transmission
6 line built that will connect into the very
7 substantial infrastructure that exists in this
8 area, improve reliability, and get the power out
9 for export as well.
10 Transmission lines are actually quite
11 flexible. They have to connect to the stations,
12 but in between there is a large amount of
13 flexibility, and picking the routes for these
14 transmission lines is a big part of the
15 environmental assessment process. This route
16 selection balances the biophysical,
17 socio-economic, technical and cost perspectives,
18 and public input is a very big part of this
19 process. That public input has involved local
20 First Nations, Aboriginal people, elected
21 officials, environmental groups, resource users,
22 and a general public in firstly identifying
23 potential routes, and then the selection of the
24 preferred route. The whole aim is to reduce the
25 environmental affects, avoid sensitive areas, and
69
1 try to take advantage of benefits where those come
2 about with the line.
3 Alternative routes were compared based
4 on traditional knowledge, and the Chief gave a
5 number of examples of that this morning. Local
6 input, they were compared based on the effects on
7 people and their activities, effects on the
8 environment, and as I mentioned, the technical
9 limitations and costs. Routes were compared, and
10 ultimately a preferred route was selected which
11 would minimize disruption to the people and the
12 environment, and meet the technical and cost
13 considerations.
14 This map shows the preferred routes.
15 Again, we will start at Thompson. This shows the
16 proposed Birchtree new station. Here is the
17 Wuskwatim site with a new station at the site.
18 Then we have the Snow Lake location with the
19 Herblet Lake existing switching station, and the
20 station at The Pas. The first leg of transmission
21 lines will be built from Thompson into the site, a
22 230 kV, that is 200,000 volts transmission line
23 between Wuskwatim and the station. It is about
24 45 kilometers long. It will be the first line
25 built. We will take power into the site. And it
70
1 will consist of steel structures, about 38 metres
2 high, about 4 per mile, a right-of-way of about 60
3 metres, which is cleared. Some revegetation is
4 allowed, but it is trimmed to avoid contact with
5 the lines. There will also be a 230 kV line from
6 Snow Lake to The Pas, 165 kilometers. Again, the
7 same kind of single tower line. And there will be
8 another line, double line actually in this area
9 here between the station and Snow Lake. So the
10 right-of-way here is a bit larger, 110 metres.
11 These lines are serviced by helicopter in terms of
12 maintenance. And this line will be about
13 137 kilometers, so we have about 350 kilometers of
14 line in total.
15 To give you some idea of costs, the
16 projected in-service costs, considering capital
17 cost and interest during construction, are about
18 800 million for the generation facility, and about
19 180 million for the transmission works. That does
20 not include the Herblet Lake to Ralls Island line
21 which will be required in any event. So we have
22 about a billion dollars of construction, and that
23 clearly relates to a lot of economic activity, and
24 we will be discussing that this afternoon.
25 That concludes an overview of the
71
1 project description, and I will turn it back to
2 Mr. Wojczynski, unless there is questions of
3 clarification.
4 MR. WOJCZYNSKI: Mr. Chairman, if it
5 is acceptable to you, I would like to introduce
6 the system operations presentation by Dave Cormie.
7 Should I proceed?
8 We have seen issues raised in the
9 process, in our review process and in our
10 consultations about system operations and the
11 potential for changes that may result from
12 Wuskwatim operation -- pardon me, from changes in
13 the Manitoba Hydro system operation with the
14 addition of Wuskwatim. By potential changes,
15 parties have referred to the water regime changes,
16 or that is changes in the water level and water
17 flows, resulting from the operation of the
18 Manitoba Hydro power system, with the addition of
19 Wuskwatim. The issues here go to describing how
20 will we, Manitoba Hydro, operate the system. More
21 specifically in the context of the Wuskwatim
22 project, as just described by George Rempel, we
23 are talking about potential changes in the water
24 regime, again the levels and the flows, outside
25 the Wuskwatim water regime study area that George
72
1 has described. In other words, as George had
2 indicated, there will be changes from Early
3 Morning Rapids down to here, and that was studied,
4 but now David is going to be talking about the
5 changes outside of that area. So David is
6 going be -- David Cormie is going to be discussing
7 the regime change outside of the study area that
8 George had talked about.
9 As George had indicated, the Wuskwatim
10 development is not expected to cause any
11 perceptible changes in the CRD water regime
12 outside of the study area; and secondly, is not
13 expected to cause any perceptible changes in the
14 water regime associated with the Lake Winnipeg
15 Regulation operation.
16 In response to questions about these
17 conclusions that we discussed earlier in the
18 process, Manitoba Hydro carried out a more
19 detailed review of possible system issues related
20 to the operation of the power supply with
21 Wuskwatim, and we met in the past year with
22 Pimicikamak advisors and others to discuss the
23 results of this review.
24 This review was lead by Mr. Cormie,
25 who is the division manager responsible for
73
1 operation of the Manitoba Hydro's power system and
2 for its export marketing. He will provide you now
3 with a summary of our review. These details have
4 been reported elsewhere in our filings, and the
5 supplemental filings provided in August and
6 October of 2003, and also are addressed in the
7 subsequent interrogatory responses that we have
8 already filed. I give you Mr. Cormie.
9 MR. CORMIE: Thank you, Ed.
10 As Mr. Wojczynski had indicated, the
11 addition of Wuskwatim is not expected to lead to
12 any perceptible changes in water regimes beyond
13 the study area. In order to help understand why
14 we came to that conclusion, I want to take the
15 opportunity this morning to take you through a
16 description of the Manitoba power system. I want
17 to discuss how we matched the electricity supply
18 to the demand on a daily and hourly and seasonal
19 basis. I want to talk about the major factors
20 that lead to water levels, water level changes.
21 In particular, I want to speak about the operation
22 of the Churchill River Diversion and the Lake
23 Winnipeg Regulation projects. I also want to talk
24 about what our expectation is for water level
25 change as a result of Wuskwatim, and cumulative
74
1 effects. And I will wrap up my presentation in
2 discussing some conclusions.
3 The Manitoba power system has 16
4 generating stations, 14 hydro, two
5 thermal-electric power plants, with the installed
6 capacity of 540 megawatts. Wuskwatim will add
7 200 megawatts to our production capability. It
8 will represent approximately a 4 percent increase
9 in production capability.
10 The 14 hydro stations in the Manitoba
11 Hydro system have an installed capacity of around
12 4,900 megawatts. The stations were installed over
13 the last 100 years. So approximately
14 500 megawatts of generating capacity on the
15 Winnipeg River in southern Manitoba, so
16 approximately 500 megawatts at the Grand Rapids
17 Generating Station at the outlet of Saskatchewan
18 River as it flows into Lake Winnipeg,
19 approximately 500 megawatts between Jenpeg and
20 Kelsey on the upper Nelson River. There is 10
21 megawatts of capability at the two Laurie River
22 stations, on the Laurie River which feeds into the
23 Churchill River, but by far the largest capacity
24 is on the lower Nelson at three large stations
25 with the combined capacity of around
75
1 3,600 megawatts.
2 On the lower Nelson, Manitoba Hydro
3 has 80 percent of its production, hydro production
4 capability. That hydro production is brought
5 south to serve the Manitoba load and the export
6 load primarily through a 600-kilometer high
7 voltage direct current transmission system that
8 collects the generation from the Lower Nelson
9 plants and brings it south to Winnipeg, to our
10 terminal station at Dorsey. At that point the
11 power is converted from direct current into
12 alternating current and is fed into the North
13 American electric grid at that point.
14 A key control point for the Manitoba
15 water system and for the flows on the Nelson River
16 is the Jenpeg control dam. 75 percent of the
17 water that flows down the Nelson River comes from
18 Lake Winnipeg. The dam at Jenpeg allows Manitoba
19 Hydro to control that flow in order to match the
20 supply of energy to the expected demand. It takes
21 approximately 4 to 6 weeks for water released at
22 Jenpeg to work its way down along the Nelson
23 River, through the lakes and along the river,
24 before it arrives at the Lower Nelson plants. So
25 water has to be released in advance of the power
76
1 need, four to six weeks in advance, in
2 anticipation for the demand of power at the Lower
3 Nelson stations.
4 The second critical component of the
5 water management system that feeds the northern
6 generating stations is the Churchill River
7 Diversion. There is a control structure at Notigi
8 which controls the flow of water, controls the
9 diversion of water from the Churchill River, from
10 the Southern Indian Lake reservoir, into the
11 Burntwood River, as it flows towards the Lower
12 Nelson station. There is a control dam at the
13 Missi Falls, at the northern outlook of Southern
14 Indian Lake. That dam operates to block the flow
15 and allow the water to be diverted south into the
16 Nelson River.
17 Similar to the Lake Winnipeg project,
18 it take several weeks, three to four weeks, for
19 water that is released from the Notigi dam to work
20 its way down the Burntwood River and arrive at the
21 Lower Nelson generating stations.
22 In a normal water year, the
23 hydroelectric plants in Manitoba are fully capable
24 of meeting the entire demand of the province and
25 fulfilling all of our obligations in the export
77
1 market. We don't always have high water years.
2 In times of drought, Manitoba Hydro has two,
3 operates two thermal plants at Brandon and
4 Selkirk, and these plants provide 500 megawatts of
5 generating capacity that is independent of the
6 water flows, the rainfalls, and can be operated --
7 we burn coal and natural gas at the Brandon and
8 Selkirk stations. They operate as backup plants
9 to the hydroelectric system.
10 A critical component of the Manitoba
11 Hydro system are our interconnections to
12 neighboring markets, to Ontario to the east, to
13 Saskatchewan to the west. The prime connection is
14 to the United States. We have 2,000 almost
15 2,200 megawatts of interconnected capability with
16 with the U.S. market. Over 50 percent of Manitoba
17 Hydro's production capability can be sold into the
18 neighboring markets. Not only do these
19 interconnections provide us with an outlet for our
20 surplus power, they also provide for an energy
21 supply during low flow years. And a good example
22 is what we have done this year, become a major
23 importer of power to serve our needs during this
24 low flow period.
25 This chart shows the history of water
78
1 flows, beginning back in 1912 up to present. It
2 is expressed as percent of the long term average
3 flow. I have indicated on this chart -- the
4 lowest flow period on record, extreme drought,
5 when the water supply was as low as 56 percent of
6 the long term average. I have also shown the
7 highest flow years, record flood conditions in
8 1974, when the water supply is as much as
9 142 percent of the long term average; also showing
10 the flood of the century in 1997 -- it wasn't a
11 record, but it was very close to the record of
12 1974 -- and also indicating the flows that we have
13 experienced in the last year where water supply
14 was just above 60 percent of the long term
15 average. What you can see from this chart is that
16 the water supply varies over time, ranging from
17 very low to very high. Manitoba Hydro must be
18 able to meet its obligations to serve its
19 customers even under the lowest flow conditions.
20 And we described those low flow conditions as the
21 dependable flow. It is the flow that we can
22 depend upon to serve our firm power demands.
23 This bar chart shows the production
24 capability of the Manitoba power system as it
25 varies between minimum flows, or the dependable
79
1 flow condition, to the highest flows, as occurred
2 in 1974, and in the middle bar shows what the
3 average production capability of the system is.
4 We described the energy capability of
5 the system in units of kilowatt hours. In a
6 normal water year, the power system will generate
7 around 32 TWh of electricity. In the higher flow
8 years, it increases up to around 36. In the
9 dependable flow condition, the power system is
10 capable of producing 28 TWh hours of electricity.
11 We have talked about the need to be
12 able to serve our firm low requirements even under
13 dependable flow conditions. The red bar indicates
14 that for loads lower than 28, we describe those as
15 firm loads, if the power supply is greater than
16 the dependable capability, we will sell that as
17 interruptible power. It is not there under all
18 flow conditions, so we need the right to interrupt
19 it. We will serve firm loads from the dependable
20 capability. When Manitoba Hydro has insufficient
21 dependable capability to serve its load, at that
22 time we need to consider the construction of new
23 resources.
24 This next chart shows the variation in
25 the demand for power over a year, typical year.
80
1 The power demand varies continuously. There are
2 moment by moment variations in the demand.
3 Customers turn their lights on, they turn them
4 off. We need generating stations that can produce
5 more power when you turn your lights on, we need
6 generating stations that can back down when you
7 turn your lights off. There is an hourly pattern,
8 there is a daily pattern, there is a weekly
9 pattern, and there is a seasonal pattern to the
10 power demand.
11 The hourly and daily matching of the
12 power demand is primarily done at the three Lower
13 Nelson generating stations. The seasonal
14 variation in power demand is also done at the
15 Lower Nelson stations, but it is done by managing
16 the fuel supply, by regulating the flows on the
17 Nelson River with Lake Winnipeg Regulation. What
18 I have shown here is how the power demand on
19 average in the summertime is lower, shown here at
20 an average of around 50 GWh per day. During the
21 fall season the power demand picks up until it
22 reaches a peak in the winter time, in December and
23 January, when people's furnaces are running much
24 more often. That additional energy supply that is
25 needed to serve the load is controlled by
81
1 releasing, is met by releasing more water from
2 Lake Winnipeg, by using our ability to move water
3 from the summer season, when there is a large
4 surplus of water available, to the winter when
5 there is a greater demand for electricity.
6 In addition to matching the demand for
7 Manitoba customers, matching is also required for
8 our export sales. The next chart shows how we
9 expect to match the Wuskwatim output to export
10 sales. If we had an export customer who could
11 take the production of Wuskwatim on a moment by
12 moment basis, as it was produced, there would be a
13 perfect match between our ability to generate it
14 and the export sale. So if Wuskwatim output
15 equals the export sale, there would be no change
16 in overall system operation. The power would be
17 generated, it would flow through the transmission
18 grid, and it would go to the export customer.
19 We don't expect and we don't plan that
20 there will be a perfect match between the
21 production at Wuskwatim and the export sale.
22 There will be an hourly and a daily mismatch.
23 Wuskwatim will produce power at nighttime.
24 Manitoba Hydro intends to store that production at
25 nighttime, concentrate that electricity production
82
1 in the daytime by increasing the generation at the
2 Lower Nelson generating stations. We will not use
3 the Churchill River Diversion or the Lake Winnipeg
4 Regulation project to create the match on a hourly
5 and daily basis. That match will be done at the
6 Lower Nelson stations.
7 The seasonal mismatch between
8 Wuskwatim production and the export sale will be
9 done though with Lake Winnipeg Regulation. It is
10 expected that in the summertime primarily
11 Wuskwatim will produce more power than will be
12 sold to the export customer, and so the additional
13 Wuskwatim generation has the potential to be
14 stored and to be moved into the winter season.
15 And that transfer of summer production, that
16 transfer of production on a seasonal basis will be
17 done with Lake Winnipeg.
18 The next chart shows a typical day of
19 generation on the Manitoba Hydro system. This day
20 was chosen from June when the load variations are
21 the maximum. The bottom access shows time of day
22 from midnight to noon to midnight. It is a 24
23 hour period. Production is lowest at night, our
24 customers are sleeping, the demand for electricity
25 is low. This chart shows production as low as
83
1 about 1,700 megawatts up to about 5:00 o'clock in
2 the morning. As people wake and begin their
3 normal day activities, the demand for power
4 increases, and the Manitoba power system increases
5 its production from around 1,700 megawatts up to a
6 full capability of around 5,000 megawatts, for the
7 peak demand hours, from about 10:00 o'clock in the
8 morning until about 10:00 o'clock at night. And
9 those we describe as the on peak hours.
10 Most of the variation between the
11 overnight minimums and the daily maximum occurs by
12 changing, increasing the output from the Lower
13 Nelson generating stations. Over 90 percent of
14 the hourly and daily matching of supply to load
15 occurs by changing the output of those Lower
16 Nelson plants.
17 The gray area at the bottom shows how
18 the other generation in the Manitoba Hydro system
19 operates relatively constant over the day. And I
20 have also shown on here how Wuskwatim generation
21 is expected to vary over the day. At night we
22 expect to run, in this case around 2 units of
23 operation, increasing to 3 units of operation.
24 You will see that we've concentrated the output of
25 Wuskwatim in the top here, and the system needs to
84
1 absorb the production from Wuskwatim during the
2 nighttime hours. And it is the Lower Nelson that
3 then allows us to put that energy into the market
4 during the daytime.
5 So what will be the effect of using
6 the Lower Nelson to match the production from
7 Wuskwatim to the market needs? This chart shows
8 again on a 24-hour scale, from midnight to
9 midnight, for our Lower Nelson main reservoir,
10 Stephens Lake -- Stephens Lake operates within a
11 10 foot range between elevation 453 up to 463.
12 For the month of June it has a normal 5 foot
13 operating range. The blue and red lines show how
14 that reservoir will be operated over the daily
15 period with and without the Wuskwatim project.
16 The effect of balancing the Wuskwatim production,
17 taking it, absorbing it at nighttime and then
18 taking it to market in the daytime results in
19 approximately a quarter inch change in levels on
20 that reservoir.
21 So Nelson we have talked about the
22 hourly and daily match between load and
23 generation, and how Wuskwatim will affect that. I
24 would like to now talk about how Wuskwatim
25 generation is expected to affect the operation of
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1 Lake Winnipeg.
2 The map on the slide is a blow-up of
3 the north end of Lake Winnipeg, with the Nelson
4 River leading north through the Playgreen Lakes,
5 past the Jenpeg control structure, and then in the
6 upper right-hand corner is Cross Lake as the
7 Nelson River flows downstream. The map shows the
8 location of the control structure at Jenpeg, and
9 the channels that were constructed as part of the
10 project.
11 As I described earlier, Lake Winnipeg
12 is the seasonal balancing reservoir. Most of the
13 water that comes into the Manitoba Hydro system
14 comes in during the summertime as a result of
15 spring, snow melt run-off, spring and summer rain
16 falls, Lake Winnipeg collects that water, and that
17 reservoir can be operated to distribute that water
18 throughout the year and bring balance to the
19 supply and demand for water.
20 The control structure at Jenpeg
21 controls the flow on the west Nelson River,
22 approximately 85 percent of the flow out of Lake
23 Winnipeg flows down the west channel. The other
24 15 percent of the flow flows uncontrolled through
25 the east channel directly into Cross Lake. The
86
1 outflows from Lake Winnipeg are the main
2 determinant of the Nelson River water levels. So
3 Jenpeg is the control point. What happens at
4 Jenpeg determines what the water levels will be
5 downstream.
6 The Lake Winnipeg Regulation project
7 is operated under a water power licence issued to
8 Manitoba Hydro from the Province of Manitoba.
9 Lake Winnipeg has a four foot range in the licence
10 that has been reserved for power purpose. The
11 licence has an upper level of 715 feet for power,
12 a lower level of 711 feet. It is within those
13 four feet that Manitoba Hydro is allowed to
14 regulate for power purposes.
15 The licence specifies how Manitoba
16 Hydro will operate the control structure at Jenpeg
17 during flood conditions. Under high flow
18 conditions such as occurred in the flood of 1997,
19 the water level on Lake Winnipeg rose above
20 elevation 715 feet, and Manitoba Hydro was
21 required to operate the Jenpeg dam in order to
22 minimize flooding along, around Lake Winnipeg.
23 During drought conditions, the level
24 of Lake Winnipeg can drop below level 711. Under
25 those conditions the licence issued by the
87
1 Province requires, transfers authority for the
2 outflows at Jenpeg to the Minister of Water
3 Stewardship. So Manitoba Hydro does not get to
4 decide independently what the outflows from Lake
5 Winnipeg will be, either under low flows or under
6 flood conditions. However, when the water levels
7 are within the 4 foot range reserved in the
8 licence for power, there are two modes of
9 operation. The first mode is conservation mode,
10 when Manitoba Hydro is holding back water in Lake
11 Winnipeg out of concern that there will be an
12 adequate energy supply in the future.
13 This is the condition that we are in
14 now. We are in a severe drought. We are in
15 conservation mode, concerned that water needs to
16 be held back to serve the future demand for
17 electricity. However, when conditions are more
18 normal, Manitoba Hydro regulates the outflows from
19 Lake Winnipeg based upon power system economics,
20 regulates within the limits that are set through
21 its agreements and other licences. This is the
22 range for which there is potential for Wuskwatim
23 related seasonal change and outflows from Lake
24 Winnipeg. If the surplus power that Wuskwatim is
25 producing is best stored for future release to the
88
1 market, that energy will be stored in Lake
2 Winnipeg, and it creates a potential for a change
3 in water regime as a result of the project.
4 So what are the major factors that
5 affect the operation of the Lake Winnipeg project?
6 A critical factor is the ice conditions that --
7 the icing that occurs in the winter time, the
8 choking of the channels that limit Manitoba
9 Hydro's ability to release water from Lake
10 Winnipeg and get it to the downstream generating
11 stations.
12 Another major critical factor is the
13 operation of the Churchill River Diversion. The
14 Churchill River Diversion has very little storage.
15 South Indian Lake is a relatively small lake, has
16 a very limited ability to transfer water. And
17 that operation needs to be considered when the
18 decisions are made to operate Lake Winnipeg
19 Regulation.
20 By far the major factor that affects
21 the regulation of Lake Winnipeg is the water
22 supply. Extreme droughts cause low flows, extreme
23 floods cause high flows. Those flow conditions
24 cause low levels and high levels respectively.
25 Our firm power demands need to be met at all
89
1 times. Winter power demands are highest. We need
2 to hold back water to conserve that for future, if
3 there is a concern for low water conditions.
4 Relative power prices are a major
5 driving factor. Summer prices are generally
6 higher than winter prices, and that price
7 differential affects the release decisions on Lake
8 Winnipeg during normal flow conditions.
9 And the interconnection capability,
10 our ability to move energy to the export markets,
11 also has a major impact on how the lake is
12 operated. The water may be there, but there may
13 not be any room on the interconnections for the
14 energy to be taken to market. So if the
15 interconnection capability is insufficient, that
16 will affect the way that Lake Winnipeg Regulation
17 is operated.
18 Ice restrictions severely limit the
19 outflow capability from Lake Winnipeg in the
20 winter time. There is an approximate 50 percent
21 flow reduction caused by ice accumulations and ice
22 growth in the outlet channels between Lake
23 Winnipeg and Jenpeg. During the summer season,
24 Lake Winnipeg project is completely capable of
25 meeting the power demands downstream of the large
90
1 Nelson River plants. In the winter time it is
2 like clogging of the arteries, the ice chokes up
3 the river, and Lake Winnipeg is incapable of
4 supplying an adequate amount of water for the
5 downstream plants. What that means is that
6 Churchill River Diversion water is most useful in
7 the winter. The Lake Winnipeg reservoir is
8 incapable of meeting that demand, so that need for
9 water at the downstream plants needs to be
10 augmented by maximum flows on the Churchill River.
11 This chart shows levels on Southern
12 Indian Lake for the years 2000 to 2003. During
13 the summer outflows from Notigi are reduced so
14 that the level of Southern Indian Lake rises. The
15 levels are brought up, if possible, to the full
16 supply level of 847 feet. The purpose of bringing
17 the waters to the maximum levels is so that a
18 maximum amount of water is stored and is available
19 to flow down the diversion route in the winter
20 time to meet the winter power demand. So the
21 Southern Indian Lake reservoir is drawn down
22 during the winter time over that 4-foot range, so
23 the maximum amount of water can be concentrated
24 down the diversion to meet that winter power
25 demand, because Lake Winnipeg Regulation is
91
1 incapable of fully satisfying the need for water
2 downstream.
3 Churchill River Diversion operations
4 follow this predictable seasonal pattern. This
5 seasonal pattern is driven by the ice restrictions
6 on Lake Winnipeg. Those ice restrictions will not
7 change as a result of Wuskwatim project, so that
8 seasonal pattern will not change as a result.
9 I mentioned earlier that water supply
10 is the most significant driver for Lake Winnipeg
11 Regulation. If there is very little water flowing
12 into the Manitoba system, the Manitoba reservoirs,
13 outflows from the reservoirs need to be held back
14 to maintain water levels within the reservoir
15 within their regulated range. So in extreme
16 drought conditions, water supply is least, water
17 flows on the Nelson River are lowest, extreme
18 drought leads to lowest levels.
19 In major floods such as occurred
20 during the 1997 flood of the century, you have the
21 highest levels. Lake Winnipeg reaches its highest
22 level, flows down the Nelson River reached their
23 highest flows, and water levels will be the
24 highest. The range of levels along the Nelson
25 River between highest levels and lowest level
92
1 caused by variation of the water supply can be
2 between 8 and 13 feet depending upon the location.
3 The water flows are not always the lowest, they
4 are not always the highest, they follow this
5 irregular pattern. Water levels on the Nelson
6 River also follow that pattern.
7 This chart shows the variation in
8 monthly power prices in the export markets that
9 Manitoba Hydro serves. Power prices are generally
10 highest in the summertime, especially in the
11 United States market where there is, their peak
12 demands occur due to air-conditioning loads, the
13 most expensive generators have to run at that
14 time, it drives up the price of power.
15 During the spring and the fall season
16 we are not into the heavy air-conditioning period,
17 we are not into extreme heating loads, so power
18 prices are at the lowest during the fall.
19 That price differential throughout the
20 year is the price signal that Manitoba Hydro
21 responds to if it has surplus electricity
22 available to sell into the export market. If
23 there is a surplus unit of power available,
24 Manitoba Hydro wants to store that water in
25 reservoirs and release it to the market at the
93
1 time when it can get the maximum value. But that
2 can only be achieved if there is sufficient
3 interconnection capability or generating capacity
4 to allow that energy to be taken to market. So
5 Lake Winnipeg can shift surplus energy to higher
6 value months, but only if it is possible, only if
7 there is enough transmission available or enough
8 generators to take that energy to those high
9 priced markets.
10 This is the factor that creates the
11 potential for shifting water under normal
12 conditions, because Wuskwatim, because of the
13 Wuskwatim plant. All of the Wuskwatim output will
14 not be sold to a customer under a firm contract.
15 There will be some surplus power that Wuskwatim
16 produces on average. So Manitoba Hydro has the
17 choice of taking that surplus energy to the market
18 at a time of its choosing, and that time will be
19 driven by the price that the market, the price
20 signal that the market is sending to the
21 operators.
22 We have been operating the power
23 system with Lake Winnipeg Regulation and Churchill
24 River Diversion and large interconnections for
25 over 25 years. It gives us experience with how
94
1 the power system was operated in the past. But
2 the question is, what will happen in the future if
3 we build Wuskwatim and now have to operate that?
4 Lots of things can change between now and the
5 future that the operators don't know. At this
6 point we use our computer models in order to help
7 us predict the effect of operations from the
8 Wuskwatim plant.
9 Our computer modeling system is called
10 SPLASH, and it is a simulation program that looks
11 at what the Manitoba load will be in the future,
12 looks at our export power commitments, looks at
13 our historical water supply record, looks at our
14 export market price forecast and our
15 interconnection capability. It can look at these
16 variables and predict how the system will operate
17 in the future, and then we can add Wuskwatim to
18 that computer model and see what the effect on
19 system operation is with and without Wuskwatim.
20 I want to take you through that
21 comparison of water levels using Cross Lake as an
22 example of a place that will see some small
23 changes in water regime as a result of water
24 levels, as a result of Wuskwatim.
25 This chart shows the output from our
95
1 SPLASH computer model for the water years 1970
2 through 1990. It shows the water levels on Cross
3 Lake for the load year 2012. This is the output
4 of the model without Wuskwatim as part of the
5 supply and without the export sales associated
6 with the Wuskwatim project. 1974, very high water
7 year, the model predicts very high water levels on
8 Cross Lake as a result of the 1974 flood, very low
9 levels during the drought from 1977, very low
10 levels during the droughts of the early '80's, and
11 again very low levels during the droughts of the
12 late '80's and early '90's. Water levels
13 fluctuate as the water supply fluctuates.
14 The next slide shows, if we add
15 Wuskwatim to the generating system and we sell the
16 firm production from Wuskwatim in the export
17 market, how the model predicts the water levels on
18 Cross Lake will be under those conditions. Under
19 very high flow conditions as in 1974 level, there
20 is very little change; under low levels, very
21 little change. There are some minor changes
22 during the mid band, mid range of levels, because
23 Wuskwatim is providing more power to the system
24 than is associated with the export sale, and our
25 computer model identifies that that water should
96
1 be held back in reservoir storage and should be
2 shifted to a different time. So there are slight
3 changes in water levels as a result of Wuskwatim
4 and associated firm sale as compared to the
5 without Wuskwatim analysis.
6 That chart was a chronological look at
7 the water levels on Cross Lake. One way of
8 viewing that same information is to construct a
9 duration curve of water levels, where we sort the
10 water levels from lowest flows to highest flows,
11 they are ranked from lowest to highest. And we
12 have done this for the summer levels for the
13 period of, for that same period of historical
14 records, again for the load year 2012. The red
15 line indicates the levels without Wuskwatim, and
16 the black line indicates what the duration curve
17 will look like with the construction of, operation
18 of Wuskwatim and associating export sale.
19 Small changes in levels are predicted
20 by the model. The average level change will be,
21 during the summer will be .04 feet, less than half
22 an inch change in average water level, slight
23 lowering of the level during the summertime. The
24 maximum water level change was .12 feet, just
25 over, between 1 and 2 inches. And those changes
97
1 are in the context of a water level change over
2 the range of all flows of around 6 and a half
3 feet.
4 That is our -- that was our base case
5 assumption, that we build the project, we match it
6 with an export sale. As a sensitivity, we said
7 what happens if you don't enter into a firm sale
8 associated with the firm output or dependable
9 output from the system that results from
10 Wuskwatim? This analysis again for the same
11 period, for the same load year, shows that --
12 without Wuskwatim the water levels are shown in
13 the red line, with Wuskwatim the water levels are
14 shown slightly higher during, in the normal range
15 from something near lower quartile to upper decile
16 flows. That is because the Lake Winnipeg
17 Regulation project is concentrating the surplus
18 production in Lake Winnipeg and Lake Winnipeg is
19 releasing that surplus energy to the market during
20 the summer season when power prices are highest.
21 That results in slightly higher outflows from Lake
22 Winnipeg during the summer season, resulting in
23 slightly higher levels with Wuskwatim than
24 without. Conversely, in the winter time, levels
25 would be slightly lower in the normal range than
98
1 the without Wuskwatim case. But, again, this is a
2 sensitivity, this is assuming that Manitoba Hydro
3 doesn't enter into a firm power sale and all of
4 this energy that Wuskwatim is producing is surplus
5 and can be concentrated according to the price
6 signal that the market is sending to Manitoba
7 Hydro.
8 Those are very small changes. To put
9 those level changes in context, I have shown a
10 chart here that shows maximum water level
11 variations that occur on Cross Lake now, water
12 supply results in a range of levels around 8 feet,
13 wave action on Cross Lake is approximately 4 feet
14 under maximum conditions. With constant flows out
15 of Lake Winnipeg in the winter time, water levels
16 on Cross Lake vary about three-quarters of a foot
17 just due to the ice effects caused by the thermal
18 change between a warm day and a cold day on the
19 lake. So water variations occur naturally up to
20 three-quarters of a foot. Wind setup on the lake
21 is half a foot. Operation of the Jenpeg
22 Generating Station through its daily cycle is
23 around .2 feet, about 3 inches between day and
24 night. In that context, the water level changes
25 resulting from Wuskwatim under the maximum were
99
1 shown, with the firm sale, was the reduction in
2 the summer of about .1 feet, about an inch
3 reduction, and as a sensitivity we have shown an
4 increase of about .4 feet, about 5 inches, if we
5 do not enter into a firm sale.
6 Cross Lake isn't the only lake that
7 will be affected by the change in system
8 operations as a result of adding Wuskwatim to the
9 generation fleet. Water level changes will occur
10 on other lakes in the system, Lake Winnipeg, Cedar
11 Lake, Kiskittogisu Lake, Sipiwesk Lake, Split Lake
12 and Stephens Lake, but our studies have indicated
13 that these water level changes will be even
14 smaller than those, than what we are predicting on
15 Cross Lake.
16 We looked at the cumulative effects on
17 water regime should Manitoba Hydro construct
18 Notigi, Gull and/or Conawapa in conjunction with
19 Wuskwatim. We considered the possible future
20 generating stations in the system. We came to the
21 conclusion that there will be no changes to the
22 Churchill River Diversion operation beyond the
23 study area as a result of these projects.
24 We concluded that there would be no
25 perceptible change to Lake Winnipeg Regulation
100
1 resulting from the construction of Notigi
2 Generating Station at the Notigi control
3 structure. We concluded that changes to Lake
4 Winnipeg Regulation were very dependent upon the
5 assumptions surrounding the construction of Gull
6 and Conawapa. Particularly those projects and the
7 assumptions surrounding those projects affect the
8 direction and the magnitude of change in water
9 levels; that interconnection size and how well the
10 production from the these new plants matches the
11 export sale are critical assumptions; other
12 factors can also be significant; and that no one
13 scenario is likely today.
14 So, in conclusion, there will be no
15 change to CRD operation or water regime beyond the
16 study area as a result of Wuskwatim. There will
17 be no perceptible change in Lower Nelson water
18 levels. There will be no perceptible change in
19 Lake Winnipeg outflows, no perceptible change in
20 water levels affected by Lake Winnipeg Regulation.
21 And we provided these results to the EIS team for
22 their review.
23 That concludes my presentation.
24 MR. WOJCZYNSKI: Mr. Chairman, that
25 concludes the system operation presentation. The
101
1 next one we would make is for need for
2 alternatives, but I would expect that presentation
3 is close to an hour and a half, so you may prefer
4 to have us break and conclude later, but we are at
5 your disposal.
6 THE CHAIRMAN: I think that is a wise
7 suggestion. Maybe we could break at this time and
8 come back and hear the full presentation on that,
9 at 1:00 o'clock sharp.
10
11 (HEARING RECESSED AT 11:45 A.M. AND
12 RECONVENED AT 1:00 P.M.)
13
14 (PROCEEDINGS RECONVENED AT 1:03 P.M.)
15
16 THE CHAIRMAN: I turn the ball over to you, Mr.
17 Wojczynski.
18 MR. WOJCZYNSKI: Thank you, Mr. Chair. So this
19 afternoon, we'd like to bring you the Need For an
20 Alternatives presentation and I will be leading off
21 with an explanation of the overall justification for
22 Wuskwatim for the background and the context for our
23 evaluations, a discussion of the alternative resources
24 and a description of the economic evaluations and the
25 results. Lynn Wray, Division Manager of Treasury and
102
1 Business Analysis will follow me and deal with the
2 financial evaluations of the projects.
3 I'd like to start with our interpretation of
4 the scope of the review for the need for an
5 alternatives portion, both of our submission and for
6 the hearings and the whole IRR process and everything
7 that we did. And we took our interpretation from the
8 terms of reference given to the CEC in its original
9 terms of reference from the Minister. And we've got
10 some excerpts here to explain what our interpretation
11 is. And we give it in two aspects. And so we've used
12 excerpts to help explain that.
13 The first excerpt is that all alternative
14 options are considered. Wuskwatim was selected on
15 reasonable grounds including economic viability as an
16 export project and relevant technical factors. And
17 then a little bit further in terms of reference, it
18 discusses Wuskwatim in its entirety.
19 And so this first part we take to be what
20 should be the evaluation of the project considering
21 the economics, environmental risk and other factors.
22 It is obvious from an environmental licensing
23 acceptability point of view that one should consider
24 the entire project and not portions of the project and
25 that the ownership arrangements and who owns what is
103
1 not significant from an environment acceptability
2 point of view. Thus the economic evaluations and the
3 options screening did not separate the project into
4 Manitoba Hydro and NCN portions.
5 The second part of the scope is captured by
6 this second portion from the terms of reference and it
7 is that the effect on Manitoba Hydro customer rates
8 and Manitoba Hydro financial stability should be
9 considered. And particularly, there's the phrase that
10 NCN/Manitoba Hydro partnership to be described to the
11 degree required to understand the financial analysis.
12 So based on this, our second part of the Need
13 For an Alternative is that we have an evaluation of
14 the effect on Manitoba Hydro rates and financial
15 situation. This protects the Manitoba customers and
16 the rate payers, thus the financial evaluation
17 considers only the investment and returns associated
18 with the Manitoba Hydro ownership in the project.
19 So that's the sort of the terms of reference
20 that we utilized generally. There were other aspects
21 as well in our submission and in our whole process on
22 the need and alternative side.
23 Now I'd like to turn to the presentation
24 itself. And in a nutshell, what is the justification
25 for proceeding with Wuskwatim particularly in 2010.
104
1 And in one sentence, it is that Wuskwatim is a
2 profitable project with benefits for all Manitobans
3 including those in Northern Manitoba and a very clean
4 project with much less environmental impact than the
5 generation it displaces. So in a nutshell, that is
6 our justification for Wuskwatim.
7 But what we do in this slide then is try and
8 expand on that and summarize in this one slide we're
9 going to expand on that short justification and also
10 summarize our whole need for an alternatives
11 submission.
12 We start off with the Need For portion of our
13 analysis and it deals with the fact that there's
14 economic, financial, environmental and reliability
15 benefits from increased electricity exports that will
16 be enabled by Wuskwatim. And we will, in some detail,
17 go through that in the remainder of our Need For
18 Alternatives presentation.
19 In terms of the environment, Wuskwatim is an
20 exceptional gem of a project. Wuskwatim is an
21 environmentally clean project that provides renewable
22 energy, has a low impact design and operation, and you
23 heard some of that earlier this morning. We have a
24 partnership with NCN that assisted in having a good
25 healthy design for the project and in ensuring that
105
1 there will be local benefits. It would be hard to
2 find other projects, other power resource projects as
3 environmentally attractive as Wuskwatim.
4 Wuskwatim's environmental attractiveness is
5 demonstrated through the Comprehensive Environmental
6 Impact Statement material that we've submitted earlier
7 and that we will present later on today in the second
8 presentation in the afternoon.
9 The third aspect on the Need For An Alternative
10 is risks. Any investment that anyone makes has risk
11 of some sort attached to it and of course Wuskwatim is
12 no exception. We have done an extensive assessment of
13 the risks and we have concluded that Wuskwatim, all of
14 its risks are relatively low. And it is overall a
15 relatively low-risk project and all the risks that may
16 occur are manageable.
17 Moving onto the next factor. The next factor
18 is more of a byproduct of Wuskwatim. It is not a
19 primary drive, it's not why we are doing Wuskwatim but
20 it is a very important factor. And that is that
21 Wuskwatim will provide an economic stimulus in
22 Manitoba and it will provide benefits for Manitoba and
23 all Manitobans. And we will explain that in some more
24 detail later on as well.
25 Secondly, what is the justification dealing
106
1 with alternatives to Wuskwatim? We, at Manitoba
2 Hydro, on an ongoing regular basis assess the full
3 range of resource options and stay on top of what the
4 new technologies are and continually update our
5 analysis. And we have, in our planning studies and
6 our decision-making in the corporation, come up with a
7 resource plan that we are working with and that we are
8 committed to. We are planning to continue to expand
9 our PowerSmart energy conservation, or demand-side
10 management is another term, program. We've
11 been very active in it in the past. We are already
12 planning to expand it. We are looking to expanding it
13 further. And we're planning to undertake any economic
14 wind generation in Manitoba. And that's in addition
15 to improving our existing system. So those are
16 already fundamentals of what we are doing. And then
17 in addition of course, we're now looking at Wuskwatim.
18 Looking at the other options Hydro, gas or
19 coal, we have determined that at this time at least,
20 Wuskwatim is a more attractive option than any of the
21 other generation options.
22 So that in a nutshell is the Need For an
23 Alternative justification for Wuskwatim. I'd like to
24 now move on to expanding on those points.
25 The first is that a fundamental drive for
107
1 Wuskwatim is that advancing Wuskwatim will enable
2 Manitoba Hydro to increase exports particularly in the
3 earlier years. Exports are profitable for Manitoba
4 Hydro. They have been one of the major reasons why
5 our customer rates are the lowest in the developed
6 world, amongst the lowest in the developed world. But
7 exports also of hydroelectricity contribute to
8 reducing global greenhouse gas emissions and also
9 other emissions as well. And this is done by it
10 displacing coal or gas generation in the markets that
11 we export into.
12 Proceeding with Wuskwatim and the other
13 resources we are pursuing such as the DSM and the wind
14 energy and the supply efficiency improvements will
15 enable Manitoba Hydro to continue exporting and to
16 accrue the kind of benefits I was just referring to.
17 Advancing Wuskwatim will also enhance our
18 reliability of supply to Manitobans. Should we run
19 into generation or transmission supply problems or
20 should the Manitoba load drill faster than we're
21 currently forecasting, even though it is planned to
22 commit additional export contracts, should problems
23 occur in Manitoba with Wuskwatim, there will be a
24 greater amount of supply that we can hold back in
25 Manitoba while alternate supplies are being arranged
108
1 in other jurisdictions. And this may seem somewhat
2 contrary to the people. We're saying, well, you're
3 going to advance Wuskwatim, get export revenue, so how
4 can that be any good for Manitobans if we run into
5 trouble?
6 What we would do is in an emergency, we will
7 hold back the power in Manitoba and we'd find and have
8 to somehow arrange for and pay for alternate supplies
9 on the other side of the border and the other side of
10 the interconnection. So that will be of a benefit to
11 Manitobans from a reliability point of view. Overall,
12 Manitobans are better off by advancing Wuskwatim and
13 maintaining our exports.
14 As I mentioned earlier, any investment has risk
15 and we had extensive efforts to ensure that the risks
16 are minimized at Wuskwatim and that we have a good
17 handle on what the remaining risks are.
18 The two main categories of risk that one would
19 look at with a project like Wuskwatim would be what is
20 the chance of the capital costs going higher than we
21 estimate them to be; and secondly, what if our export
22 rates are lower? Well, we have had extensive
23 experience building Hydro plants, planning Hydro
24 plants and we have had extensive experience marketing
25 export energy. So we have some fundamental good
109
1 reasons to believe that we, as an organization, are
2 capable of proceeding with Wuskwatim and staying
3 within the kind of parameters we are looking at.
4 We have had an extensive engineering and
5 environmental studies over a number of years, field
6 investigations and we now have a wealth of information
7 on Wuskwatim. We have a very advanced design and set
8 of information on Wuskwatim that gives us great
9 comfort in the project.
10 There are numerous other factors that could be
11 looked at and we will review the sensitivity analyses
12 shortly in our economic evaluation portion of the
13 presentation. But our conclusion, at looking at
14 those, again is that we've got a relatively low risk
15 project. All the risks are manageable and the
16 Wuskwatim economic benefits are very robust with
17 respect to the risk factors.
18 Moving onto that economic stimulus that I have
19 referred to as a byproduct, remembering that the
20 primary economic drive for Manitobans is that will
21 provide profits. However, it will also provide an
22 economic stimulus for Manitobans and provide
23 socio-economic benefits. There will be training,
24 jobs, business opportunities in Manitoba and Canada.
25 And we have, particularly on this project, although we
110
1 have made efforts on previous projects as well but
2 we've made an even more innovative and greater effort
3 with Wuskwatim have a special focus on Aboriginal
4 people in Northern Manitoba. We've got a pre-project
5 training program that Mr. Adams spoke to this morning.
6 There will be a number of special initiatives to job
7 preference and special measures to enhance Aboriginal
8 employment and there will be business opportunities.
9 And generally, this is for Aboriginal people in
10 Northern Manitoba. NCN, there's a special emphasis
11 being in the vicinity. This is also true for all
12 Aboriginal people in Northern Manitoba.
13 So there will be a more direct Aboriginal
14 participation in the project and during benefits
15 through the partnership with NCN and there will be
16 significant social net benefits to the economy as a
17 whole. As I will discuss later, we have had an
18 analysis undertaking to determine not just from the
19 project proponents point of view, what does the
20 project look like, but we had a special analysis
21 looking at it from the provincial society point of
22 view. And they indicated that the social return to
23 Manitobans significantly exceeds even the financial
24 returns to Manitoba Hydro and NCN.
25 So I'm just going to speak briefly about some
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1 of the options that we're looking at. I'll go into
2 more detail on the options later on in the resource
3 screening part of the presentation. But it's
4 important to emphasize that Manitoba Hydro considers a
5 full range of resource alternatives and we are
6 committed to pursuing those that are economic and
7 viable and attractive.
8 First of all, Manitoba Hydro for over ten
9 years, has been active in the demand-side management
10 or PowerSmart area. We have a target for the year
11 2011 and 12 of having undertaken 356 megawatts of DSM
12 by that time. That's in our plans right now, in our
13 integrated plans for forecast. And that includes DSM
14 that was undertaken in the past, DSM that we are
15 currently working on and engaged in with our end-use
16 customers. DSM we're planning to undertake between
17 now and 2011. When you think of Wuskwatim being 200
18 megawatts, a 356 megawatts entire DSM program is
19 significant.
20 Most of you are aware that a few years ago,
21 concurrent with us looking at, in more detail,
22 Wuskwatim, we initiated a major review and study of
23 the potential in Manitoba. It's necessary every
24 number of years to update that. So we initiated that
25 a few years ago. That culminated in the study that
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1 came out last summer, end of last summer, and has been
2 part of this review process. It suggests that there's
3 potential for us to expand our DSM even beyond the 356
4 megawatts we talked about. And we are in the process
5 and will be in the process of incorporating that into
6 our planning process with the expectation we will
7 likely increase our ultimate DSM target beyond the
8 356.
9 In addition to looking at customer end-use
10 efficiency, we also look at the efficiency of our
11 existing system. As Dave Cormie explained this
12 morning, we have in the order of 5,000 megawatts of
13 generation in our system, we have a large transmission
14 system. And what we have been doing particularly
15 since export rates increased a number of years ago, we
16 have been assessing all the opportunities to improve
17 the efficiency of the facilities we already have and
18 also to expand the capability. In certain cases, same
19 facility, same amount of water, you can get more water
20 out. So we're trying to do that. We have an
21 extensive program for doing that and that target, or
22 it's not so much a target as our estimate of what we
23 will achieve by 2011 is 382 megawatts. And again,
24 like the DSM, that's programs we have done in the
25 past, are doing today or have committed in the next
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1 number of years.
2 The other area that we are actively pursuing
3 and have a commitment to is dealing with alternative
4 energy. We have right now in our plans and as part of
5 our financial forecast that we would be undertaking
6 250 megawatts of wind generation in Manitoba. It
7 could be either on the basis of an independent power
8 producer who would sell to Manitoba Hydro under
9 contract and then we'd export the power using the rest
10 of our system to enhance the value of that wind power.
11 Or we could develop it ourselves at Manitoba Hydro
12 some sort of combination. We have an extensive
13 program of assessing wind in Manitoba. We've had
14 seven monitoring stations up for nearly a year. There
15 are a number of other activities and we are assessing
16 the possibility of wind ourselves.
17 So we have quite a wide range of options where
18 we'd be looking at, if you look at site management,
19 supply efficiency improvements, alternate energy and
20 new hydro, those are four legs of a diverse portfolio
21 of economically and environmentally attractive
22 options.
23 Now, we do look at other generation options and
24 resource options than the ones I just mentioned. We
25 don't just consider Hydro, wind, DSM, alternate
114
1 energy. In the past, we have built coal plants. We
2 have a remaining 105 megawatt unit at Brandon. Two
3 years ago, we built nearly a gas combustion turbine
4 plant using natural gas almost 300 megawatts.
5 However, overall, when considering the
6 economics, rate impacts, the environment and other
7 factors, proceeding with Wuskwatim now is more
8 attractive than other forms of new generation such as
9 Hydro, gas or coal. However, this does not preclude
10 the possibility of future development of these Hydro
11 or these other generation matters.
12 We did find Wuskwatim more attractive than
13 thermal generation. But it would be possible for us
14 to, in the future, conclude that more thermal would be
15 attractive but that isn't really in our studies at
16 this time.
17 I should mention that those options,
18 particularly the Hydro options that were not precluded
19 from developing those other ones at a later date, for
20 instance, the three Hydro options, the other ones
21 we're looking at, Gull, Conawapa, Notigi are
22 attractive options. And even some of the other
23 options might be attractive in the future as our load
24 grows and the possibility of expansions to our export
25 interconnections occur, then there will be
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1 opportunities to develop the other ones and that
2 wouldn't be precluded.
3 I'd like to now turn to the more detailed
4 evaluation of resources. In evaluating Wuskwatim or
5 other alternatives, whether it's wind or DSM or
6 whatever, an important context to start with is the
7 load growth in Manitoba. Now, as Dave indicated, we
8 first end up meeting our load in the province and then
9 we export what's left. And so as our load grows in
10 Manitoba, the amount of energy we can export, the
11 amount of surplus available to export diminishes.
12 And this graph, it's kind of a boring graph I
13 admit. It's got 2006 to 2038 and we've got the
14 energy. We've got this in annual energy. And these
15 units are hard to follow after a while. It's
16 thousands of gigawatt hours. So like this is 21,000
17 gigawatt hours which is 21 million megawatt hours.
18 And so I apologize, there's no other way for us
19 to explain the energy. The difference between the
20 indices on the axis is 4,000 gigawatt hours. And it's
21 kind of hard to relate to but if you think of
22 Wuskwatim as providing 1,250 gigawatt hours of
23 dependable energy, then you can think of Wuskwatim as
24 sort of being something like a third of the distance
25 between these two sets of lines.
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1 That's what our load growth looks like. It's
2 fairly flat into the future. There will be ups and
3 downs. We can't predict exact ups and downs. We've
4 got an average. And it's a slight flattening into the
5 future. But it is a very boring line.
6 What is more interesting is what has the load
7 growth in the past been, the historical load growth?
8 And one of the reasons I'm bringing this up today is
9 that one of the participants, one of our esteem
10 participants in this process, TREE/RCM, their
11 consultants have expressed concern about our load
12 forecasting and the adequacy of that. This is just to
13 give a very basic first-cut indicator of what happens
14 with our load forecasting.
15 And what we have, this is the number of years
16 1960 going into the future up, this is the end of the
17 historical period 2003. And you can see, this is the
18 percentage load growth from one year to the next. So
19 we actually had two years where there was a slight dip
20 in the load growth but in the earlier years there was
21 some huge increases in load growth but that has
22 significantly tapered off for a whole bunch of good
23 reasons. And it's more or less been up and down but
24 more stable in recent years. And the average load
25 growth historically over that time period is about 4
117
1 and a half per cent.
2 Now, we don't just go and extrapolate from the
3 past, we do a sophisticated analysis dealing with
4 end-use and all the various sectors and we look
5 forward into the future. And you can see this here is
6 our forecast and the average load growth into the
7 future in our forecast is, and this is for the 2003
8 forecast, is 1.1 per cent into the future.
9 Substantially lower than the historical rate.
10 So moving on, we have to do our planning not
11 just to meet Manitoba load but any firm export
12 contracts we have. So we enter into the long-term
13 contracts with export customers and typically three,
14 four, five, 10, 15, sometimes 20 years. So what we
15 have here now as well is on top of the domestic load
16 is our firm export contracts. And the single largest
17 one we have in there is a 500 megawatt, 10 year sale
18 to Northern States power that we signed a couple of
19 years ago. It is now an approved contract. We have
20 other ones as well in here. We are in the process of
21 negotiating other contracts but they are not in here.
22 We only have the ones that are currently committed and
23 approved. And you can see into the future there's
24 very little export that are committed beyond around
25 2017 or so. So into the future, the only commitments
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1 we have to meet are our domestic load.
2 This graph brings together the other half of
3 the picture and that is the supply side. So what we
4 have here in the yellow is the firm resources
5 available to Manitoba, the firm Electrocity Resources.
6 It's composed of our existing hydro and this is under
7 drought conditions. Dependable energy is what we can
8 do in a drought. So it consists of the dependable
9 hydro, the thermal generation we can run in the
10 province, both coal and gas, running them base load
11 through the whole year, imports over our tie lines.
12 And in a bad drought, we would start maxing out on
13 those. We'd first cancel exports and then we would
14 arrange for imports. Very costly ones eventually.
15 And also DSM is built into our resource line.
16 So you can see that there is a somewhat steady
17 amount of resources and then it diminishes over time.
18 I'd just like to point out that in the earlier years
19 here, let's say in 2006, there's a substantial
20 surplus, less than there is today, but there's a
21 substantial surplus there and the majority of it is
22 taken up by these long-term firm export contracts and
23 we have some surplus left over that we can sell either
24 into the long-term or the short-term market.
25 And you can see that the resources over time decline
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1 around 1016/18, around there. The majority of the
2 reasons for the decline is that we assume that our
3 coal units will retire. They will be like in the
4 order of 50, 60 years old. Our natural gas units will
5 come to the end of their normal life. And also we
6 have import arrangements. Some of them tied to our
7 export contracts that will be assumed to end.
8 We do assume though that some import arrangements
9 continue after this point. So this line over here
10 does include about 1,600 gigawatt hours of energy
11 imports in the off peak over our tie lines.
12 So our supply increases over time. And around 2020,
13 the exact year is not critical, we find that the
14 demand exceeds the dependable supply and new resources
15 would be required. And our previous analyses had
16 concluded that for the 2020 time frame, that the best
17 resource we could put in at that time would be
18 Wuskwatim and our corporate integrated financial
19 forecasts and all our other resource plans have been
20 based on that resource plan.
21 So this graph shows it's the same graph with
22 adding in Wuskwatim, this is the 1,250 gigawatt hours
23 of Wuskwatim I was referring to. And coming in at
24 2010. You can see in the earlier years, Wuskwatim is
25 available for exports and then after 2020-ish, it's
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1 available for domestic supply. If we have a drought,
2 we can use it for domestic supply.
3 The overall conclusion that can be drawn from
4 this demand resource picture is that even after the
5 economic levels of demand-side management, supply side
6 efficiency improvements and wind are taken into
7 account. First of all, new resources are required
8 around 2020 for Manitoba load. Secondly, with exports
9 diminishing over time without Wuskwatim, there will be
10 ample room for Wuskwatim to be exported over the tie
11 lines into either the United States, Ontario or
12 Saskatchewan and into those markets. There are sort
13 of the two main messages one can take. That's sort of
14 the two main messages one can take from this series of
15 graphs.
16 The next part of the picture, the fundamental
17 piece that we need to look at when considering
18 Wuskwatim and evaluating Wuskwatim and other resources
19 is the export price. We are confident that we are
20 going to be able to export. Let's say we do develop
21 Wuskwatim, we are confident we are going to be able to
22 export Wuskwatim. But the real issue is when you
23 export, what price are you going to get?
24 So this graph shows their prices historically
25 from 1990 to 2004 and it shows it in Canadian cents
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1 per kilowatt hours, 0, 3, 6, 9, 12. And you can see a
2 definite trend here. And it's not just our market,
3 it's other markets as well, that export prices have
4 been on the increase. There are always a number of
5 reasons for things to happen. But probably the single
6 most critical factor is that in the United States,
7 that market had open access transmission instituted
8 back in 1996. This is part of the deregulation of the
9 electricity markets down in the States. And what that
10 meant was that suppliers such as ourselves were able
11 to access a broader market and to have greater
12 certainty of getting into that market, had increased
13 competition and caused the market price to increase.
14 And you can see that once it was open up, there was a
15 steady increase and it has held steady since then.
16 There is a general consensus in the industry that
17 electricity market prices will continue to be high,
18 that they won't go back to where they were in say the
19 eighties or the early nineties and that we will see a
20 sustained high price and that there will be a real
21 escalation over time.
22 Now, there will be ups and downs. There's
23 absolutely no question of that. Electricity markets,
24 just like any commodity market, has ups and downs and
25 variability in it. But the fundamentals are quite
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1 strong and so we have a forecast into the future. And
2 again, it could be ups and downs, it could be higher
3 or lower than the kinds of things we're looking at but
4 sort of an average. And what we have projected here
5 into the future is a low export price forecast and a
6 high export price forecast. And what these try and do
7 is give us these sort of 90, 95 per cent probability
8 range of where we expect on the average future
9 electricity prices are going to be.
10 Now, I should explain we've got a low and high
11 and you might ask where is the expected? We have
12 other forecasts that are expected forecasts and we
13 can't share those because of commercial
14 confidentiality. We'd be exposed to loss on the
15 export market if that were done. But what we have
16 shared is extensive information on those expected
17 forecast prices and we have shared all the information
18 on the low and the high and all the calculations. And
19 these low and high bound what we expect will happen so
20 we can present all our analyses and we feel that is
21 more than adequate information. I'm going to
22 particularly focus on the low because even under the
23 low, we've still got a good project. The high of
24 course is even better. And we think that high is as
25 equally likely as low but I will focus on the low.
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1 In the low, what we did fundamentally to come
2 up with this is there's two components one can think
3 of in the export price. There is the long-term
4 contracts that are firm that we have to supply whether
5 we have a drought or not and then there is the
6 short-term opportunity exports that we supply and
7 arrange on a short-term notice if we have a sufficient
8 supply. And we have a mixture of those. And that
9 mixture was an historical price as well. And in the
10 long-term low export one, the starting point of it,
11 and actually the whole forecast for the long-term
12 firm, we used the prices that we have experienced
13 recently but equal to a little bit lower than the
14 prices we have experienced recently with no real
15 escalation in the future.
16 The short term, the other component, we have
17 taken what we've experienced recently and added a
18 relatively low escalation to the long term. And the
19 escalation we've used in the low scenario is lower
20 than what the general consensus is there will be
21 escalation. So that's the sort of basis for the low
22 export price forecast.
23 Manitoba Hydro utilizes its own direct
24 experience in the market, knowledge of market trends
25 and independent consulting experts to prepare these
124
1 forecasts particularly of the expected future
2 forecasts.
3 The conclusion here is that while earlier we
4 were demonstrating there will be room on the
5 transmission interconnections to export Wuskwatim,
6 these are the range of prices we expect to obtain for
7 Wuskwatim and other resources.
8 I'd like to give some idea of how we develop
9 this expected forecast. And I should add by the way
10 that most of this information we're presenting here
11 comes directly out of the submission or the
12 interrogatories. So this is pretty well information
13 we have shared before.
14 So no one knows with certainty what the exact
15 future price is going to be for electricity exports or
16 for any commodity. Our expected price forecast is
17 composed actually of a probabilistic weighing of a
18 number of scenarios. Each scenario has a different
19 level of environmental regulation of thermal
20 generation, thermal generation being the main
21 generation which Hydro exports we displace in our
22 neighbouring markets.
23 So when we're exporting, we displace thermal
24 generation. Effectively what we get when we export is
25 the price is that our competitor would have to pay for
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1 their generation. So that's how we can relate our
2 exports to the thermal generation prices.
3 One of the most likely generation supplies to
4 be displaced in the export market are combined cycle
5 or combustion turbines that utilize natural gas. So
6 this is a graph of how the cost of energy from a
7 combined cycle turbine would vary with the different
8 environmental scenarios that we looked at. It's going
9 from 2010 to 40 and then we've got the premiums here
10 in cents per kilowatt hour.
11 How we develop this is we start with let's say
12 a combined cycle gas turbine and we start with what we
13 call The Business As Usual environmental scenario.
14 There are regulations today in Canada and the United
15 States on any thermal generation and there are pricing
16 or a costing for the generation. We look at what is
17 in place today and what have Canadian governments,
18 U.S. governments already committed to putting in place
19 down the road for environmental regulation. We call
20 that business as usual. And then we develop what the
21 cost of that gas turbine energy would be into the
22 future and we call that the reference case. Then we
23 add to that what other environmental regulation would
24 be put in place.
25 There's a general expectation that the
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1 regulation of thermal emissions will increase over
2 time. That's pretty well across the line. I think
3 there's a broad consensus that's what's going to
4 happen. That's true whether you're talking about
5 mercury emissions being into the air, particulates
6 meaning like dust, sulfur dioxide, nitrous oxides
7 which are acid rain precursors or ozone, other heavy
8 metals. The full range of them. There are already
9 regulations. There are going to be more increasingly
10 stringent ones.
11 The one that's most pertinent in this area is
12 greenhouse gases. Particularly in the United States
13 right now, there's no regulation on greenhouse gases.
14 There is a general expectation in the future there
15 will be. No one knows when will these regulations
16 come in, when will the entire spectrum of regulation
17 become more stringent. How stringent will they
18 ultimately be?
19 So what we did is develop a number of scenarios
20 and analyzed our exports forecasts and our system
21 exports and the attractiveness of projects using each
22 of the scenarios and then average them together to
23 come up with what we call an expected forecast. And
24 we do that with a probabilistic rating. Lower
25 probability in the earlier years, greater probability
127
1 in the later years.
2 One comment I'll just make before I finish off
3 here is that we have the high environmental premium
4 here and that is less stringent than if Kyoto was
5 ratified by the United States. The United States is
6 part of the negotiation of Kyoto and they, at least
7 with this administration, are unlikely to ratify the
8 future administrations. Who knows what will happen.
9 But we assume in here that the United States does not
10 ratify Kyoto ever. What we assume is that in the
11 first budget period which is 2008 to 12, stopping
12 around there, that the United States will probably do
13 very little on greenhouse gases. And it's beyond
14 2012. And that whatever comes into place will be less
15 stringent than Kyoto.
16 If by chance in the election in November in the
17 States, Bush is not elected and the Democrat is
18 elected, you may very well see the States still
19 ratifying Kyoto. But we don't think that's likely
20 overall and so we haven't built that at all into our
21 assumptions.
22 So this slide gives an indication of the
23 comprehensiveness and complexity undertaken by
24 Manitoba Hydro to forecast the prices.
25 So moving on away from the export prices to
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1 what are the options we looked at. This provides a
2 life-cycle cost comparison of the main resource
3 options that Manitoba Hydro considered. We consider
4 other ones as well but these are the main ones. And
5 what we do is we come up with a cost in cents per
6 kilowatt hour here, from zero cents per kilowatt hour
7 to 32 cents Canadian dollars. And what we do is we
8 take each option and we determine over its whole life
9 and each option has a different life. You can take
10 different kinds of things and compare them on some
11 kind of common basis. We take over the life of each
12 option all of the capital costs, all of the O&M
13 operation costs, maintenance costs, refurbishment
14 costs, taxes, like capital taxes, we take transmission
15 costs. In the case of thermal options, like coal or
16 gas, we include the fuel costs. In the case of Hydro,
17 we include water rentals for example. So we include
18 all of these project costs, costs that are charged to
19 the project and we sort of average them out over the
20 life of the project and we divide by the energy
21 production over the life of the project and we
22 determine this energy cost in cents per kilowatt hour
23 here. And now we can have some sort of screening
24 comparison of options.
25 And this is a relatively simple calculation
129
1 used for initial screening purposes. It is used quite
2 widely in industry for that purpose. We do not use
3 this and others don't as well for final decisions on
4 commitments because there are a whole bunch of issues
5 that are not addressed by that kind of a calculation.
6 There is what we can call system issues that relate
7 to, well, what were the export prices, what are the
8 transmission limitations, how will these different
9 resources fit in with the existing system. So we do
10 an initial screening with those but we need a more
11 complicated detailed analysis to make a final
12 decision.
13 And a good example of that is if you have
14 intermittent generation such as wind generation, if
15 you're going to sell it on the export market, to get a
16 premium price you need to firm it up. You need to
17 have a firm product to sell into that market. So
18 there's quite a major firming cost that we have to add
19 in when we look at it on a system basis. And so those
20 kind of costs aren't included in here either. But
21 this is still a useful starting point.
22 So let's start with looking at the alternative.
23 DSM or demand-side management. It starts at 1.8
24 cents, the lowest costing on the whole scale. And
25 TREE and RCM would fully agree with me that that's
130
1 starting point. It ranges from 1.8 to 7.2 cents a
2 kilowatt hour. And why is there a range? By the way,
3 that's what this light purple is showing in each one
4 of these, is that there's a range.
5 For DSM, it's composed of many different
6 measures, some small, some large in the residential,
7 industrial, commercial sectors. And each one of those
8 sectors have many different possibilities. Every
9 end-use we have potentially has a DSM measure. So you
10 have a range of costs for all the different programs.
11 And what we have shown here are the costs for the
12 programs that Manitoba Hydro either has already
13 undertaken or is working on today and delivering to
14 end-use customers or planning to do in the next seven
15 years. And so this shows the range of cost for all
16 those programs.
17 And of course, the logical thing when you're
18 looking at this is you start with your lowest cost
19 option, you commit to that. And if you want to do
20 more, you go to more expensive options and you keep on
21 adding more expensive ones.
22 So the 7.2 cents is the cost of the most
23 expensive one we'd be putting in. But if you wanted
24 to go with the old information we had without this new
25 study yet, if you wanted to go to a higher level of
131
1 DSM more than the 356 megawatts, you can go to more
2 but the cost would be higher. So this is just the
3 cost for the programs that we are putting in.
4 The next resource down here is new Hydro and
5 we've just included Wuskwatim, Conawapa and Gull.
6 That's where we have a range from 6.6 to 7.6 cents.
7 All three of these are attractive projects but
8 Wuskwatim is the lowest cost and it's also relatively
9 small projects and it makes it a little bit easier to
10 deal with. So it's the most attractive out of the new
11 Hydro projects that we're looking at.
12 Wind generation, we show a range of 6.6 to 10.6
13 cents and there's a range there. And the reason for
14 this range is that the wind energy cost obviously is
15 going to be directly related to how much wind you have
16 when you build these turbines. What we're looking at
17 here is 450 megawatts of wind generation which would
18 give roughly the same amount of energy as Wuskwatim.
19 So we're trying to do a little bit of an apples and
20 apples here. And the 6.6 cents is if you get a better
21 wind resource than we think is likely possible in
22 Manitoba for a 450 megawatt amount. And we also have
23 the 10.6 is if you have a worse wind resource than we
24 think we likely have. And the best guess is somewhere
25 in the middle, closer to the 6.6.
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1 There are other uncertainties though that we
2 haven't depicted in this range. We have assumed on
3 this -- by the way, I should explain. This graph is
4 taken from our original submission. The only thing
5 we've changed really is on the wind generation, we've
6 taken some updated information that became available
7 after we did the original submission. One of them is
8 that we commissioned two studies by a U.S. and
9 Canadian consultant looking into wind costs and they
10 indicated that wind costs will decrease over time a
11 little faster than our very preliminary information.
12 So we have incorporated that into our update. We have
13 incorporated a whole bunch of other updates as well.
14 And so what we have, this assumes this updated cost
15 information. It also assumes that there will not be a
16 whoopi program which is a federal subsidy. By the
17 time you get to 2009 or 10, that program would be
18 finished and there's only 1,000 megawatts and we
19 figured that would be subscribed. So there's various
20 assumptions built into it.
21 What we don't have into here of course is the
22 cost of integrating this into the system. That would
23 increase the cost even more. So you can see the costs
24 here and the cost of the wind will probably be
25 somewhat higher than the cost of Wuskwatim is our
133
1 conclusion once you look at all the cost factors.
2 These three sets of alternatives, DSM, new Hydro
3 wind generation plus the supply improvements I talked
4 about earlier, they are the most attractive options we
5 are looking at and those are the ones, the four legs
6 of the diverse portfolio that I mentioned earlier that
7 we are committed to and are working with. There are
8 other options, there's many other options. Just spend
9 a minute on the first one here, gas turbines. And
10 what's called combustion turbines are the lower costs
11 when you're trying to produce that's large quantities
12 of energy. That's the lower cost and simple cycle.
13 And the lowest cost shown in here 6.1 cents. And
14 that's if you take the newest technology and you take
15 the low forecast for natural gases prices into the
16 future.
17 And this is the price forecast that we had two
18 years ago when we were preparing the submission. Even
19 at that time, widespread in industry, there was
20 concern about two things; (A) Price spikes. Natural
21 gas is quite prone to huge price spikes. And so
22 anybody who builds one and depends on one will be
23 exposed to those and will tend to be unless you enter
24 into long-term contracts. But even there there's some
25 risk.
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1 The second is that the expectation, there was
2 maybe a fear in the industry that we think the
3 forecast will go up -- the prices for natural gas are
4 more likely to go up than come down compared to what
5 was being forecast. But this was the information
6 available two years ago.
7 We regularly update all our background data,
8 all our information and we're just in the process of
9 updating our natural gas price forecast as part of our
10 regular cycle. And what we're finding is as people
11 expected, the forecast for natural gas prices is
12 higher and we would see even higher prices than in
13 here.
14 So the gas turbines would be more expensive
15 than the most attractive options we looked at. And
16 the other factor is that if there's an environmental
17 premium, more stringent regulation of nitrous oxides
18 or greenhouse gases, you'll see the higher end of the
19 cost range or even higher than we're showing here
20 when we get the new gas forecast in. Coal is another
21 option. I'll be honest about it, we haven't paid as
22 much attention to the possibility of coal in Manitoba.
23 Our assessments are it's probably not an attractive
24 option in Manitoba for a whole bunch of reasons.
25 However, in our export markets, it is something
135
1 that was being looked at a couple of years ago. Even
2 Alberta, they built a couple or building one and
3 planning and building another. In the U.S. market,
4 what we're finding particularly now that natural gas
5 prices are going up, there is some new coal generation
6 going in. And you can see our analysis indicates it
7 will be around 6.5 cents which is sort of the same
8 cost as Wuskwatim. But if you put any kind of
9 increasing environmental regulation on it, the cost
10 will go up and that's why we've got it up to 9.7 cents
11 there. There are other technologies as well. They
12 are significantly more costly and they are not really
13 obviously part of the most attractive group.
14 So that sort of concludes looking at the
15 screening of our options.
16 Another aspect, we don't just look strictly at
17 the cost, we look at the range of environmental
18 issues. And this one is just going to focus on the
19 greenhouse gas one which is quite prominent. And what
20 we've done is again a life-cycle analysis over the
21 whole life of the facility taking account in the
22 construction what happens.
23 When you build a Hydro dam, you use concrete.
24 The manufacturer of the concrete produces greenhouse
25 gases. When you build wind turbines, you need steel.
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1 Steel creates greenhouse gases. No matter what you
2 do, you're going to have construction costs,
3 transportation costs, the fuel which creates
4 greenhouse gases.
5 So all of those are included. The
6 transmission, all options need transmission of some
7 kind or another. So the amount of right of way you
8 have to clear is included. If you have to build
9 roads, that's included.
10 In the case of thermal generation, these ones
11 here, the biggest emitter by far though is the
12 combustion of the fuel creates greenhouse gases. And
13 by far, this is the single biggest source of emissions
14 in the world is from fossil fuel combustion.
15 So if you look at this, you can see very
16 quickly Wuskwatim and wind produce much less
17 greenhouse gases than the others, particularly the
18 coal generation. And you can also see that Wuskwatim
19 and wind are not just very low but actually Wuskwatim
20 is around half of that of wind which is a bit of a
21 surprise to a lot of people. But Wuskwatim, there's
22 very little flooding and there is some emissions in
23 reservoirs. But actually for the kind of reservoirs
24 in the north, there is actually very low greenhouse
25 gases.
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1 And so this analysis was done by the Pembina
2 Institute for Appropriate Development and an
3 environmental organization in Alberta. And you can
4 see that Wuskwatim is less than wind but they are so
5 low that essentially we can just call them zero.
6 DSM also would have extremely low greenhouse
7 gases. Because of such a huge range of measures that
8 you'd undertake, we didn't ask the Pembina Institute
9 to look at the DSM. Without having an evaluation, we
10 fully expect that it will be essentially zero just
11 like the wind and Wuskwatim.
12 So there are other emissions we could look at
13 but I don't think we want to take the time to do that
14 today.
15 The overall conclusion of the preliminary
16 screening in terms of the economics and environmental
17 aspects is that the most attractive options available
18 to us in Manitoba are DSM, or PowerSmart, Wuskwatim
19 and wind as well as the supply side efficiency
20 improvements we talked about earlier.
21 I'd like to now move to the detailed system
22 economics to evaluate more fully the Wuskwatim
23 economics. Before we present the economic
24 evaluations, it will be useful to explain a little bit
25 of the economic methodology we used in non-technical
138
1 terms.
2 I'm an engineer by background and when I got
3 into this field, I had a bit of a hurdle and luckily
4 there was some economists around but I don't expect
5 there's too many economists in the audience here so I
6 think it would be useful for me to give a bit of a
7 non-technical explanation of one of the fundamental
8 criteria we have used in our economic evaluations.
9 And that is what is the internal rate of return or IRR
10 which we've used again and again.
11 The IRR is used to report the detailed sequence
12 economic evaluations. It includes all the costs we
13 talked about earlier in the levelized cost, the
14 capital cost, transmission cost, everything else. It
15 also includes all of the other system kind of costs
16 and benefits that I was referring to, what export
17 revenues do we get? What are the transmission limits?
18 What is the load growth like? What is our existing
19 system doing? What are the thermal costs? All of the
20 various factors are included in this more detailed set
21 of evaluations and wrapped into this IRR.
22 So what is the IRR? And I hope the economists
23 in the crowd and the financial people will forgive me,
24 but the IRR is the long-term average monetary return
25 to the project proponent from the investment. So what
139
1 we mean by that is that the proponent in any project
2 invests into the project. And then what return do we
3 get over the long run on the average from that
4 investment? You can say, okay, so that's what you're
5 getting and we expressed it in per cent return, annual
6 per cent return. But what do you do with that?
7 Well, the first thing we do is compare it to
8 the economic criteria for what is acceptable for a
9 project. So you calculate the IRR for a particular
10 project. You do your very best guess as to what will
11 the IRR over the long term be? And then you compare
12 it against your economic criteria or hurdle rate. And
13 this is based fundamentally on Manitoba Hydro's hurdle
14 rate factors and is being adopted by the project.
15 So what we develop is for a low to medium risk
16 project is that the IRR must be greater or equal to a
17 6 to 10 per cent real return. Okay. So what do we do
18 with that? A 6 to 10 per cent real return, what is
19 the significance of that? Particularly, I'm using the
20 word "real."
21 When economists speak about the real return,
22 what's referred to there is over and above inflation.
23 So this is what's higher than inflation and I'll
24 explain right away in this little calculation here.
25 First of all, let's start with the borrowing
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1 cost of the project. That's probably the best
2 starting point to look at. The Wuskwatim project on
3 its long-term debt, on its long-term borrowing 30 year
4 kind of money will be about 7 and a half per cent,
5 7.45 per cent. So that's what the cost of the project
6 of borrowing money would be. Now, that is the normal
7 way we think about borrowing costs. If you think
8 about your return on your mutual funds or Canadian
9 Savings Bonds or whatever. And that's what that would
10 compare to is the 7.45 per cent is the borrowing rate.
11 If you express it in real terms, if you take
12 inflation out of that or move inflation, the same rate
13 in real terms is 5.34 per cent, say 5.3 per cent. So
14 the real borrowing for the Wuskwatim project on the
15 markets would be 5.3 per cent. When we say that the
16 project has to have a 6 to 10 per cent IRR to be
17 acceptable, we're saying that like the 6 per cent
18 would be for a low risk project, it is higher than the
19 5.34. And what we're saying for a low risk project,
20 it would only have to meet a 6 per cent return and
21 there will be about a .7 per cent buffer between the
22 borrowing cost and the low risk return. And that
23 little bit of a buffer provides a profit and it
24 provides a buffer against risk scenarios.
25 But a project like Wuskwatim or wind, probably
141
1 a 6 per cent return isn't really good enough and
2 Manitoba Hydro wouldn't likely find that acceptable.
3 It would be higher up on the range although not all
4 the way to 10 per cent.
5 Let's just take 10 per cent as the other end of
6 the range. If you have a 10 per cent project, that's
7 about 4.7 per cent higher IRR than the borrowing rate.
8 And that gives you a very substantial buffer to have
9 risks happen. And there's still to be a profit above
10 the borrowing cost.
11 So that's just a basic explanation of what the
12 IRR is and I hope that helps in the understanding of
13 the information we're presenting.
14 So we'll start now with the actual evaluations
15 that we did and I'll start with the analysis we
16 provided in the original submission back in April
17 2003. In that submission, we did a number of analyses
18 and the first one is the advancement of Wuskwatim. We
19 have said in our base case that we need Wuskwatim in
20 2020 to meet Manitoba load requirements. Said, well,
21 we're going to propose to advance it from 2020 to 2009
22 to get the export benefits.
23 And when you just look at the advancement, we
24 did very detailed calculations including all those
25 factors we discussed earlier and we get an expected
142
1 return with our expected export prices. And all are
2 best guesses of 10.3 per cent IRR. Real. So above
3 inflation. So that's a very attractive return. And
4 given the relatively low risk of Wuskwatim, we felt
5 that's a very worthwhile project and we felt very
6 comfortable proceeding on that basis. Around 10 per
7 cent we find a very attractive return.
8 And if you look at those low and high export
9 price bounds that we showed earlier, it drops around 2
10 per cent. If you go to low, it goes up by around 2
11 per cent, it goes to high. It's more or less
12 balanced. And so no surprises and we drew comfort
13 from that because even at 8.5 per cent, you are still
14 getting a healthy profit on the project.
15 We provided in November an update to that
16 evaluation. A number of things happened. Everything
17 is changing all the time and so we incorporated all
18 the updates that were available in November and update
19 our analyses. There were a number of factors which
20 would tend to cause the IRR to reduce. One of them,
21 Wuskwatim got delayed from 2009 to 10. There were a
22 number of other factors. The transmission cost
23 estimate. We had a new estimate on that. It hadn't
24 been quite as advanced as the generation one earlier.
25 That was updated and it's slightly higher on the
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1 transmission side.
2 We had a number of other changes, for example,
3 probably as most of you are aware, the U.S./Canadian
4 exchange rate has been a major shift in the last
5 little while. And even the long-term forecasts. We
6 had all these forecasts, there will be a shift in the
7 exchange rate in the long term. We're now even
8 forecasting, it will be a little bit further and that
9 reduced the IRR Wuskwatim and any other export project
10 like wind.
11 And so there were a number of other factors as
12 well but they tended to drive slightly down the IRR.
13 There were some offsetting. The most important one is
14 that the load forecast. We experienced high load
15 forecast the last couple of years and we have a new
16 load forecast which is significantly higher than it
17 was a year ago. So when you put all these puts and
18 takes together, the IRR is now 10.0 per cent instead
19 of 10.3. It's still around 10 per cent. Essentially
20 not much change at all. So Wuskwatim is still very
21 attractive.
22 So moving onto sensitivities. We have to do
23 risk analyses. So we've done many different risk
24 analyses. And we won't have time to go into them in a
25 lot of detail but I'll start off with first of all in
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1 the original submission, I had mentioned we looked at
2 the advancement of Wuskwatim. We also looked at what
3 if you hadn't put Wuskwatim in in 2020 for domestic
4 load. What if you never built Wuskwatim in the base
5 case and what if you now built Wuskwatim forever for
6 export? So that's a totally different way to look at
7 it.
8 We looked at that and we did all of the same
9 detailed sequence evaluations and what we got is
10 somewhat coincidental. It is exactly the same IRR.
11 You wouldn't normally expect to see them exactly the
12 same but it turned out they were. But that was partly
13 due to rounding.
14 So the long-term economics was 10.3 our best
15 guess. We did low and high. It was also plus/minus 2
16 per cent on the IRR. No surprise there. We also
17 looked at the individual expected price forecast and
18 they fell within the low and the high which is more or
19 less what you'd expect. So no surprises and we drew
20 comfort from that.
21 And then we did a number of sensitivities and
22 maybe let's go through those briefly. I mentioned
23 capital cost is a possibility. We've done lots of
24 work to make sure we've got a good capital cost
25 estimate. But what if the capital cost goes up 15 per
145
1 cent? $95 million basic increase in cost. Well, the
2 IRR would drop around a per cent. On the other hand,
3 there is an equal likelihood of a capital cost
4 decreasing like they did in limestone. And well, the
5 cost would -- the IRR would increase by 1.4 per cent.
6 So they are more or less the same, plus or minus 1 per
7 cent.
8 What if the Hydro plant, what if we had less
9 water available to Wuskwatim and we did a sensitivity
10 where we only reduced the flows on the Burntwood River
11 not the rest of our system. That's more stringent to
12 Wuskwatim because if the whole system was lower, then
13 the value of Wuskwatim becomes more important. But we
14 did a sensitivity if only the Burntwood and a 10 per
15 cent reduction on the Burntwood would cause only 0.5,
16 half a per cent drop in IRR, more significant but it's
17 not all that major and still, the project very
18 profitable.
19 There are a whole bunch of other sensitivities
20 one could do. We did a 300 megawatt plus or minus on
21 the tie line. We did sensitivities there. It could
22 also be thought of more or less DSM, more or less
23 supply. With a whole bunch of differences in our
24 future would do is impact how much room there is on
25 the tie line. When you look at the 300 megawatts
146
1 either way, very small impact on the IRR.
2 So we also looked at, and this is back in the
3 original submission, what if we delayed Wuskwatim with
4 all our information then one year from 2009 to 10 and
5 we said there will be a significant dollar loss to the
6 corporation in, I can't remember, 25 million or
7 something in that order, but the IRR would only drop
8 0.1 per cent? And the reason that there is a big
9 dollar loss but the IRR doesn't change much is when
10 you've -- if you haven't got a good investment but you
11 have to wait to make it, then there's a loss even from
12 doing that. So that's part of the explanation there.
13 What we were talking about so far, independent
14 sensitivities. Nobody knows exactly how the future is
15 going to unfold so we do sensitivities. And the
16 general trend is that various factors will offset each
17 other. You'll have puts and takes, pluses and
18 minuses. But what if a really bad scenario happened
19 that had a very low likelihood that a number of things
20 all went bad and nothing went good to offset? So that
21 is a very low likelihood but it is possible. So we
22 looked at an extreme downside combination of what if
23 we had the low export prices? What if we had the
24 capital cost go up? And what if the flow on the
25 Burntwood was lower permanently by almost 10 per cent?
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1 We say 10 per cent, it's actually just a tinge less,
2 but a permanent reduction in the water available to
3 Wuskwatim? Now there was a substantial drop in the
4 IRR, 3.7 per cent, but the IRR is still 6.6 per cent.
5 Our borrowing cost, real borrowing cost was 5.34
6 you'll recall. So we still have a 1.3 per cent profit
7 on Wuskwatim even in this very bad scenario.
8 Another comparison you can draw, and this is
9 something called the weighted average cost to capital
10 which I don't think I can go into explanation right
11 now. The weighted average cost to capital for
12 Wuskwatim including an imputed return on equity is
13 around 6 per cent. So here, you've got .6 per cent
14 higher IRRs than our cost to capital. Still a
15 profitable project.
16 I should add an extreme upside sensitivity
17 could have been done and I haven't showed that here.
18 But you could have an equal likelihood of an extreme
19 upside happening. And Lynn will present one later on,
20 too.
21 We looked at the advancement I had mentioned
22 earlier. This is that same information. We looked at
23 the low and the high. We looked at different export
24 rate scenarios. I won't take the time here today. We
25 looked at other sensitivities here as well. And we
148
1 looked at what if you, in the original submission,
2 added 250 megawatts of wind? The impact from the IRR
3 is 0.05 per cent, virtually negligible. What if you
4 doubled the amount of DSM you were planning to do in
5 the future? The same. Nearly negligible, 0.05 per
6 cent in the IRR. So Wuskwatim is virtually
7 unaffected. What if you add both of them together, .1
8 per cent? Still very little effect.
9 However, now we'll go to something else which
10 is a little bit more significant. All of our analyses
11 that I've been talking about so far will look at the
12 full range of flows that may happen. When we do the
13 expected, we know that in any particular year, you may
14 have a drought or you may have a flood or you may have
15 a middle kind of year. In all of our expected
16 analyses, we take that full range of flow
17 possibilities. We do an evaluation for each one and
18 then we add them all together. We average them and
19 that gives our expected.
20 But in this one, what we've done is a
21 sensitivity. We said what if we had the worst system
22 drought happen just as Wuskwatim is coming on line?
23 Last year at the P.U.B. status update hearings, there
24 was an extensive discussion of the 1987 to 1992
25 drought and that's what we've utilized here. So we
149
1 said what if Wuskwatim comes in and just as Wuskwatim
2 comes in, we have this extreme system drought happen?
3 Well, the IRR does drop significantly, .6 per cent,
4 but it's not that big of a drop. 9.7 per cent higher
5 is still a very profitable project.
6 We did a few other sensitivities. The one I
7 think I'll just focus on before moving on is medium
8 low load growth, this one here. The medium low load
9 growth is what if the load forecast figuring is wrong?
10 What if the load in the future is going to be less
11 than we were predicting? What if TREE was right? And
12 we can do a lot more DSM and/or our load forecast was
13 too high.
14 So we took our medium low load forecast and did
15 an analysis and still left the DSM in by the way and
16 we got the IRR only dropped 0.3 per cent? Again, very
17 small impact. So if we have a significantly lower
18 load forecast and/or much more DSM, five times more
19 DSM, we have the IRR still only drop a very little
20 amount. Or what if you did a whole bunch of more
21 wind, some sort of combination of these?
22 So moving on, speaking about wind.
23 THE CHAIRMAN: Can I briefly interrupt you?
24 We're speaking about sensitivity and wind. I've
25 become very sensitive to the lack of it here. I
150
1 wonder if we can stand for 30 seconds.
2
3 (BRIEF RECESS)
4
5 MR. WOJCZYNSKI: I actually don't have very
6 much more. So we're just drawing to a close here.
7 Speaking of wind, in the submissions and
8 interrogatories, contrary to what some participants
9 have suggested, we did much work to consider the
10 economics of Wuskwatim in relation to alternatives,
11 including wind and DSM. We did this by demonstrating
12 that Wuskwatim continues to be economic when tested in
13 sensitivities with the maximum amount of wind and/or
14 DSM that was reasonably likely to be false and
15 economic -- sorry, reasonably likely to be feasible
16 and economic. It wasn't a Freudian slip either.
17 Now how do we do this? First of all, we
18 always, when doing the IRR or the other sequence
19 evaluations, we take a case without Wuskwatim and a
20 case with Wuskwatim. And so in a case without
21 Wuskwatim, we said is we don't know how much wind or
22 DSM ultimately will be economic in the future. We
23 don't have that with great certainty but we do have a
24 sense of what the upper end of the likely range is.
25 And we say let's put in that maximum amount that
151
1 likely will be economic and feasible. And then when
2 we put that in, then we add in Wuskwatim and we see
3 the economics. And we determine, okay, if Wuskwatim
4 is then economic, then -- okay, so Wuskwatim is
5 economic, you put in all the economic wind or DSM so
6 they are both economic but you couldn't do more wind
7 or DSM because it isn't economic.
8 And our commitment in Manitoba Hydro is we're
9 going to develop all the economic and feasible wind in
10 DSM. And so as long as you check that when you put in
11 all that's economic and feasible and Wuskwatim is
12 still economic, then what Wuskwatim will be competing
13 with is uneconomic wind or uneconomic DSM. And so we
14 have been assessing the alternatives to Wuskwatim in
15 that regard. And that was the means of doing that.
16 So we believe that the work we had done is
17 conclusive and sufficient to draw conclusions about
18 the alternatives. But of course, that's why we have
19 this hearing process to test that. However, in
20 response to concerns expressed by some participants
21 that we should have compared an exact amount of wind
22 versus an exact amount of Hydro, we did do a
23 comparison of that. And we compared in this case wind
24 to 450 megawatts.
25 The 450 megawatts of wind gives the same amount
152
1 of energy as Wuskwatim and we took our updated
2 information and we did a long-term economic evaluation
3 comparison of wind and Wuskwatim and we looked at
4 putting in 450 megawatts of wind in 2009 versus
5 putting in the Wuskwatim and we did our IRR. Now,
6 this is using the same assumptions we used in the
7 submission. We used updated capital costs for the
8 wind but we used the same other assumptions to be
9 consistent with the original submission. And what we
10 got was a 10.3 per cent IRR for Wuskwatim and we got a
11 6.1 per cent IRR for the wind for 2009.
12 Now, that assumes that there is no federal
13 subsidy. If there was a federal subsidy, the wind IRR
14 would have increased by around 8 per cent, something
15 in that order. But it still would have been clearly a
16 lot less economic than Wuskwatim. And also, I need to
17 point out that we did assume lower capital cost for
18 the wind because we're assuming that capital costs
19 were reduced 16 per cent into the future to reach
20 2009. We don't know for sure if that will happen but
21 our consultants tell us that it likely will. And
22 we've done our best guess at what we call the firming
23 cost, the integration cost in the system when you take
24 the wind and you want to sell it into a long-term firm
25 market, the cost of doing that on our system. So
153
1 we've taken all our best information and that's our
2 best guess right now.
3 MR. SARGEANT: Can I just ask a question for
4 clarification? I think I know the answer but you're
5 talking about 450 megawatts of wind and we're talking
6 about 200 megawatts of Wuskwatim. Is it because of
7 the inefficiencies of wind or?
8 MR. WOJCZYNSKI: It's not inefficiency. The
9 basic explanation is that the main product that we
10 need to look at from either Wuskwatim or wind is not
11 the capacity but the energy output. You can have a
12 200 megawatt -- let me use the wind. That's the
13 easiest example.
14 Let's say you have 450 megawatts of wind. You
15 can have enough wind available so that 20 per cent of
16 the time you could produce electricity or energy. You
17 can have the same 450 megawatt wind facility but let's
18 say you've got a much better wind resource. So
19 instead of 20 or 25 per cent of the time producing
20 energy, it was 40 or 45 per cent of the time. Even if
21 I produce double the amount of energy from the same
22 facility. So it's the amount of energy that's more
23 important.
24 So what we did is Wuskwatim, we know its energy
25 output very well from all the work we've done. And it
154
1 has something in the order of over 80 per cent
2 capacity factor. Capacity factor is how much -- you
3 take the full capacity and if you take the energy, how
4 much of the year would it have to run to get that
5 energy. That's over 80 per cent.
6 Wind has, our best guess, our best information
7 that the wind resource in Manitoba, the best wind
8 resource in Manitoba is around probably 35 per cent
9 capacity factor. So you only produce energy 35 per
10 cent of the time. So we made the wind facility bigger
11 so that it would produce the same amount of energy as
12 Wuskwatim. So we compare the two and we use the
13 updated assumptions and we say that Wuskwatim is more
14 economic.
15 So moving on to the conclusions and that pretty
16 well just about wraps up. We've got one more overhead
17 to go through before the conclusions. And that is all
18 of the economic analyses we've been talking about so
19 far deals with the monetary benefits to the
20 proponents. That's the joint project owned by NCN and
21 Manitoba Hydro. There is another important
22 perspective and that's the social benefit. That is
23 from a society as a whole in Manitoba.
24 And so what we had, and this is there's a
25 standard set of techniques for doing this, what we had
155
1 is an expert consultant take our analysis. He started
2 with ours but then he made adjustments to a social
3 point of view. And that was by this report by the way
4 that details this was provided in our supplemental
5 filing last year. And there were adjustments made for
6 taxes, wage benefits, government, other government
7 costs, environmental and social costs were considered.
8 And let me just give you a basic simple example of
9 what happens.
10 In the project, the project pays the provincial
11 government capital taxes and water rentals and they
12 are significant. And that's a cost to the project and
13 we have included it in our evaluation as a cost to our
14 project. But that's not a fee for service. We're not
15 getting anything in return in terms of a fee. No one
16 is giving us concrete or service per se. So that's
17 considered a transfer to the government and a transfer
18 within society and not a cost to society. So that's
19 taken out of the analysis.
20 But there are some other costs that the
21 proponent doesn't experience at our cost. And the
22 easiest example is we've got this innovated
23 pre-project training program and we at Manitoba Hydro
24 and the project with NCN are co-funders of that
25 project with the Provincial and Federal Governments.
156
1 But our project doesn't see the cost the Feds and the
2 Province are putting in. It actually is a cost to the
3 society. That cost is put back in.
4 There are other adjustments that are explained
5 in the report. But when you take all of those and do
6 the adjustments and you use the social discount rate,
7 not what the developer would use as the hurdle rate,
8 but the social discount rate, the current thinking of
9 what the social discount rate should be according to
10 our consultant is a 6 per cent real discount rate and
11 that gave us benefits of -- the exact number is not
12 critical here -- but in the order of $267 million,
13 benefits to society in Manitoba for advancing
14 Wuskwatim.
15 Anyways, that's a very significant amount of
16 money and that's, in effect, larger than what we, as
17 the project proponents, would see. So the social
18 benefit is quite large. There is some thinking maybe
19 6 per cent social discount rates should really maybe
20 be 8. So he did a sensitivity and it's still very
21 large at $151 million.
22 So not shown here as well but provided in the
23 rebuttal that we filed on Friday, social benefit cost
24 evaluation was also undertaken to compare Wuskwatim
25 with 450 megawatts of wind. The study concluded that
157
1 Wuskwatim was more attractive than expanding the wind
2 not just for the economic perspective of the
3 proponents but even more so from a social perspective.
4 And just the last comment here is that
5 particularly in terms of Wuskwatim. So what the
6 social benefit cost evaluation shows is that the
7 project will not only benefit Manitoba Hydro and NCN
8 but also benefit workers because of employment and
9 income. Taxpayers because of significant water
10 rentals and capital tax. And the environment because
11 of displacing emission causing generation.
12 So to wrap up the conclusions for the economic
13 and the screening part of the presentation, the
14 internal rate of return for Wuskwatim of 10 per cent
15 real is a very attractive investment given the
16 relatively low level of risk. We did extensive
17 sensitivities, demonstrated that the Wuskwatim
18 economics are robust for all the reasonable risks and
19 verifying and confirming that this is relatively a low
20 risk project.
21 And lastly, we did the sensitivities as I
22 indicated and that even if you had much higher DSM,
23 like five times the DSM and/or a much higher wind
24 generation, the Wuskwatim IRR would not reduce
25 significantly. And if we did find that that much wind
158
1 and/or DSM was economic and viable, that we could
2 proceed with those legs as well.
3 Thank you. And now I'd like to turn it over to
4 Lynn Wray, Division Manager of Treasury and Business
5 Analysis who will present the financial aspects of the
6 evaluation.
7 MS. WRAY: Thank you. Ed began his
8 presentation by recalling the terms of reference to
9 this aspect of the review and the first part that he
10 has addressed is the economic viability of Wuskwatim.
11 The part that I will address is where we were asked to
12 look at the effects, if any, of Wuskwatim proposals on
13 Manitoba Hydro customer rates and the corporation's
14 financial stability.
15 The financial analysis, unlike the economic
16 project analysis, also includes the effects of the
17 arrangements with NCN. In other words, it's from a
18 Manitoba Hydro perspective as one of the participants
19 urged that we do.
20 The focus of the financial analysis rather than
21 looking at internal rates of return provides
22 projections of Manitoba Hydro's future financial
23 statements with and without the Wuskwatim advancement.
24 In this way, you can see the effects of the project's
25 costs and revenues on Manitoba Hydro's debt position
159
1 and income statement and financing requirements.
2 We've also calculated the potential effect on customer
3 rates if all of the financial benefits from the
4 project were steered back to electricity customers.
5 And finally, it's important to note, as I just
6 mentioned, this financial analysis fully includes the
7 effect of Hydro's transactions with the partnership
8 and its loans to NCN. This is a difference from the
9 economic evaluations discussed by Ed which analyzed
10 the cash flows from a total project perspective. The
11 two types of analyses we believe are complimentary.
12 This is a schematic of the financial
13 arrangements between Manitoba Hydro and NCN as laid
14 out in the summary of understandings which was filed
15 as part of I believe the first round interrogatories.
16 The numbers are the same as those provided in the
17 summary of understandings and you'll see at the top of
18 the overhead, we are assuming that the cost at
19 inservice at 2009 in this case is at $756 million for
20 the generating station.
21 Now recall that the partnership is for the
22 generating station and the transmission facilities are
23 outside of the partnership that's financed by Manitoba
24 Hydro.
25 The two partners essentially have 33 per cent
160
1 and 67 per cent shares in the partnership. Manitoba
2 Hydro, as you'll see, is the general partner. There's
3 a very small 0.1 per cent share there with the balance
4 making up the balance of the 67 per cent. The general
5 partner is, in essence, Manitoba Hydro in its role of
6 operating the plant.
7 In terms of a debt equity ratio, the
8 partnership will finance the $756 million project, 75
9 per cent by debt, 25 per cent by equity which works
10 out to the numbers that you see here. And NCN we are
11 assuming will make a cash investment of just over $20
12 million and will borrow its remaining equity
13 investment of $41.5 million from Manitoba Hydro and
14 Manitoba Hydro will lend NCN that equity money at a
15 premium over Hydro's cost of borrowing. And this one
16 will be repaid from a part of NCN's dividend proceeds
17 from the project.
18 Manitoba Hydro will be providing a project
19 itself with financing for the 75 per cent debt share
20 and that will be at Manitoba Hydro's cost of
21 borrowing.
22 The partnership will also reimburse Manitoba
23 Hydro for the use of transmission, for operating the
24 plant, for marketing the energy and for any other
25 expenses incurred as a result of the project going
161
1 forward.
2 Turning to the way that we did the financial
3 analysis. The costs that I've just mentioned will be
4 financed by Manitoba Hydro with the exception of the
5 $20.5 million or so that will come from NCN and that
6 will then be repaid over the period of the period of
7 the project through the project's net returns and also
8 from interest on loans which are made to NCN.
9 We basically did the financial analysis two
10 ways. We looked at it from the point of view first of
11 all of assuming that the rates would be the same as in
12 the base case. Now the base case in this case is
13 where Wuskwatim comes into service in 2020 rather than
14 being advanced. And we did a set of financial
15 projections that extended our forecast out to that
16 period. Figured out roughly what rate increases would
17 be and we determined that there would be less than the
18 rate of inflation. We then overlaid Wuskwatim
19 advancement to 2009 and held rate increases the same
20 throughout that period and determined in that way what
21 the impact would be on Manitoba Hydro's financial
22 position, its income statement, its balance sheet and
23 so forth.
24 The other way we looked at it which is an
25 alternative point of view is to assume that Wuskwatim
162
1 coming in at 2009 will get you to the same financial
2 results if Wuskwatim were to come in at 2020 and then
3 the change occurs in the rate increases that will be
4 required. And what that allows you to do is to
5 determine the rate benefits that will accrue from the
6 project.
7 So the first overhead is looking at it from the
8 point of view of holding rate increases the same and
9 seeing what that would do to Manitoba Hydro's net
10 income. And you can see that there is a very
11 significant positive impact on net income over the
12 period up to 2035 which is where we did our financial
13 analysis. Obviously the useful life of the plant
14 would go on long beyond that. And you can see that by
15 the time you get up to 2035, you're seeing increases
16 of close to $100 million in Manitoba Hydro's net
17 income if you have low export prices and over $200
18 million if you have high export prices. Those are
19 very significant numbers in the context of base case
20 types of net income in the sort of hundred million
21 dollar range.
22 You can also see that even at the front end
23 where you would expect there to be less of a
24 beneficial effect because you've got your costs up
25 front and you don't get your revenues right away
163
1 because the units are coming into service one by one,
2 you can see that there's only a couple of years there
3 where we're not actually adding to net income and that
4 the effect is very very small.
5 Now, if you were to take the additional net
6 income that I showed you in the previous draft and use
7 it to, in effect, pay down Manitoba Hydro's debt. Or
8 another way of looking at it is just building up our
9 retained earnings, what this graph shows is the change
10 in Manitoba Hydro's debt equity ratio. In very simple
11 terms, a debt ratio is the ratio of total debt to
12 total assets.
13 The actual calculation is a bit more
14 complicated than that but that gives you the idea.
15 And what we wanted to do is two things. We wanted to
16 see over the longer term what this would do in terms
17 of benefit. And as you can see, that's a pretty
18 substantial benefit, those $100 to $200 million in
19 additional income that you saw in the preceding graph
20 have managed to get our debt equity -- rather our
21 debt ratio down by between 7 and 18 per cent by 2035.
22 So we wanted to see what the benefits would be
23 if those profits were retained in Manitoba Hydro. But
24 we also wanted to test a particular risk aspect of the
25 financial analysis and that's this period here which
164
1 is at the front end.
2 You'll recall that I said that when you get the
3 front end of any project, you have your costs up
4 front, you have your revenues coming in later. So the
5 real question is is it going to cause a very abrupt
6 shift in the corporation's financial position? And we
7 wanted to see how significant that would be. And what
8 we found is that the highest point here in terms of
9 the change that's happening in our debt ratio is 1.6
10 per cent. So whatever our debt ratio is at that point
11 in time, 1.6 per cent is all that would be added to it
12 as a result of Wuskwatim coming on. And then you can
13 see that by as early as 2015, which is about six years
14 after the project starts or 2017 if you have low
15 prices, which is eight years after the project starts,
16 then you're back to where you were on your debt ratio.
17 And this is the point if you choose where you can flow
18 those benefits to rate payers you're back in the same
19 financial position as you were when you started and
20 this area under the curve here could be flowed to rate
21 payers. And this is a decision that would be
22 obviously brought before the Public Utilities Board.
23 Now, this overhead looks at the other type of
24 analysis which is where you assume that instead of
25 your improving your debt ratio, improving your
165
1 financial net income, you've got now to a break-even
2 point where you would have been even if you hadn't
3 brought in Wuskwatim early, what would that do
4 potentially for rate payers? And you can see the
5 shaded area shows the amount of rate savings that are
6 available.
7 What we're looking at here are cumulative
8 benefits in 2002 dollars. And you can see it starts,
9 as I mentioned, six years to eight years after the
10 project starts. And that by the end of the period
11 here, you have very significant amounts going to rate
12 payers. Even under the low price range, there's
13 potential for about $87 million in rate savings.
14 Just to put this in context, the range that
15 we're looking at here in the dollars of the day once
16 the project is up and running is somewhere between $10
17 and $30 million per year ongoing in rate savings for
18 customers.
19 Ed went through a number of risk sensitivities
20 on the economic evaluations. For the most part, we
21 can rely on those directionally when we look at the
22 financial impacts. But we also wanted to do one or
23 two key risks just again to test those up-front
24 impacts on the corporation's financial stability and
25 again to look at the type of range of changes that
166
1 might make in rate benefits.
2 So this column here, we're looking at that
3 little bump, up-front bump in the debt ratio and the
4 base case we just talked about, 1.6 per cent addition
5 to the debt ratio, even if you have low export prices,
6 that isn't going to change. And the reason is that
7 you are really at the front end of the project and
8 you're not terribly sensitive to revenues at that
9 point. It's more of the cost side.
10 So we decided we would look at the cost side
11 and we assumed a 15 per cent capital cost increase
12 which is somewhere in the order of $127 million
13 inservice to the cost of the project. And what that
14 did was it adds .5 per cent to the 1.6 per cent. We
15 then looked at the circumstance Ed talked about which
16 is what if you had the worst drought on record
17 coinciding with the start-up of the plant? I don't
18 think this is particularly likely but we wanted to
19 test it out because it is something that is of concern
20 obviously to rate payers. And the addition there is
21 .3 per cent to the 1.6 per cent.
22 So if you were to have a combination of the low
23 export prices, the 15 per cent capital cost increase
24 and an extreme drought at the start-up of the plant,
25 adding all those up, get 2.4 per cent. What we said
167
1 here is it's going to be less than 2.4 per cent
2 because if you have drought occurring with low export
3 prices, that means low import prices too. So you're
4 going to get some benefit when you're importing to
5 help yourself out with the drought. So the 2.4 is
6 actually overstated.
7 Now if you look at the other column which is
8 once you've got past this temporary hump and you're
9 into the benefits that are potentially available for
10 rate payers, you add up all the adverse circumstances
11 and you still have $61 million in 2002 dollars
12 available potentially as rate benefits. That would
13 translate into something like $8 million a year
14 ongoing to consumers. So even under a very adverse
15 combination, we think there's significant benefits
16 there for consumers.
17 We also, in a very limited way, took a look at
18 our high case. And this is not the highest case there
19 could be because we didn't have available to us the
20 highest water flow run that would be an analogy to the
21 lowest drought case. But we did have the high export
22 prices. And again, it doesn't -- it's insensitive at
23 the front end to that bump in the debt ratio because
24 the revenues haven't really got going yet. But the
25 capital cost decrease actually of course reduces the
168
1 1.6 per cent so that you're looking at, in that
2 favourable combination, an increase to your debt ratio
3 of 1.4 per cent. And we believe that would be better
4 if you were to add favourable flows to that.
5 Over on the rate side, adding those two factors
6 together, you're looking at $241 million in 2002
7 dollars to rate payers which is in excess of $30
8 million a year ongoing in terms of potential rate
9 savings.
10 So in conclusion, having done the financial
11 analysis from a Manitoba Hydro perspective, we've come
12 to the conclusion and feel confident that there will
13 be no adverse effects on Manitoba Hydro's financial
14 stability as a result of investing in Wuskwatim and
15 advancing it. The impacts in the debt ratio net
16 income are very modest as you've seen. It won't as a
17 consequence cause any additional rate increases.
18 There is some significant potential for
19 improved financial performance going forward once
20 those few early years, we've got over that and/or
21 there could be rate savings beginning as early as six
22 years after the project start-up and continuing
23 thereafter every year.
24 Mr. Chair, this concludes the end fact part of
25 the presentation.
169
1 MR. WOJCZYNSKI: There's just one last comment
2 I wanted to make. I realize with the question that
3 Mr. Sargeant posed to me, there may be a
4 misunderstanding or I may have put forward an
5 explanation in the 450 megawatts in a way that might
6 lead you think that the cost of the wind and IRR is
7 worse than it might otherwise be than if we used 200
8 megawatts. If we had done exactly the same kind of
9 analysis for 200 megawatts of wind even though it had
10 much less energy than Wuskwatim but the same capacity,
11 we would have had more or less the same kind of
12 result.
13 So the fact that we used 450 megawatt wind
14 facility did not significantly alter the IRR. That
15 was not the reason why the IRR is so much lower than
16 the Wuskwatim one. In case there was a misimpression
17 from what I was saying.
18 MR. SARGEANT: No. Thank you, Mr. Wojczynski.
19 I understood what you were getting at. That to get
20 the output from wind, you needed a higher input than,
21 if I can use non-technical terms, than for water.
22 Thank you.
23 MR. WOJCZYNSKI: That concludes our end fact.
24 We do have the EIS presentation but, Mr. Chair, we're
25 at your hands but I have a hunch that you may want to
170
1 have a bigger wind break.
2 THE CHAIRMAN: You had a good hunch. I think
3 it's about time we take it at this point in time. If
4 we can take a 15 minute break.
5
6 (PROCEEDINGS RECESSED AT 2:43 P.M. AND
7 RECONVENED AT 3:00 P.M.)
8
9
10 MR. LECUYER: We might be fewer in
11 numbers to get it started, but hopefully others
12 will show up in a moment. The ones that want to
13 hear you are here. So, take it away.
14 MR. THOMAS: Thank you, Mr. Chairman.
15 The people that are going to be doing the
16 Environmental Impact Assessment Statement are here
17 with me, beside me. Cam Osler, he is with
18 InterGroup. George Rempel is with TetrES. Stuart
19 Davies is with North/South Consultants and Dave
20 Hicks is with N.D. Lea. Of course, I am with
21 Chief and Council of the Nisichawayasihk Cree
22 Nation.
23 Prior to the actual presentation on the
24 screen, I would just like to make some comments
25 that I would like to have included as part of
171
1 the record.
2 Our lands and waters and resources are an
3 integral part of who we are as Nisichawayasihk
4 Cree Nation people. Over many years we have
5 lived in harmony with our environment and
6 adapted to changing situations. This has given
7 us the ability to survive and thrive in the
8 rugged wilderness of Northern Manitoba. Our
9 greatest challenge has been to adapt to the
10 rapidly changing world of the twentieth and
11 twenty-first centuries. Today we are
12 searching ways to integrate modern ways,
13 technologies and opportunities into our society
14 while preserving our identity and our
15 traditional way of life that we value so
16 highly.
17 Wuskwatim represents just such an
18 opportunity, but based on our past experience
19 with the Churchill River Diversion project,
20 which disrupted our traditional lifestyles, we
21 have been naturally cautious about proceeding
22 with Wuskwatim. Our key priority has been to
23 ensure that any development has minimal impact
24 on our land and waters, while maximizing
25 benefits.
172
1 One way to do this is to integrate our
2 traditional knowledge into the assessment
3 process, and we have been able to do that. A
4 landmark of the Environmental Impact Assessment
5 process for Wuskwatim has been the use of local
6 and traditional knowledge for the first time in
7 assessing the impact of a hydroelectric
8 generating and transmission project in
9 Manitoba. This information was in addition to
10 the scientific information that is usually at
11 the core of the environmental impact
12 statements.
13 As part of the process, NCN members shared
14 their local area traditional knowledge through
15 their own traditional knowledge program. This
16 program includes interviews with resource
17 harvesters, elders, and others. Traditional
18 knowledge was also shared by the many NCN
19 members who worked with study scientists in the
20 field, programs that considered the physical
21 land and water resources, heritage resources,
22 and people in the local area that could
23 potentially be affected by the project.
24 In addition, we took into consideration
25 some the sacred sites that we have on our
173
1 traditional territory and ensured that there
2 was not going to be any impact on those sacred
3 sites.
4 All the studies were reviewed with NCN
5 through the future development team and several
6 community open houses. They were also shared
7 with other communities.
8 Using traditional knowledge provides
9 significant advantages. First, it draws on the
10 intimate knowledge of our land and resources by
11 our own people, who were able to provide
12 long-term and detailed information that may be
13 missed by shorter term scientific studies.
14 Second, it allows us to be part of a
15 decision-making process in ensuring that the
16 project will have as small an impact as
17 possible. A good example is the route of the
18 proposed access road to the Wuskwatim site.
19 Traditional knowledge played a role in assuring
20 that sensitive sights were bypassed.
21 Thirdly, when our own people see that
22 their knowledge and wisdom is respected and
23 used, they will be much more confident in and
24 satisfied with the final result, and hence be
25 supportive of the Wuskwatim project. They are
174
1 part of the solution.
2 Traditional knowledge is essential to our
3 people. While there are many different
4 definitions, we have our own view of what
5 traditional knowledge is and how it should be
6 collected and used. To us traditional
7 knowledge is, but it is not limited to, the
8 observation and experience of the land,
9 Aboriginal law regarding how the environment
10 works, the understanding of NCN's place in the
11 world, how things are connected, including
12 spirituality and relationship to the land, the
13 goals and aspirations of NCN, the outlook on
14 the proposed projects, concerns that we may
15 have, and the acceptability of the projects to
16 us, NCN's identity and culture, the stewardship
17 of the land, a base for natural resource
18 management.
19 We feel that traditional knowledge comes
20 from elders and others that are both
21 traditional and also living in a modern way of
22 life. We have applied our traditional
23 knowledge to the Wuskwatim project throughout
24 the whole process of planning for the project,
25 assessing the environmental effects that it may
175
1 have, and drawing conclusions that you have
2 seen in the EIS documents.
3 Our extensive involvement in the project
4 has meant that traditional knowledge has played
5 an important role in defining the project as is
6 currently proposed and how those effects will
7 be managed and monitored. Traditional
8 knowledge has played many essential roles in
9 planning for the project and in carrying out
10 the environmental studies.
11 Selecting the low head design that
12 will cause less than one half square kilometer of
13 flooding and reduce effects on the environment
14 compared to high head options.
15 Also for selecting locations for the
16 road, the camp, and transmission lines within our
17 resource management area that will minimize
18 effects on the environment and on NCN.
19 Providing an understanding at the
20 beginning of the environmental assessment process
21 of what should be studied. This was important in
22 setting the scope of the assessment and guided the
23 studies that were done.
24 Adding in a major way to the understanding
25 of the baseline conditions. In other words,
176
1 how things were in the past, how they are
2 today, and how they may change in the future
3 without the project. This includes
4 understanding things that have affected us and
5 our environment over time from the Natural
6 Resource Transfer Act through to the Churchill
7 River Diversion project.
8 Selecting valued environmental components
9 for detailed study, such as Woodland caribou,
10 and helping with an understanding of how those
11 VEC's are connected to the whole environment.
12 Contributing, along with science, to
13 conclusions about the effects that the project
14 may have. Where results did not agree, both
15 were included in the EIS reports.
16 Helping to identify things that should be
17 done to manage effects; for example, the need
18 for ceremonies at the Wuskwatim site before any
19 changes begin.
20 Helping to monitor where monitoring will
21 be needed. For example, monitoring water
22 levels at Wuskwatim lake in the vicinity of
23 important cultural sites.
24 Along with Manitoba Hydro, we have also
25 learned about the concerns and ideas of other
177
1 Aboriginal communities through the public
2 involvement program that has been implemented
3 since the fall of 2001. Concerns raised by
4 others through this process were included in
5 the assessment process. For example, in
6 response to concerns raised by a trapper in the
7 Wabowden register trapline district, Manitoba
8 Hydro examined whether an underground river
9 could link Wuskwatim Lake, or more broadly to
10 the Churchill River Diversion system, with the
11 headwaters of Ferguson Creek and therefore be
12 responsible for increased water levels on
13 Ferguson Creek at times.
14 Also, TCN's concerns led to commitment to
15 extend long-term quality monitoring from
16 Birchtree Lake to Stephens Lake.
17 So, we have made sure that because of our
18 involvement as NCN people that the
19 Environmental Impact Assessment that has been
20 done includes our traditional knowledge, as
21 well as western scientific knowledge components
22 to the whole thing.
23 So with that having been read into the
24 record, Mr. Chairman, I would like to then hand
25 over to Cam Osler who will do some of the
178
1 presentations, and each one of my environmental
2 team here will do their portion of the
3 presentation. Thank you.
4 Cam.
5 MR. OSLER: Okay. I will deal with the review of
6 the Environmental Impact Statements, documents
7 submitted for review by this Commission.
8 This work was put together by a team of
9 people who worked jointly for both NCN and
10 Manitoba Hydro, and they will speak to you on
11 the different parts of it today.
12 The integrated approach is the first part
13 I will deal with, looking at the overall
14 integrated approach adopted for this
15 assessment. There will be a second part that
16 will follow that and will look at each one of
17 the environmental components, parts of the
18 environment that were looked at as part of this
19 process of doing this assessment.
20 When I am looking at the integrated
21 approach, I will focus on certain topics; the
22 regulatory review process itself, the
23 assessment approach taken in general, the
24 public consultation and involvement approach,
25 and the overview of the EIS studies in general.
179
1 I will focus in the end on some cumulative
2 effects issues because they have surfaced in
3 the question and answer process and they are
4 common issues to all of the assessments that
5 will be discussed.
6 Starting with the regulatory review
7 process, it is ongoing and cooperative between
8 the two governments, Manitoba and Canada, as
9 Mr. Strachan pointed out earlier today. The
10 Wuskwatim project requires Federal and
11 Provincial regulatory environmental approvals.
12 The generation and transmission projects are
13 viewed in these processes as two separate
14 projects for licensing applications and review.
15 The regulatory and the public review has
16 continued since the EIS filings were made in
17 April of 2003, and extends beyond the CEC
18 hearing process itself.
19 Now, the CEC knows it has continued since
20 the filings, because you have had processes
21 involving motions hearings and interrogatories
22 processes of the CEC. As noted earlier today,
23 the Provincial government and Federal
24 government PAT and TAC process had their own
25 reviews, their own supplementary filing
180
1 questions to us, two rounds of them, and
2 filings in response to them.
3 The Department of Fisheries and Oceans in
4 the Federal process has an entirely separate
5 process of making its own decisions from the
6 Province of Manitoba, required under the
7 Canadian Environmental Assessment Act and the
8 Fisheries Act. And that is proceeding with
9 documentation. A large part of the draft
10 documentation was filed in public registries
11 recently and put on the website and made aware
12 to all the participants in this hearing as of
13 Friday.
14 There is another process that has been
15 going on that people have heard from, it is
16 Federal and Provincial Aboriginal consultations
17 that is going onwards as we sit in this
18 process. And there will be other processes
19 even after the licencing in terms of monitoring
20 and review as these projects proceed, if they
21 are indeed licensed.
22 The focus today, going to the next slide,
23 is on the Environmental Impact Statements that
24 have been filed with you, and all of the
25 supplementary information relating to them.
181
1 These have been prepared in accordance with the
2 EIS guidelines provided to the proponents.
3 These EIS guidelines set out the information
4 that is required by the Federal and Provincial
5 government agencies.
6 The project description and refinement is
7 the first key piece of information that this
8 requirement sets out. Now, we use the word
9 "refinement" here, because project description,
10 when you start and make an application for a
11 project as was done in 2001, you have a certain
12 level of project description, but that is going
13 to keep evolving. It evolved and is refined in
14 the case of what we have heard today with the
15 selecting of an access road route, with the
16 selecting of transmission routes that were put
17 before you.
18 By the time the application was made, the
19 low head approach had already been selected by
20 the proponents, as distinct from the high head
21 approach, but there has been refinements to
22 that process since then. There has been
23 refinements in terms of how the project will be
24 operated and everything else like that.
25 So, this process is ongoing. It will
182
1 continue to be refined in response to
2 monitoring even as the project is developed in
3 some instances, as you hear from people as you
4 listen to all the evidence.
5 The assessments by each environmental
6 component -- and I am going to talk about what
7 I mean by that word -- include a series of
8 things. They include looking at what is the
9 existing setting or baseline; they include
10 looking at effects assessment on the
11 environment and on the socioeconomic
12 situations. They look at mitigation to
13 mitigate effects from these projects. They
14 look at something called cumulative effects and
15 residual effects. And they look at ongoing
16 environmental monitoring after it is all
17 finished. But they do all of these things for
18 each what we call environmental components; the
19 physical environment, the aquatic environment,
20 the terrestrial environment, and socioeconomic,
21 or in layman's language, people environment,
22 and heritage resources. These are spelled out
23 in each of the EIS guidelines as the five
24 components that have got to be examined
25 separately as part of the assessment process.
183
1 Today my colleagues will address, we will
2 address together each of the key areas that I
3 have just listed here and the key conclusions
4 in each one of them.
5 The overall assessment approach -- sorry,
6 all the way through all of them, they have
7 involved public consultation and involvement.
8 The assessment process is not just done by a
9 bunch of people working for some proponents.
10 They go out and they talk with people, and I am
11 going to talk a bit about that process. It
12 occurs all the way through the process of
13 looking at what are the issues to be examined,
14 what are the assessment findings, what are the
15 monitoring and mitigation approaches, what is
16 the refinements to the project that seem to
17 make sense? All these things involve an
18 ongoing process of dialogue.
19 Let's go on to the next one. The
20 assessment that has been put in front of you in
21 accordance with the guidelines incorporates
22 local and traditional knowledge as well as
23 scientific information, as Councillor Elvis
24 Thomas has just laid out for you. The local
25 and traditional knowledge was an essential part
184
1 of the planning and the environmental
2 assessment process and I want to say a few
3 words about that.
4 Traditional knowledge has been explained
5 to you in the hearings and the meetings in 2002
6 on the guidelines, and explained again today by
7 Mr. Thomas on the grounds of NCN's perspective.
8 And he has reminded us all that there are
9 different perspectives from different people
10 and he has given you the NCN perspective that
11 is set out in the way in which we have
12 conducted this assessment.
13 Essentially, when we listen to people, one
14 of the first things that it involves is an
15 attitude of respect by those doing the work to
16 the local and traditional views and knowledge
17 of the people in the areas that are going to be
18 potentially affected. This respect deals not
19 just with hard knowledge the way some of us
20 understand it -- where are the caribou, where
21 are the fish -- it also deals with people's
22 view of the world, their spirituality, how they
23 see relationships between and among themselves
24 and the environment, and the elements of the
25 environment, the things they value and things
185
1 they want to see protected, all of these
2 things. It isn't just traditional. Some of us
3 just listen to this discussion and we think it
4 has to be something that has been there for
5 generations only. If you listen to the NCN
6 perspective, it includes modern as well as
7 traditional. It includes their views today as
8 they have been informed and learned from
9 Churchill River Diversion, as well as their
10 views before they ever saw anybody up there
11 trying to change the environment for them.
12 So all of these perspectives are important
13 to keep in mind when we are thinking of
14 traditional knowledge, and not just for
15 listening to NCN but all the other First
16 Nations and Aboriginal peoples that these
17 projects have discussed issues with.
18 In the case of NCN, information was shared
19 from the very outset. Dialogue went on from
20 the very outset. The attitude of the respect
21 is demonstrated by the approach that the
22 parties have taken. Councillor Thomas has
23 mentioned their own traditional interview
24 study, the scoping of the projects, the design
25 of the projects, the refinements of the
186
1 projects, the actual people from NCN worked
2 with the study scientists in collecting the
3 information and sharing information there.
4 There are many, many different ways in which
5 the people of NCN for many, many years now have
6 been working with all of us to develop what you
7 see in front of you today.
8 Beyond the people of NCN, information was
9 provided by others. Ongoing public
10 consultation and involvement activities
11 occurred beyond NCN starting in 2001, and it
12 occurred with First Nations and the Aboriginal
13 peoples in the areas that could potentially be
14 affected by these projects. We took the
15 attitude potentially to be very broad. Without
16 trying to say for sure this would be a
17 potential effect, we talked about anybody
18 upstream, downstream, or in any way in a
19 contractual agreement relationship with
20 Manitoba Hydro that might perceive themselves
21 to have some possibility of being affected.
22 There have also been discussions with
23 local governments throughout this area, with
24 the potentially affected stakeholders such as
25 trappers and other resource users, and with the
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1 general public. All of this has been very
2 important to the development, refinement, and
3 ongoing assessment process for these projects.
4 The EIS documents there before you today
5 detail over four years of research and public
6 review. The environmental studies for both
7 projects have been underway since late 1999, in
8 the case of some of the studies, have been
9 under way since 1998.
10 The EIS describes the refinement of the
11 projects that have been going on throughout
12 this time period to avoid and mitigate expected
13 construction and operation effects.
14 The table of contents volume, which is
15 separate volume all by itself -- courtesy of
16 some interveners who suggested to us that it
17 would be useful to develop such a volume --
18 this table of contents volume outlines the EIS
19 reports filed in April of 2003. First of all
20 there is a brief summary, public summary
21 document, which we call the integrated
22 executive summary of the EIS's for the two
23 separate projects, the generation project and
24 the transmission project. That is not a long
25 document, it is not that hard to read, and it
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1 was intended for the general public. A Cree
2 translation and an oral translation was done by
3 the elders and other people from NCN, a team of
4 them, so there was a Power Point presentation
5 developed, a disk prepared and was available to
6 anybody who was interested in hearing the oral
7 presentation of that executive summary.
8 The main technical volumes, one for each
9 of the two projects, there is one volume which
10 contains most of the information that we
11 thought would be necessary for the review by
12 the regulators, including the CEC. That is
13 intended to summarize all of the key elements
14 of the assessment process that the guidelines
15 required us to do, and put it in one document,
16 although it is a bigger document, several 100
17 pages in each case.
18 There are a series of supporting documents
19 that start to take up the numbers of feet that
20 Mr. Wojczynski was talking about as
21 documentation. These are viewed by us as
22 extensive technical, scientific, or other
23 information, that support the main document.
24 We don't expect everybody to read every single
25 one of these volumes. They are there for
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1 professionals, for people that are interested
2 in particular technical areas, to know what the
3 details are. But the main public summaries for
4 the public and the main volumes, one for the
5 each two projects, are the ones where most of
6 the information that should be relevant to the
7 guidelines is contained.
8 There has been extensive supplementary
9 materials filed since the filings in April of
10 2003. These have generally responded to
11 questions posed by government regulators, or
12 the public, or participants in the CEC process.
13 These documents include supplementary filings
14 made to the Technical Advisory Committee in
15 August and October of last year. They include
16 the two rounds of public questions posed
17 through this process with the CEC.
18 All of this documentation today is -- when
19 we talk about the EIS, we are really talking
20 not just what we filed in April, but all the
21 documents that have been filed to date, all of
22 them are before the Commission today. This is,
23 for our purposes today, the EIS.
24 The public consultation and involvement
25 process itself was an integral part of the
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1 overall planning and assessment process. Since
2 1997, NCN has been actively working and
3 involved with Manitoba Hydro in all aspects of
4 planning, and you have heard that, not just the
5 generation project but also the transmission
6 project in the areas where it falls within
7 their traditional territory.
8 Since 2001 we have had five separate
9 rounds of public consultation and involvement
10 beyond NCN, extensive opportunities for the
11 public to receive information and provide
12 input. In fact, the public involvement plan
13 that we filed with the regulators, I think in
14 the summer of 2002, set out the objective of
15 trying to provide early and ongoing information
16 to people and to receive information back from
17 people as to their views and concerns. The
18 focus of the involvement process has been on
19 meaningful consultation with Aboriginal
20 peoples, First Nations and Aboriginal peoples,
21 but also with all the other people that might
22 have any potential -- that might be potentially
23 affected by these projects as well as the
24 general public.
25 The website information, the open houses,
191
1 the community meetings and the newsletters were
2 used as methods to try and facilitate these
3 objectives. A very special step we took was in
4 July of this year, we had a participant
5 workshop with the various people who were
6 looking as though they were going to be
7 interested in being participants in this
8 hearing, in order to give them three days to
9 get an overview -- or two days for the EIS and
10 one day for the need for -- to get an overview
11 of what all of this documentation was and get a
12 leg up on it.
13 We have learned from this public input, it
14 has helped refine and improve the projects and
15 the assessments. I will give you a few
16 examples -- Councillor Thomas has given some of
17 these already --
18 NCN participation in the evaluation and
19 selection of the road, camp, and transmission
20 line locations in their area, and the key
21 choices about design and other matters related
22 to the developments, these have been obviously
23 critical to the evolution and refinement
24 process.
25 Elected officials in all of the
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1 communities in the region that would talk with
2 us have made inputs to the design of the public
3 involvement plan at an early stage. That was
4 the first stage of the discussion we had with
5 them. We dealt with them as they wanted to be
6 dealt with in terms of how the process should
7 unfold.
8 Downstream communities in particular who
9 were concerned that maybe there might be some
10 water quality issues flowing downstream to them
11 had an effect on the field work design that had
12 been carried out in terms of water quality
13 sampling. And that can be spoken to if anybody
14 is interested.
15 Communities, since we have been doing all
16 this filing and having these discussions, some
17 of them have raised questions about further
18 information on systems operations issues,
19 potential for water regime changes that David
20 Cormie presented earlier. That presentation,
21 that process of going more in-depth was in
22 response to the public in various areas raising
23 questions and concerns and looking for more
24 information.
25 Communities and other's inputs to the
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1 identification and evaluation of alternative
2 transmission line routes and the selection of
3 the preferred transmission routes. The whole
4 transmission process in a sense is separate
5 from generation. Generation, at least they
6 start off knowing where the site is. They may
7 not know whether they want to have a high head
8 or a low head, or whether they want to operate
9 it this way or that way. Transmission says
10 they have to get from here to there, but there
11 is a lot of different ways they can do that.
12 And a lot of their work that they have been
13 doing for the last few years has been assessing
14 alternatives, looking at alternatives, talking
15 to people about what the concerns should be,
16 what they would like to see happen, what they
17 would want to make sure is avoided.
18 When we look beyond the process and start
19 talking about the outcomes, it is important to
20 understand that the environmental effects were
21 predicted specific to Wuskwatim projects that
22 we are talking about today. That is the whole
23 focus of the EIA and EIS assessments,
24 Environmental Impact Assessments. So I want to
25 look at this rather carefully.
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1 The potential effects that we are talking
2 about from each project, or of each project,
3 are predicted separately for the projects, and
4 are predicted separately in the end for each
5 environmental component that I have talked
6 about earlier; the physical environment, the
7 aquatic, et cetera. They are done in each case
8 by comparing two things; first, what would be
9 expected without the projects, which we have
10 talked about as the existing setting or then
11 existing baseline without the projects. And we
12 compare that with, of course, what do we expect
13 to happen with the projects? And we talk about
14 effects pathways.
15 Now, an effects pathway is a very simple
16 idea. We do something with this project that
17 changes the water regime which you have heard
18 described. What might that do to the land
19 around, and the air around, and the waters?
20 The land might have more or less erosion. If
21 there is more erosion it might put more
22 sediment into the water. That sediment may
23 have an effect on water quality for human
24 beings consuming the water, it may have an
25 effect on fish and fish habitat. The erosion
195
1 process may have more trees that are valued in
2 that area falling into the waters, which may
3 affect the terrestrial habitat. The
4 development of the road may bring more people
5 to this area than otherwise had been the case,
6 which some people may view as creating some
7 opportunities, some other people may view it as
8 creating some issues.
9 Each one of these elements of the project,
10 the construction process, the changing of the
11 water regime, the development of a road, the
12 development of transmission, creates beginnings
13 of pathways through to the air, the land and
14 the water, and ultimately the people. Our job
15 is to try and understand those pathways. And
16 the end point that we talk about in each case
17 is something called a valued environmental
18 component or a valued ecosystem component --
19 fancy word for saying somebody thinks that is
20 important, it is a resource use, it is an
21 element of the environment that is important.
22 For starters, the regulators have told us
23 that each one of those environmental components
24 are important and we better look at each one of
25 those. But within each one of those components
196
1 there are things that some people particularly
2 want us to focus on, and we call those valued
3 environmental components or valued eco-system
4 components. And we are trying to find out
5 where the project is going to have a pathway
6 through to effect on those components. And we
7 are trying to do that by comparing what that
8 component will be like without the project
9 versus what it will be with the project.
10 In a sense, just to be very clear, there
11 are not only direct effects, but a lot of
12 indirect effects involved in the pathways that
13 we are examining. And to be very clear, in
14 case there is any confusion, we are not limited
15 in the way in which the guidelines have told us
16 to look at this by the Canadian Environmental
17 Assessment Act. The Canadian Environmental
18 Assessment Act only looks at some pathways as a
19 matter of law. We have to look at all of them.
20 We look at the effects on human beings through
21 jobs, and not just through the pathways through
22 the physical and bio-physical environments.
23 When all is said and done, we are talking
24 about residual effects, the end result after we
25 have talked about mitigation, and their
197
1 significance. That is what the end result is,
2 that is the end product. Is there going to be
3 a likely effect on valued environmental
4 component as a result of a pathway of effects
5 from this project, direct and indirect? Is it
6 likely to be -- is it likely, particularly if
7 it is going to be adverse, and is it going to
8 be significant? And significant is a
9 terminology that is used with factors built in
10 that are explained in the reports, but they
11 look at the frequency, they look at the
12 magnitude, they look at the geographical
13 extent, various factors such as that. They
14 decide whether or not, based on judgment and
15 based on information, or based on if there are
16 threshold guidelines, which there are in some
17 cases, whether it is likely to be a significant
18 change.
19 In looking at all of this, we look at
20 mitigation, we look at monitoring, we look at
21 follow-up measures. They are all important.
22 Monitoring in this case is looking at either
23 trying to deal with uncertainties and find out
24 what happens in fact, or to deal with
25 confirming what we have predicted, or as part
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1 of an adaptive management strategy to manage
2 the results that occur rather than sitting here
3 debating at great length what the most expected
4 ones are going to be.
5 So that sets the framework in which we are
6 working, and it gives us the focus, and it is
7 going to be there for each one of the
8 environmental components that we are going to
9 talk about.
10 There is one big issue everybody has asked
11 us a lot of questions about, that is cumulative
12 effects. So I am going to spend a few moments
13 concluding my comments by looking at that.
14 Cumulative effects assessment was an
15 integral part of the overall effects assessment
16 as directed that it should be by the
17 guidelines, it shall be. So cumulative effects
18 assessment, or CEA, was an approach used for
19 both projects as required in the guidelines.
20 The approach we took reflected the EIS
21 guidelines. We looked at all effects that are
22 likely to result from the Wuskwatim projects,
23 when they are anticipated to occur, in
24 combination with other projects or activities
25 that have been or will be carried out -- words
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1 right out of the guidelines and words right out
2 of section 16 of the Canadian Environmental
3 Assessment Act.
4 There will be -- I am going to dwell on
5 for one second the words "will be." Quite
6 legitimately in some cases people would assume
7 that means they have to be for sure. Well,
8 Canadian practitioner's guide and other things,
9 have an evolved thinking on this. It isn't
10 just those projects that are already licensed,
11 it is at least the projects that are already
12 licensed and those for which the licences have
13 been made, applications have been made is sort
14 of the basic requirement. We have adopted the
15 approach as saying, and are reasonably likely
16 to occur within a certain time period, and I
17 will talk about that. Hypothetical projects,
18 though, are outside the bounds clearly of the
19 concept of saying something will be carried
20 out.
21 The approach that we have taken in
22 accordance with the guidelines is intended to
23 meet the single project regulatory assessment
24 requirements as reviewed by the Technical
25 Advisory Committee and Project Administration
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1 Team. That's our focus, that is our direction.
2 This differs, I have to note, and it is laid
3 out in some of the interrogatories we received
4 from the CEC, in particular number 137. This
5 differs from broader regional planning
6 approaches or cumulative effects assessment.
7 When you are focused on how to assist doing an
8 environmental assessment to get the effects --
9 as I have just talked about a few minutes
10 ago -- assessed, you are focused on project and
11 the changes it will make to the environment.
12 There is another approach that can be
13 taken under other mandates to talk about a
14 region and to talk about planning for that
15 region, and to talk about cumulative effects of
16 all the different developments that may take
17 place in the region, and the different
18 approaches to be taken. That usually requires
19 a mandated authority with a regional
20 jurisdiction to look at such things. That's
21 not what we are doing, to be very clear.
22 Inside the areas we are talking about, there
23 are mandated authorities, Federal, Provincial,
24 and Aboriginal, First Nations that look at some
25 of these areas, including the Nelson House
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1 Resource Management Board and the Cormorant
2 Resource Management Board. So there are bodies
3 that do look at regional issues within certain
4 areas. But we didn't take that approach. That
5 doesn't mean we ignored regional issues, it
6 just means that our focus was on the single
7 project regulatory assessment requirements as
8 set out to us in the guidelines.
9 I would just note that the approach we
10 have taken, and this is set out in the answers
11 to questions, is consistent with the Canadian
12 Environmental Assessment Agencies
13 Practitioner's Guide. The CEA -- as said in
14 that guide and as the view we have taken -- is
15 an Environmental Impact Assessment done well.
16 Essentially, it is not something magical, it is
17 not something unique and special, it is
18 something integral, and it is basically doing
19 environmental assessment properly and well,
20 taking into account how the environment may be
21 changing due to past, current, and future
22 projects that we are reasonably certain will be
23 carried out.
24 The CEA approach is integrated throughout
25 each EIS for each environmental component. It
202
1 is done for the transmission as well as for the
2 generation, and for each one of the components
3 therein. It considers local and traditional
4 knowledge throughout.
5 To deal with a couple of very specific
6 points, to conclude, two slides: Cumulative
7 effects were assessed with regard to past and
8 current project activities as required by the
9 guidelines.
10 Past and current project activities were
11 considered to form an integral part of the
12 existing or baseline or setting environments.
13 We considered current and ongoing effects, for
14 example, of the Churchill River Diversion,
15 including the augmented flow program, as well
16 as other specified projects and activities.
17 The assessment separately was done for each
18 environmental component, and where it was
19 considered relevant for that component to think
20 about the Churchill River Diversion, it was
21 thought about. I point to various areas where
22 you will see this surface. When we are looking
23 at the physical environment, it surfaces in
24 looking at the where are we on the erosion
25 spectrum with respect to the CRD? Are we early
203
1 days, middle days, late days, in terms of
2 erosion effects, sediment effects, mercury
3 effects? People did not put on blinkers and
4 not ask themselves those questions, how is that
5 baseline evolving?
6 When we are dealing with socioeconomics,
7 you cannot work in this area without hearing
8 from the people in that area the effects on
9 them of the CRD and the LWR, what it did to
10 shatter their confidence and raise their
11 anxiety about any future hydro development.
12 So although we talk about the baseline
13 taking into account the CRD and where we are
14 today, where it is relevant, we have to take
15 into account because we are forced to, the
16 situation of how that baseline is evolving.
17 The scoping for each environment was based
18 on the potential for overlapping pathways.
19 What does that mean?
20 Section 2.3.2 of the guidelines lays out
21 some ground rules for scoping in terms of
22 geography. It talks about, you will look at
23 the reflected local areas directly impacted by
24 the project, the area right around the dam, the
25 area where you have a right-of-way for
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1 transmission, for example. Obviously, you have
2 got to look at that. But it also says you have
3 got to look at the zones within which there may
4 be regional or global effects from these
5 projects -- zones meaning what? If you are
6 going to affect some caribou and they range
7 over a much bigger range, then you better take
8 account of all of the things that are going on
9 inside the areas where they are ranging, or you
10 may miss something that will be critical to
11 them. If you're going to the air, you better
12 think about that. If the result of what you
13 are doing will save emission somewhere else
14 globally, you better think about that.
15 We have certainly, as you have heard and
16 you will hear, have been thinking about those
17 types of things with respect to the pathways of
18 effects from these projects. The secret is, we
19 have to look at the pathways of effects in each
20 one of the environments from these projects,
21 and then consider whether other projects such
22 as CRD, or LWR, or forest reactivity, or other
23 things that are going on, overlap with these
24 effects pathways. And if so, we have to think
25 about what is the issue and how does it change
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1 our baseline and the future of the effects?
2 Essentially, it also means that where
3 there are no overlaps, we are not looking. We
4 don't go and study everything. If there is no
5 effect downstream on the Churchill River, we
6 are not looking there. The critical
7 assumption, the critical point, is there a
8 reasonable basis for belief and critical
9 evidence to support that key assumption as to
10 where we looked and where we didn't look? That
11 will get tested in the process of this hearing.
12 That is the past and the current projects.
13 Looking at the future projects, cumulative
14 effects were assessed with regard to specific
15 future projects. I would say that in the EIS
16 in the general approach we do lay out the
17 specific past projects that we had in mind,
18 just so there is a checklist. In section of
19 for example, the generation project, a
20 checklist of all the past projects we had in
21 mind, so that you can know what we had in our
22 mind when we were thinking about what I just
23 talked about, beyond the CRD.
24 We did the same thing with respect to the
25 future projects we had in mind. They are all
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1 listed there, but just to summarize it. When
2 we are looking at future projects or
3 activities, they have to be scoped into the
4 cumulative effects assessment to deal with the
5 "will be carried element" that I was talking
6 about. As a practical ground rule, we included
7 projects being considered as reasonably likely
8 to occur, by Manitoba Hydro, for the possible
9 construction starting within the next five to
10 ten years. We also looked at other specific
11 activities, the forestry area, et cetera.
12 Now, we think that that is consistent with
13 good practice, best practice. Elsewhere we
14 have answered some questions, I think the PCN
15 in the second round, to document that, as well
16 as earlier on to the TAC questions in the
17 supplementary filings.
18 The assessment was done again separately
19 for each environmental component, and I will
20 give you some examples.
21 When we go to the scoping, generation
22 project scoping for each environment is based
23 again on the potential overlapping pathways.
24 Again, we are talking about the same ground
25 rule I just used a few minutes ago. But here,
207
1 let's apply it to the future. In the
2 bio-physical study area, for example, we are
3 talking about an area from the foot of Early
4 Morning Rapids down through Opegano Lake as a
5 bio-physical area that might be affected by
6 water regime changes due to this project. We
7 looked at with Notigi, with Gull, or with
8 Conawapa, three projects that Manitoba Hydro
9 sees as reasonably likely they might start
10 construction within the next five to ten years,
11 would they have an overlapping effect with the
12 effects of Wuskwatim projects? The conclusions
13 set out are, they don't think so and therefore
14 these projects are not a part of any detailed
15 cumulative effects assessment because we could
16 not see an overlap. But, again, that is open
17 for discussion. In the second round of
18 questions from the CEC, there were some very
19 specific questions about, well, why did you
20 exclude Notigi for that reason -- CEC 103 if I
21 am not mistaken. So that is one example.
22 When we go to socioeconomic study regions,
23 the approach we took acknowledges that the
24 effects of employment go far beyond the local
25 area. They include the people in the north,
208
1 certainly the people in the project region,
2 that goes throughout all the area where
3 preference for employment will be given. We
4 talked about a number of different regions in
5 the socioeconomic assessment, particularly the
6 generation project, to reflect that. The
7 transmission project, we tended to focus more
8 on the individual segments where the
9 transmission lines were being built.
10 Finally, when we were looking at what Dave
11 Cormie was talking about this morning on system
12 water regime, we looked at that in more detail
13 after the EIS was filed in order to address
14 issues being raised by people, we of course are
15 looking at, okay, the whole CRD, the whole LWR
16 are, are there any potentials for overlap of
17 effects.
18 You heard today that in the case of CRD
19 there is no potential for overlap in the
20 judgment of the information put in front of
21 you. Downstream in the Nelson River, Lower
22 Nelson plants, there is no basis that we can
23 understand proceeding any perceptible change in
24 the water regime. And dealing with the LWR
25 releases, again, the information is, no
209
1 perceptible change seems to be reasonably
2 expected.
3 We tried to look at how this might be with
4 the Gull and the Conawapa projects added in,
5 Notigi didn't make any difference, but Gull and
6 Conawapa might, but we could not come up with
7 any likely scenarios to how Gull and Conawapa
8 would be developed, including tie lines and
9 everything else, and therefore make a
10 reasonable basis for a likely prediction, which
11 is required if you are going to do a cumulative
12 assessment. We are not just trying to talk
13 about anything, we are trying to talk about
14 what is likely to be an effect. So we scoped
15 out, for the purposes of the system water
16 regime issues we talked about this morning, we
17 ended up scoping out any attempt at assessing
18 Gull and Conawapa for that reason. There is no
19 likely scenario. We considered it, we looked
20 at whether it could be used, and we came to the
21 conclusion that there is no one scenario
22 likely.
23 I have given you that to set the stage for
24 the discussion by components. We will now go
25 to the second part of our presentation dealing
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1 with specific environments. The studies
2 extended to the siting and the refinement of
3 project components and assessments of effects
4 on the physical environment, the aquatic
5 environment, terrestrial, and then the
6 socioeconomic and heritage. And George Rempel
7 is going to start off by focusing on the
8 physical environment, and then others will
9 follow on the others ones.
10 MR. REMPEL: I will be talking about
11 the physical environment components that were
12 identified in the guidelines as needing to be
13 addressed. These components include, the
14 following items: Climate, geology, soils, water
15 regime, ice processes, erosion, sedimentation and
16 debris.
17 These guidelines were for both the
18 project -- the Wuskwatim Generation Project and
19 the Transmission Project -- included these
20 components. Obviously, there was more
21 discussion of some of them on the Generation
22 side -- debris, for example -- than there was
23 on the Transmission.
24 Each of these components are assessed in
25 great detail in the various documents that
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1 Mr. Osler has described.
2 Subsequent to their filing of the EIS,
3 there actually was additional information on a
4 number of topics, and rather than go through
5 all these items in detail, I will make some
6 comments on some of the topics that were raised
7 in the interrogatory process.
8 To begin with, in terms of climate, the
9 Wuskwatim development overall will have a
10 positive effect on climate. The Generation
11 project is expected to result in a net
12 reduction in greenhouse gases. That is
13 particularly true because of the displacement
14 of power that would otherwise be generated
15 using coal or gas as explained by
16 Mr. Wojczynski this morning.
17 And also, it is also a fact because there
18 will be minimal flooding because there will be
19 such a small amount of new flooding associated
20 with the Generation Project.
21 The Transmission Line Project will result
22 in clearing of the forest and vegetation along
23 the right-of-way along different station
24 sights.
25 There will be a loss of carbon stocks. We
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1 have been very conservative in estimating the
2 loss. We have considered there would not be
3 revegetation. Obviously, there will be. But,
4 even when we look at it in a very conservative
5 manner, the loss of carbon stocks, we believe,
6 are very nominal in the overall regional
7 context.
8 So, overall, the climate effects are
9 positive.
10 In terms of water regime, we spent some
11 time talking about this today, the effects of
12 Wuskwatim Generation on the water regime are
13 minor. If you look at the upstream side of it,
14 water levels will be raised between Taskinigup
15 Falls and Wuskwatim Falls about 7 metres.
16 In the immediate forebay, as we talked
17 about before, the water levels that today
18 annually vary, subject to the flows along the
19 diversion out on Wuskwatim Lake, will be
20 stabilized in the upper area of its present
21 range.
22 There will not be water regime changes
23 upstream of Early Morning Rapids. Those act as
24 an hydraulic brake in the water profile.
25 Looking downstream, there will be changes
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1 downstream of the Generating Station,
2 particularly immediately downstream of the
3 station. This is a function of when the
4 various turbines are operating.
5 If, for example, three turbines are
6 running during the day and only two at night,
7 there will be an immediate change in the water
8 level downstream in the Burntwood River.
9 So, these will be most pronounced in the
10 first 9 kilometres or so downstream of the
11 plant itself. These variations are going to be
12 up to about 1.3 metres per day and they will
13 occur daily, I should say, under normal,
14 open-water conditions.
15 As you proceed further down to Opegano
16 Lake, these will be dampened out. By the time
17 you get there, it will be about 0.45 metres and
18 they will be further smoothed out as the water
19 proceeds down the rapids and gets to Birch Tree
20 Lake. There, the water level changes will be
21 not perceptible. It will be about 0.1 metres;
22 about four inches.
23 So, we have got changes in the water
24 regime essentially from Birch Tree Lake up to
25 the foot of Early Morning Rapids. Those are
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1 the changes that are brought about by the
2 station.
3 The station will not change the operation
4 of the Churchill River Diversion. The
5 Wuskwatim project will not affect the operation
6 of Notigi, that is a controlled structure,
7 regulating flows into the Rat/Burntwood, nor
8 Missi Falls, which is the outlet -- that
9 controls the flows into the Churchill River.
10 The monthly and seasonal flow patterns on
11 the Churchill River diversion will not change
12 their function of the rainfall and snow melt in
13 the watershed of the Churchill and
14 Rat/Burntwood Rivers. They will continue as
15 they have for the last 25 years.
16 In the immediate area of the new
17 Generating Station, the daily flows will be
18 shaped to conform to the modified run of the
19 river operating mode. On a daily basis, the
20 flow into Wuskwatim Lake will equal the flow
21 out.
22 Wuskwatim will not have a perceptible
23 effect on Lake Winnipeg water regime.
24 When we filed the EIS back in April 2003,
25 we did so on the basis that the assessment did
215
1 not see any perceptible effects on the overall
2 system regime, including the Lake Winnipeg
3 Regulation and Lower Nelson River flows and
4 water levels.
5 Subsequently, after filing the EIS, there
6 was a lot of interest in system effects, and
7 potential effects, and as Mr. Cormie explained
8 this morning, as a result, Manitoba Hydro and
9 NCN conducted a lot more analysis.
10 This confirmed that there were little
11 effects on the rest of the system. It showed
12 that there were no perceptible changes in the
13 water levels for the water bodies downstream of
14 Lake Winnipeg, including Cross Lake. So, that
15 confirmed what we had judged to be appropriate
16 in the EIS initially.
17 There are no perceptible water regime
18 changes that are expected and, therefore, when
19 we look at the pathways that Cam Osler
20 discussed in the Assessment, you look for
21 changes in one component in the environment to
22 see if it will have other changes as they
23 proceed. For example, will water level changes
24 affect erosion or the use of the shoreline by
25 animals and people? In this case, we found no
216
1 perceptible water regime changes and,
2 therefore, we had no credible pathways for
3 measuring other environmental effects.
4 In the absence of credible pathways, we
5 also determined that an Accumulative Effects
6 Assessment was not appropriate.
7 With respect to erosion, we do expect
8 shore line erosion to increase on Wuskwatim
9 Lake. About 30% of the shorelines of Wuskwatim
10 Lake and the adjoining lakes, like Sesep and
11 Cranberry, are actually eroding today. These
12 are clay, silt shorelines. They are mostly in
13 the main part of Wuskwatim Lake on the south
14 and east shorelines. That is where the wind
15 induced waves can hit the shoreline and cause
16 erosion.
17 These erosion rates on the shorelines were
18 increased rather dramatically when this
19 Churchill River Diversion was put in place.
20 Wuskwatim Lake, for example, was increased in
21 depth by about ten feet when the diversion was
22 put in place. So, there was fairly aggressive
23 erosion in the initial years after the CRD was
24 introduced.
25 That erosion has been declining over the
217
1 past 25 years. Hydro has had a number of
2 sites. I believe there is about 15 sites along
3 Wuskwatim Lake itself, with about, I think,
4 over all, 45 different erosion profiles being
5 measured.
6 Those erosion rates have been declining
7 and today are approaching what you would expect
8 to be long-term rates in northern lakes that
9 have erodible shorelines.
10 When the water levels are changed with the
11 new project, they will be kept at the upper end
12 of the current range during Wuskwatim
13 operation. Right now, they vary about 1.7
14 metres. They will now be kept pretty
15 consistent within about six inches or so at 234
16 metres above sea level.
17 That will initially increase the amount of
18 erosion on the shorelines that are subject to
19 erosion. In other words, where the water is
20 not contacting bedrock, but is contacting the
21 clay and silt shorelines, there will be
22 increased erosion.
23 After about five years, that erosion will
24 settle down again and begin to decline. After
25 about 25 years, we expect the erosion rates for
218
1 all the eroding shorelines to be about the same
2 as they are at present before the Wuskwatim
3 project.
4 There will be work done in the river, in
5 the construction of this project. There have
6 been concerns expressed about how much sediment
7 will be released into the river during the
8 construction process. We have a picture here
9 showing a cofferdam construction during the
10 Limestone Generation Project construction. You
11 can see there is equipment working on the river
12 and you will have some sediments and soil
13 released into the water.
14 We recognise that will happen here as
15 well, and particularly during cofferdam
16 construction. Most of this will occur during
17 the first years -- years two to five of the
18 construction period, especially when the
19 cofferdams are removed. It is pretty hard to
20 avoid some sediment being mobilized into the
21 water.
22 DFO has been very interested in sediment
23 management and they have asked for a separate
24 document on how sediment will be managed during
25 construction. That document has been filed.
219
1 It is being reviewed by DFO at present.
2 In the course of those discussions,
3 Manitoba Hydro and NCN introduced additional
4 measures to reduce sediment mobilization, and
5 this plan now identifies specific design and
6 contingency measures to mitigate sediment
7 releases during the course of construction.
8 There will be monitoring during
9 construction and we are confident that with
10 this mitigation, measures that we have defined
11 in the Sediment Management Plan that the
12 release of sediments will be satisfactory --
13 and will be controlled to levels that are
14 satisfactory to the regulatory authorities.
15 With this increased erosion I have spoke
16 about, there will be increase in shoreline
17 debris. As the banks do recede, the vegetation
18 that is there will be brought into contact with
19 the water. Our belief is that most of this new
20 debris will actually be trapped by the existing
21 debris that is against the shoreline and the
22 new debris will remain against the shore and
23 not move out into the lake. That is based on
24 observations on other northern Manitoba lakes,
25 including Wuskwatim.
220
1 When we discussed this with the local NCN
2 Elders, their belief is that some of this
3 additional debris will, in fact, be carried out
4 into the lake or they are concerned it might
5 be. So, we have two different judgments here.
6 We can't really determine which is correct, but
7 we can say that this will be monitored.
8 Manitoba Hydro has a Debris Management Program
9 that it does implement across the various
10 waterways that it uses. This ivolves
11 monitoring debris where it is an issue,
12 cleaning up debris or controlling its release.
13 In this case, we believe that new debris
14 can be tied into the shorelines or removed, if
15 necessary.
16 So, there will be monitoring taken and in
17 consultation with NCN, Manitoba Hydro will
18 address the mobilization of this debris.
19 With respect to the Transmission Project,
20 there are 350 kilometers or so of transmission
21 line. There will be clearing and construction
22 along this line. The effects are actually
23 confined primarily to the rights-of-way, 60
24 metres wide, 110 metres in some cases and the
25 immediate adjacent areas.
221
1 Transmission lines are typically
2 constructed and the bulk of the construction
3 takes place in the winter. There is selective
4 clearing, winter clearing, winter construction
5 and this greatly reduces potential impacts, and
6 Hydro has a great deal of experience in
7 constructing these to the satisfaction of the
8 Regulatory Authorities.
9 The effects on soils and terrain are,
10 therefore, confined mostly to the
11 rights-of-way. Access is limited during
12 construction and so the effects are quite
13 nominal.
14 That concludes my comments on the Physical
15 Environment. At this point, I will turn it
16 over to Mr. Stuart Davies who will discuss the
17 Aquatic Environment.
18 MR. DAVIES: The Environmental Impact
19 Statement for the Generation Project considered
20 water quality, aquatic habitat, lower trophic
21 levels, which includes aquatic plants, algae and
22 invertebrates, fish and stream crossings.
23 As councillor Elvis Thomas stated earlier,
24 the NCN Elders and Resource Harvesters played a
25 major role in designing these studies right
222
1 from the very start. They also played a major
2 role in conducting them. About two-thirds of
3 all the field workers that worked on the
4 environmental studies were NCN members.
5 Throughout the project, respect was shown
6 for the environment. Just as an example, when
7 the fish were taken from the water to be
8 sampled, tobacco was offered to the water.
9 For the Transmission project, EIS
10 considered watersheds and stream crossings and
11 fish and fish habitat.
12 There is an extensive water quality
13 sampling program that has been conducted.
14 There is about four years of data that has been
15 collected right now and this coming year would
16 be the fifth year of pre-project data.
17 It is being conducted over quite a large
18 geographic area that originally extended from
19 upstream of Wuskwatim Lake to just upstream
20 from Thompson.
21 Through the PIP process, there were
22 comments and input through downstream
23 communities and as a result of that, the Water
24 Quality Sampling Program was extended to an
25 area just upstream of Split Lake.
223
1 There is also a broad range of parameters
2 that are being looked at. It includes a full
3 suite of nutrients, metals, and TSS, as George
4 had discussed earlier.
5 Selected sites, parasites and bacteria
6 were also collected as well as hydrocarbons.
7 During construction, there will be some
8 specific construction activity that will cause
9 a short-term water quality changes. We had
10 talked about the increases and total suspended
11 solids that would occur during the construction
12 of the cofferdams and the removal of the
13 cofferdams.
14 There will also be sewage inputs during
15 the construction period that will be monitored
16 throughout the construction of the project.
17 I was also told the Sediment Management
18 Plan, which addresses the TSS issues that have
19 been raised has been put on the website as of
20 Friday.
21 During operation, we don't expect to see
22 any major changes to water quality except at
23 some local areas there will some increased
24 water erosion along the shorelines and perhaps
25 some TSS in the immediate area. But, the lake
224
1 itself will not be affected and the areas
2 downstream we don't expect to see any
3 measurable changes either.
4 The Wuskwatim Lake reduced water level
5 fluctuations will increase the amount of
6 habitat and we expect that will increase the
7 invertebrate production in the lake and also
8 the forage fish eaten there by the larger fish.
9 We feel it will increase the spawning
10 habitat that will be available to fish. Right
11 now there is about a 4.5 foot water level
12 fluctuation during the year. And with the
13 project in place, the water levels will be much
14 stabler.
15 So, habitat that is sometimes wet right
16 now and sometimes dry, will be wet the majority
17 of the time and we will see increased
18 production from that.
19 Initially, increased erosion on Wuskwatim
20 Lake may reduce the suitability of some of the
21 areas for invertebrates and fish. Again,
22 because some of the near shore erosion that we
23 do expect there will be some site specific
24 reductions in invertebrates and fish.
25 Overall though, in the long-term, we
225
1 expect that there will be increases in the four
2 key fish species, which are: Pickerel or
3 Walleye, Jackfish or Northern Pike, Lake Cisco
4 or Tullibee or White Fish.
5 Long-term populations in the lake will of
6 course depend on the level of harvest. We did
7 expect to see an increase in domestic harvest.
8 White Fish from Wuskwatim Lake are preferred by
9 NCN Elders, so we expect some will be
10 harvested. There is also commercial fishing on
11 the lake.
12 It is good to have a bit of perspective on
13 the areas that we are talking about. This
14 large area here is the area that we are saying
15 will be positively effected by the stabilized
16 water levels over the long-term. This smaller
17 area here is the area where we will see larger
18 water fluctuations and this very small area
19 here is where the flooding will appear. The
20 flooding will be limited to that small piece
21 right there. Again, the stable water levels
22 here and increased water level fluctuations
23 downstream.
24 This area here, which is a key part of the
25 lake, which is primary Walleye spotting habitat
226
1 will not be affected by erosion on the main
2 part of the lake.
3 Operation of a Generating Station will
4 have a negative effect on the fish and fish
5 habitat in the downstream reach that we have
6 just showed. There will be increased water
7 level fluctuations on top of the existing water
8 level fluctuations and we also expect that
9 there will be fewer fish migrating from
10 Wuskwatim Lake -- or moving from Wuskwatim Lake
11 downstream.
12 Right now, fish currently cannot move
13 upstream over Wuskwatim Falls or Taskinigup
14 Falls. It is about a 22-metre rise if you
15 consider Wuskwatim Falls and Taskinigup Falls
16 together. Some fish do move downstream over
17 Taskinigup Falls. The movement is not a
18 migration -- fish moving downstream as a
19 migration wouldn't be a very good life history
20 movement. Once they moved down, they are
21 basically lost to the system.
22 When the Generating Station is in place,
23 we expect that fewer fish will move down for a
24 couple of reasons. One, the larval fish will
25 not be drifting downstream. We also expect
227
1 that with the change in habitat, we will have
2 fewer fish going downstream than before. One
3 of the reasons being that right now when fish
4 move over to Wuskwatim Falls, they are
5 basically trapped between -- excuse me. When
6 they move over Wuskwatim Falls, they are
7 basically trapped between Wuskwatim Falls and
8 Taskinigup Falls and can't get back into the
9 main portion of the lake.
10 When the Generating Station is in place,
11 the water levels at Wuskwatim Falls will allow
12 the fish to swim back rather than being trapped
13 between to impassable falls.
14 The fish that do go downstream will move
15 through the turbines and there will be some
16 mortality. We expect that the survival rates
17 of fish going through the turbines will be
18 roughly between 80 to 90%. We feel that is a
19 relatively conservative estimate.
20 The net effect on fish in the study area
21 as a whole, we feel will be positive. There
22 will be a small positive increase upstream. As
23 you saw from the map, the area upstream is much
24 larger than the area downstream and it provides
25 better fish habitat and it is the area that is
228
1 harvested by domestic fishers and commercial
2 fishers.
3 DFO plays an important role in regulating
4 aquatic developments. One of the things that
5 it requires is the Habitat Compensation Plan,
6 which provides compensation for negative
7 effects to the fish habitat.
8 A draft Fish Habitat Compensation Plan has
9 been provided to DFO. We have been working
10 closely with them to develop that. That plan
11 compensates for the negative effects on fish
12 habitat.
13 If we take a look at the fact that we feel
14 overall that there will be a small, but
15 positive effect on fish in the area as a whole,
16 the addition of compensation being provided by
17 the Fish Habitat Compensation Plan will provide
18 even a larger benefit to fish populations in
19 the area.
20 In regards to mercury, mercury was one of
21 the issues that NCN raised very early on in the
22 process because of their experience with the
23 Churchill River Diversion and a lot of effort
24 has been focused on that. We feel that there
25 will be a very small increase in mercury
229
1 because of the small area that will be flooded.
2 We don't feel that you will be able to
3 distinguish the increase in mercury from
4 natural variation.
5 We looked at both a best case scenario and
6 a worst case scenario and out of the worst case
7 scenario, we are still not certain if you will
8 be able to see the difference in some of the
9 fish species after the project.
10 Downstream from the project, there will be
11 increases in some individual fish that may be
12 resident near some of the peat areas that we
13 feel will be decay with the project.
14 Downstream of Opegano Lake, we don't feel
15 that there will be any measurable change in the
16 mercury levels.
17 One of the things -- the way that mercury
18 is transported downstream is primarily through
19 biota. One researcher recently gave me a good
20 example that provides people with a perspective
21 that if you are looking at downstream
22 transport, the difference between mercury being
23 transported in water as compared to fish is, if
24 you ate an average meal of pickerel, the
25 mercury that you would accumulate from that
230
1 would be similar to washing that meal down with
2 about 100,000 gallons of water.
3 So, there is a huge difference between the
4 amount of mercury that is transported by water
5 and the amount of mercury in the biota.
6 Right now, there is very few fish that are
7 moving downstream, primarily because of the
8 impassable falls, the Taskinigup Falls,
9 Wuskwatim Falls and downstream of Opegano,
10 there is also impassable falls.
11 Manitoba Hydro and NCN have committed to a
12 very complex, detailed monitoring program and a
13 draft of that monitoring program has been
14 submitted to the Department of Fisheries &
15 Oceans for their review. The program will
16 monitor water quality and vertebrates, fish and
17 fish habitat and mercury levels during both the
18 construction period and the operation of the
19 project.
20 Among other things, the results of the
21 monitoring plan will be used to confirm whether
22 impact decisions are correct or not. They will
23 used to identify unexpected impacts and refine
24 mitigation as required.
25 In regards to Transmission, local
231
1 knowledge was used to avoid important fish
2 habitat and fishing areas during the routing of
3 the Transmission line. There is extensive
4 consultation with local communities. No
5 habitat critical to sustaining local fish
6 populations was identified along the proposed
7 route. All potential negative effects on
8 aquatic habitat can be mitigated for
9 construction of the transmission lines.
10 There will be site-specific environmental
11 protection plans that will be put in place to
12 make sure that impacts to fish and fish habitat
13 do not occur, and there will also be follow-up
14 monitoring that will happen during the
15 construction period again as another check.
16 I think it is now passed over to Dave
17 Hicks for the Terrestrial Environment.
18 MR. HICKS: For the record, I am Dave
19 Hicks. With your permission, Mr. Chair, I will
20 stay in my chair. I am not as mobile as my
21 colleagues here.
22 My particular role in the Environmental
23 Assessment studies and the Route Selection
24 studies were for the Transmission facilities.
25 I have about 11 slides here which deal with
232
1 both Transmission and Generation in the context
2 of effects and impacts on the Terrestrial
3 Environment.
4 The Environmental Impact Statements in
5 both cases consider the following Terrestrial
6 features: Plants and habitat, insects,
7 amphibians and reptiles, birds and mammals. As
8 my colleague Mr. Osler noted earlier, that
9 consideration did not end with the filing of
10 the Environmental Impact Statements in
11 April 2003. We have continued to do field
12 research through the summer of 2003 and will be
13 doing additional research in the years leading
14 up to the clearing and construction for the
15 Transmission lines and the development of the
16 roadway, for example.
17 In the case of the Generation Project, the
18 effects on habitats and plants will be site
19 specific or local.
20 Construction of the Generating Station
21 will potentially affect about 2600 hectares.
22 That is a very conservative estimate. That
23 deals with the total amount of disruption of
24 the Terrestrial Environment that might occur
25 over the 6-year construction period for the
233
1 Generating Station. Much of that will be
2 rehabilitated or restored towards the end of
3 the construction period. In the final
4 analysis, there will be about 660 hectares
5 permanently removed from its current vegetative
6 state.
7 I should confess many of my colleagues
8 consider I am metrically challenged. So, if
9 anyone has a problem with hectares, I will
10 remind you that one hectare is two and a half
11 acres. One hectare is basically 100 metres
12 squared and there are 100 hectares in one
13 square kilometer. So, the 660 hectares that
14 would be permanently removed here translates to
15 6.6 square kilometers.
16 No endangered, threatened or very rare
17 plants were found in the course of the research
18 work for the Generation site.
19 The use of the phrase "very rare" refers
20 to classification systems that are applied both
21 federally and provincially. Most of the
22 effected habitats are common in this particular
23 area of the province.
24 There are three less common habitat types,
25 specifically, Jackie Forest on dry soil,
234
1 which is encountered in the vicinity of the
2 portions of the access road in the borrow
3 areas, north and east of the Generation Station
4 site. There is some Balsam Fir forest, which
5 is generally at the site of the Generating
6 Station and at one stream crossing. There is
7 some white spruce forest, again associated with
8 the Generation Station site and with the shores
9 of Wuskwatim Lake.
10 The mitigation measures there would ensure
11 that any damage or disruption to those less
12 common habitat types would be subject to
13 replanting or similar mitigation at/or that
14 immediate site or nearby.
15 Again, talking to the Generation Station,
16 the effects on the shoreline habitat and plants
17 will vary a bit by location. Stuart has
18 earlier said that upstream of the Generating
19 Station, the reduced water level fluctuations
20 will occur and that will tend to favor the
21 growth of plants that are adapted to these
22 conditions; for example, peak lands, sedges.
23 There will be a decrease in plants like
24 cattails which favor a more fluctuation in
25 water levels.
235
1 Downstream in the reach immediately below
2 the power station, the increased frequency of
3 water levels fluctuations could increase the
4 break-up of peatlands along the shore,
5 particularly in some of the inlets where the
6 water is slower moving and there is a -- some
7 incidence of peatland. It could also reduce
8 the abundance of stable water regime.
9 In the case of Transmission, the effects
10 on forest and plants will be relatively small.
11 In this case, about 2800 hectares or 28 square
12 kilometers.
13 Now, I am referring here -- again,
14 conservatively -- to the entire area of the
15 rights-of-way. George Rempel has earlier
16 mentioned that there are about 350 kilometers
17 of Transmission line associated with this
18 project. In point of fact, that refers to the
19 length of the right-of-way associated with the
20 project as opposed to the length of actual
21 lines.
22 As he explained to you, in the case of the
23 corridor between Herblet Lake station at Snow
24 Lake and Wuskwatim itself, there will be two
25 lines sharing a single right-of-way.
236
1 So, the overall 350 kilometer length
2 refers basically to the distance from Thompson
3 to Wuskwatim to Snow Lake to The Pas.
4 That length, multiplied by the variously
5 60 metre or 110 metre right-of-way produces the
6 estimate of 28 square kilometers effective
7 right-of-way. The actual clearing will be
8 restricted to about 50% of that because the
9 remainder is either water, drop-out crop, or
10 wet lands. Areas where, although there will
11 still be an effect, the effect will not be to
12 clear the areas. The same impact will not be
13 incurred.
14 Shrub cover post-construction will be
15 maintained along the rights-of-way.
16 There will be a rare plant survey
17 conducted along the rights-of-way. Again, this
18 is a bit misleading. There have already been
19 plant surveys along the rights-of-way and will
20 continue to be so additional surveys.
21 In 2004, for example, our plan for the
22 Birch Tree to Wuskwatim section as preparatory
23 to finalizing the Environmental Protection Plan
24 for that area and prior to the clearing of that
25 right-of-way.
237
1 The same will occur for other Transmission
2 line rights-of-way, later on as we approach the
3 time of their actual construction.
4 One of the -- apart from the very careful
5 routing of the Transmission lines, one of the
6 principal mitigating effects is the fact that
7 the lines will be constructed during the winter
8 when there is far less risk of damage to
9 vegetation.
10 In the case of both the Transmission and
11 Generation projects, there are not to be
12 significant adverse effects in particular on
13 wildlife.
14 There will be site specific measures taken
15 to minimize effects during construction. These
16 will be described in "EnvPPs", which is
17 shorthand for "Environmental Protection Plans".
18 Site specific plans that will be filed prior to
19 the actual commencement of construction, for
20 both the infrastructure and the Generation
21 Station and for the Transmission Lines
22 associated with the Transmission project.
23 Construction effects generally tend to be
24 short-term and local. An example, noise during
25 construction may be a cause to temporarily
238
1 scare wildlife away from the right-of-way.
2 Keep in mind the construction period
3 for the Generating Station is approximately six
4 years. In the case of the Transmission lines, it
5 tends to be one or two construction seasons.
6 Winter time, two or three months in length and
7 actual construction activity tends to be
8 concentrated at particular points as construction
9 moves down the right-of-way.
10 Effects of operation of the Generation
11 and Transmission projects on birds are not
12 expected to be significant. The effects will be
13 small, although in some cases, long-term during
14 the operation period; peat habitat and some
15 habitat loss through erosion.
16 Emerging peatlands -- I think Stuart
17 earlier referred to the fact that there are some
18 mobile peat islands in that may be enjoying the
19 isolation of the islands now, may be less isolated
20 and more prone to predators than they would be in
21 the current condition.
22 The reduced fluctuations in water
23 levels upstream of the station will generally
24 benefit shoreline nesting areas, as we said, may
25 reduce some areas of offshore marsh habitat
239
1 preferred by certain species.
2 In the case of transmission project
3 again, the altered bird community, other than the
4 rights-of-way themselves, is relatively limited to
5 the area adjacent to the rights-of-way, and we
6 have filed a great deal of information on that
7 particular topic in both the EIS's and in the
8 supplementary materials.
9 There is a small risk of bird
10 collision. Manitoba Hydro experience with this
11 tends principally to involve waterfowl in areas
12 where there is a lot of waterfowl staging during
13 migration and where there may be fly-ways that
14 would be perpendicular to the rights-of-way of the
15 transmission lines. Even in those cases, there
16 are mitigative measures that can be taken.
17 In the particular case here, we, at
18 this point, have not identified any special
19 mitigation requirements for birds because
20 principally of the location of the routes relative
21 to known staging areas within the area.
22 Operation effects of mammals, again,
23 for both the generation and transmission lines
24 will be small, not expected to be significant.
25 There will be some loss of habitat, that would
240
1 will be particularly at sites like station sites
2 or the generation station site itself where the
3 loss of habitat is permanent.
4 There will be habitat alteration in
5 other locations, for example, along the
6 transmission line rights-of-way, the loss of tree
7 vegetation doesn't necessarily mean a complete
8 loss of habitat, it means an alteration in
9 habitat. As shrubs and grasses come back into the
10 right-of-way, there is a different habitat,
11 different species in some cases may favour that
12 habitat.
13 Access management, it is a key
14 consideration in this conclusion that the effects
15 on mammals will be small and will not be
16 significant, and access is a significant concern
17 of all the communities we visited, both with
18 respect to the access road for the generation
19 station, but also with respect to the transmission
20 line rights-of-way themselves.
21 There is a good deal of effort
22 currently being made. I know that Stuart has just
23 recently, working very closely with NCN, has
24 developed an access management plan for the access
25 road. We are very close at this point to an
241
1 access management plan for the first transmission
2 project, which is the construction power line from
3 Thompson into Wuskwatim itself. We have some
4 comfort now I think in dealing with NCN, and some
5 comfort on the part of NCN members, that access is
6 manageable through careful routing and through
7 attention to detail in the routing.
8 A couple slides here that deal with
9 specific species, caribou of course are a species
10 of considerable interest and concern, highly
11 valued by NCN and other communities in the area.
12 We do not expect the impacts on caribou or the
13 effects on caribou to be significant. The changes
14 in habitat will be relatively small.
15 In the case of generation project, the
16 road has been carefully selected to avoid
17 important winter range and calving habitat. There
18 are only a small number of caribou known to be
19 present in the area that would be directly
20 affected.
21 In the case of the transmission
22 project, we don't have the same certainty because
23 of the larger areas involved, but we have listened
24 very carefully to both NCN members and the case of
25 the other Aboriginal communities to other
242
1 harvesters, elders who have told us the areas that
2 they feel should be avoided, in part because of
3 their concern for caribou habitat.
4 There will be some minor alteration of
5 the habitat on an ongoing basis along the
6 rights-of-way.
7 The rights-of-way themselves, in the
8 case of transmission lines, are not considered to
9 pose an actual barrier to caribou movements.
10 There have been studies that suggest that caribou
11 will cross the rights-of-way without a great deal
12 of difficulty.
13 Another slide, this one on moose.
14 Again, the effects are not expected to be
15 significant. The habitat for moose in the area is
16 widespread. The changes in habitat will be
17 relatively small. High quality habitat has
18 generally be avoided through the careful routing
19 of the access route. The transmission line
20 rights-of-way are expected to have a neutral
21 effect. The forage will tend to be better along
22 the cleared rights-of-way, but experience
23 elsewhere has shown no demonstration of an
24 increase in habitat use along the rights-of-way by
25 moose.
243
1 Effects on fur bearers will vary by
2 species and between the projects, and again
3 overall they are not expected to be significant.
4 In the case of a generation project,
5 negative effects on aquatic fur bearers included
6 the small -- include the small loss of habitat
7 from flooding and erosion. In the case of the
8 more stable water levels upstream of the dam,
9 again, we said earlier that will tend to reduce or
10 have an adverse effect on certain plant life like
11 cattails.
12 Cattails are, in turn, a significant
13 food source for muskrats, so there may be a small
14 negative effect on muskrat that is a result of
15 that change. There will, on the other hand, be
16 some negative effects because of the increased
17 water level fluctuations levels downstream of the
18 G.S. On balance, there is no significant change
19 anticipated. Again, the more stable water levels
20 in Wuskwatim Lake should be positive in respect of
21 their impact on aquatic fur bearers and with
22 respect to the increase in shoreline peat habitat.
23 Effects on fur bearers again will vary
24 between species and projects, and again overall
25 are not expected to be significant.
244
1 I think I got a little ahead of myself
2 there at one point.
3 Again, if I can summarize quickly, the
4 generation project, the net effect is no
5 significant change expected. In the case of the
6 transmission line, there will be some small
7 habitat effects on fur bearers and some potential
8 fragmentation effects on certain species. I think
9 it came up in the course of the interrogatories
10 that there is some literature that suggest that
11 martians, for example, might be at the limit of
12 their willingness to cross the 110 metre gap that
13 would be created in the right-of-way between
14 Wuskwatim and Herblet Lake.
15 There is other evidence that suggests
16 that may be not be that serious, but nonetheless
17 there are concerns in the area which have been
18 identified in the filing.
19 Finally, as in the case of the Aquatic
20 Environment, it is intended that there will be
21 monitoring and follow-up during construction and
22 immediately following construction. That
23 monitoring will be directed principally to
24 ensuring that the mitigation measures identified
25 and demanded of the contractor in the construction
245
1 of the lines, and outlined in the environmental
2 protection plans, have been complied with. If
3 they haven't, this would be the point when any
4 remedial measures would be identified and
5 implemented.
6 We are also in the process now of
7 developing monitoring plans for the operation
8 phase. This is becoming more frequent and a more
9 routine aspect of environmental planning with
10 Manitoba Hydro. In the course of the 15 or so
11 years that I have been involved with the
12 corporation on projects of this kind, we have
13 gradually been, I think, improving the quality of
14 environmental protection planning, and working
15 very hard in recent years to incorporate not just
16 construction, but also operating considerations in
17 the protection plans, so that the operation staff
18 are equally aware of the issues and looking to
19 avoid any detrimental effect in the rights-of-way.
20 I mentioned earlier that there is
21 concern about access, increased access. In some
22 cases, trappers with NCN actually see an
23 opportunity here to gain better access to areas
24 south of the Burntwood that have been relatively
25 inaccessible since the implementation of the CRD
246
1 because of water crossing risks and ice
2 conditions. But there is concern in virtually all
3 the communities that we visited, certainly among
4 the resource users, that increased access might be
5 a problem.
6 What we have said, experience has
7 indicated to us that the problem is not perhaps as
8 serious as is the concern in some cases, but to
9 the extent that there is a concern expressed by a
10 local community, we have undertaken to work with
11 the communities to develop access management
12 plans. As I said earlier, we are nearing
13 completion of such a plan, or at least the first
14 draft of such a plan with NCN for the construction
15 power line from Thompson into Wuskwatim.
16 That concludes my presentation and I
17 will turn it back to Cam Osler. Thank you.
18 MR. OSLER: The final set of
19 components we will talk about is socioeconomic and
20 the heritage resources. This set of -- this part
21 of the environmental components, as set out in the
22 guidelines, includes the following: It includes
23 resource use by people. It includes land and
24 water use in the transmission EIS. It includes
25 the economy, which are the effects on jobs,
247
1 business, economic activity. It includes
2 infrastructure and services in the communities,
3 whether they are affected. It includes personal
4 family and community life, which itself is a broad
5 range of elements dealing with the family, with
6 the person, and with the community, whether it is
7 health and safety, whether it is community access,
8 whether it is esthetics, planning by communities,
9 governance, a wide range of matters that we will
10 talk about. And finally the heritage resources,
11 which is a separate component in the EIS
12 guidelines and in the EIS statements, which are
13 physical heritage resources, and whether they are
14 affected in any way, shape or form by this
15 project.
16 The pathways for these effects are
17 laid out in the document. We are not going to go
18 through them today, but I will just go to some
19 highlights like my colleagues.
20 Dealing with first resource use, the
21 generation projects, the effects will tend to be
22 long-term and positive for the reasons you already
23 heard.
24 Resource harvesting in the Wuskwatim
25 area is currently limited due to difficult access.
248
1 By developing this project, there will be
2 increased access, not only where you see the road,
3 but for harvesters, if this is the way people want
4 to manage it, even across the dam to the south
5 side of the Nelson House resource management area,
6 which has not been accessible given the CRD, and
7 there will be positive effects therefore for the
8 domestic harvesters, commercial fishers and
9 trappers.
10 A road access management plan being
11 developed -- well, a draft plan has been
12 developed, it has now been approved by NCN and
13 Manitoba Hydro, and it was circulated to
14 participants in this hearing as of Friday, and it
15 is on the Manitoba Hydro website as of Friday.
16 So, that's a draft plan that focuses
17 on the construction phase in particular and the
18 outlines of how they would think they would
19 approach the operations phase. It talks about
20 controlled access on the road. It talks about the
21 intent of having that controlled access maintained
22 even during operations by having a private road or
23 its equivalent.
24 So, we commend that document for
25 people's attention to lay out the approach that
249
1 NCN and Manitoba Hydro are taking with respect to
2 that issue.
3 Transmission effects on resource use
4 will be both positive and negative. The clearing
5 and construction activities may cause some
6 wildlife to temporarily move away from the area,
7 as Dave Hicks has just explained. Short term and
8 minor will be the nature of the effects. The
9 trappers will be notified in advance of the
10 schedule for clearing and construction activities,
11 and Manitoba Hydro will reimburse trappers for
12 loss for harvesting during construction and
13 clearing.
14 After construction some trappers may
15 then benefit from improved access to their
16 traplines, which has been noted throughout the
17 discussions that have taken place with them.
18 If a community, though, has concerns about
19 increased access, a transmission access management
20 plan will be developed with them. And of course
21 you have heard that NCN for sure is asking that
22 this be done, and it will be done for transmission
23 routes in their area.
24 Transmission effects on land and water
25 use -- which is specifically required in the
250
1 guidelines for the transmission EIS. None of the
2 proposed routes are located on existing reserved
3 lands. Two treaty land entitlement selections are
4 affected by the proposed routes, and discussion
5 will be required with the affected First Nation,
6 which is NCN, and the Provincial government
7 regarding any necessary use by Manitoba Hydro of
8 those lands.
9 The proposed routes cross through the
10 Nelson House resource management area, the
11 Cormorant resource management areas, and OCN's
12 tradition territory. Proposed routes also crosses
13 the Tom Lamb wildlife management area, and area of
14 special interest of ASI under the Manitoba's
15 protected areas initiative. It does this for
16 approximately 47 kilometers. Approximately 16 of
17 these 47 kilometers are parallel to an existing
18 rail line. The transmission line is expected to
19 have a very minimal effect therefore on this
20 wildlife management area.
21 Moving beyond the effects on resource
22 use and land and water use, and moving into the
23 economy, the pathway -- main pathway here is the
24 construction period jobs of the generation
25 project. This diagram summarizes those jobs over
251
1 the time period, the six years of the
2 construction, which if the project goes forward,
3 it will be 2004 to 2010. It shows you two stages
4 of construction. The first two years, access
5 road, infrastructure, and camp development, in
6 order to get the site prepared for the development
7 to be done, and the next four years stage 2 of the
8 generating station construction itself. You see
9 that the nature of the employment jumps up and
10 down. It peaks in the summer and is very low in
11 the winter. It is seasonal in its nature.
12 The two colours here tell you two
13 different levels of skill requirements. The green
14 represents designated trades. That is trades such
15 as carpenters, electricians, where you have to
16 have at least four years of training and
17 employment history in order to be fully qualified,
18 and you have to have at least three years before
19 you are even qualified as an apprentice for the 20
20 percent of the jobs that will be available for
21 apprentices.
22 When you see all that green, don't
23 think that somebody gets a job at day one and
24 keeps going. Of course it cycles through the
25 different trades as they are required, the
252
1 carpenters being earlier on and electricians being
2 later on. So you don't get one job all the way
3 through here, and you don't get one job all year
4 long.
5 In terms of the blue, we are talking
6 about the balance of construction contractor jobs,
7 the 90 percent or more jobs on the site that are
8 being contracted by the contractors.
9 These are the non-designated trades,
10 construction support services, heavy equipment
11 operators, truck drivers, people working the
12 catering, et cetera.
13 These require typically less than
14 three years worth of training, and in many cases,
15 almost the majority of them, less than 12 months
16 worth of training and history of employment. They
17 are very dominant jobs in stage two period, and
18 they are not as dominant in the period of
19 building, the actual construction of the facility
20 over the four years.
21 All of these jobs on this construction
22 site will be through a collective agreement. The
23 current collective agreement Burntwood/Nelson
24 Agreement will expire and a new one is being
25 negotiated. It is not yet negotiated.
253
1 Looking at the information that you
2 saw there, our job was to look at this and come up
3 with some estimates of what the effects of
4 employment will be for Aboriginal northerners. It
5 will be positive is our conclusion, but the
6 numbers were developed looking at factors,
7 including what you just saw for generation
8 project. We looked at four factors in effect. We
9 looked at the negotiated contractors, contracts,
10 which could be very important through stage one.
11 Looked at the pre-project training activities that
12 were described earlier today by Mr. Wojczynski and
13 Ken Adams, being funded by Hydro and the
14 governments -- and also being heavily developed at
15 NCN through their ATEC training facility which has
16 been developed in the last short while. We looked
17 at the preference that is likely to exist. We
18 made an assumption that the preference for hiring
19 will be for Aboriginal northerners, resident not
20 just at NCN, but resident in what we called the
21 Nelson and Burntwood River regions, which includes
22 South Indian Lake all the way downstream on the
23 CRD. It includes the entire water reserve area of
24 the CRD and the LWR, as well as Pikwitonei,
25 Wabowden and Thicket Portage.
254
1 Finally, we considered beyond the job
2 training activities as well required of the
3 contractor. With all these things in mind, our
4 estimates for the two stages, the first two years,
5 stage one, that there would be, as you can see
6 here, 81 to 93 potential jobs for NCN, including
7 their members at South Indian Lake, and 57 to 69
8 potential jobs for other Aboriginal residents.
9 That reflects the very important role that we
10 think negotiated contracts involving NCN
11 businesses will play in that stage. During stage
12 two, there is much more employment but a much
13 heavier requirement in terms of training and skill
14 development. The numbers are, absolute terms, not
15 that much different, they go up a bit, 80 to 113
16 potential NCN jobs, and 181 to 256 potential jobs
17 for other northern Aboriginal residents. But the
18 percentages go down because of the skill
19 requirements we are talking about. .
20 Overall, in the project region that I
21 talked about, Nelson River CRD region, up to 90
22 percent of the jobs during the first two years, or
23 about 142 at the peak, might go to northern
24 residents in that region, and 31 to 42 percent
25 might go to northern residents during the next 4
255
1 years.
2 If this is achieved through all the
3 measures we are talking about, it will be
4 noticeably different than say the Limestone
5 experience where the average was in the range of
6 20 to 25 percent of northern Aboriginal
7 employment.
8 The full socioeconomic effect of what
9 we are talking about here is not just money in
10 people's pockets, it is all the effects that go
11 with it in terms of the training and the
12 development and the capability and the learning
13 experiences that come from working in this type of
14 environment if you haven't had the opportunity
15 before, and the opportunity, if you like that type
16 of work, to do it again in the future. It is,
17 particularly for those that get more training, it
18 is a career, and it s development of which this is
19 a start rather and an end. The extent to which
20 this is indeed the first of several projects could
21 be very important to these people if they have the
22 opportunity to get their start here.
23 Moving beyond that, the generation
24 construction effects will include northern
25 business purchasing opportunities, negotiated
256
1 contracts are being pursued with NCN, as I have
2 just mentioned. The limited opportunities may
3 also exist for other entrepreneurs to start
4 businesses. To the extent that we go beyond that
5 and think of contracts not being negotiated
6 contracts, we would be looking at Manitoba Hydro
7 having tenders for qualified northern businesses
8 such as restricted tendering, or from all
9 businesses which would be open tendering.
10 Overall, when you look at the full
11 development, the full hundreds of millions of
12 dollars that are being dealt with, most of the
13 contracts for developing this facility, including
14 the general civil contract, will be awarded
15 through open tender.
16 Generation will benefit NCN also
17 through ownership investment. In the type of
18 assessment we are doing, we look at this. If you
19 are looking under the Canadian Environmental
20 Assessment Act, we wouldn't look at this.
21 NCN has an option to be a partner in
22 the project with an interest of up to 33 percent,
23 as you have heard. Revenue from this investment
24 would be a main economic benefit realized by NCN
25 during the operations phase, after the facility
257
1 starts operations, ranging from several million
2 dollars a year in the early years after 2010, and
3 growing to tens of millions of dollars a year in
4 the long-term. However, NCN also share in some of
5 the risks and actual revenues will be based the
6 financial performance of the generation project
7 itself.
8 Moving beyond the generation, the
9 transmission effects on employment and business
10 will be positive and small. The contracting
11 opportunities in this case will be available under
12 Manitoba Hydro's northern purchasing policy rather
13 than throughout the partnership agreement as such,
14 or through anything we were just talking about.
15 Discussions with First Nations and
16 Aboriginal communities in the vicinity of these
17 transmission lines will help to assess and improve
18 opportunities. These discussions will be ongoing
19 as the projects get approved and go forward. The
20 employment opportunities for transmission line
21 construction will be during the winter months.
22 They tend to be over two years, one year for
23 clearing and the next year for construction
24 activities.
25 The jobs are much, much smaller, and
258
1 we are just talking about in the generation. You
2 are talking 15 to 30 jobs for each one of those
3 three line segments, Thompson to Wuskwatim, or
4 Wuskwatim to Snow Lake, or Snow Lake to Ralls
5 Island, and maybe 10 to 70 jobs during the second
6 year of construction. So, there are very much
7 smaller opportunities than exist with the
8 generation site.
9 When we go to operation and
10 maintenance, there may be -- it may result in some
11 small sort term contracts for brush clearing on an
12 ongoing basis as the lines are maintained.
13 At the stations that are being built,
14 the transmission stations -- Birch Tree and
15 Wuskwatim are new, and the others are being
16 modified inside their existing limits -- stations
17 will require highly specialized workers, but it is
18 likely to provide some job opportunities during
19 development.
20 Moving from the economy to the
21 infrastructure and services, the effects will be
22 mitigated. The generation project, the community
23 based training and construction employment may
24 result in some NCN members and their families
25 returning to Nelson House. Returning migration
259
1 may strain the housing situation and other
2 infrastructure, and measures will be taken to
3 monitor and reduce this.
4 There is a very wide range of
5 possibility here. The members in the reports,
6 anywhere from 35 to 400 individuals. This has to
7 be monitored. The community is looking at how to
8 do this. It has to be mitigated and managed as a
9 process. But on the other hand, if people are
10 coming back, they are coming back for a reason,
11 and the best we can do is to inform them and to
12 help manage the process to the best of everybody's
13 ability.
14 Transmission project, proposed routes
15 crossed or in the proximity of some existing
16 infrastructure such as roads, railways, airports,
17 float plane base -- special requirements or
18 mitigative measures currently are not anticipated
19 to be needed and no effects are expected on the
20 local community infrastructure and services.
21 Moving beyond infrastructure and
22 services to the final component of the
23 socioeconomic environment, personal family
24 community life, one of its elements is
25 transportation and safety, and we are throwing in
260
1 esthetics here, in each one of these the effects
2 will not be significant.
3 In terms of the generation project,
4 yes, there will be some additional traffic during
5 the construction period in certain areas, but this
6 is not seen to cause any significant basis for
7 concern. Measures to warn newcomers who were at
8 the site working, or travelling there, about the
9 existing travelling hazards on Wuskwatim Lake and
10 along the Burntwood River system will be part of
11 the program. Physical changes themselves brought
12 about by the generation development on the
13 esthetics of the area will be limited to the land
14 of the project site, the borrow areas along access
15 road, areas which are at the moment not generally
16 accessible or being viewed by people.
17 In terms of the transmission route
18 project, route selection where feasible avoids
19 residences and cabins. In one instance a cabin is
20 approximately 120 metres away, but will be
21 screened from the transmission right-of-way by
22 buffers of trees. The community of Umperville is
23 located east of the proposed route, but there is a
24 vegetative buffer that separates it and the
25 right-of-way. Impacts in general are expected to
261
1 be, in terms of access, safety and esthetics,
2 minor, and what they call incremental in nature,
3 meaning that in many cases they will be inside
4 existing right-of-ways in the area, for example,
5 around Umperville.
6 Generation effects on NCN health and
7 social well-being, another element of personal,
8 family and community life, will be managed. There
9 is no direct effect on health due to the water
10 quality changes that Stuart described earlier at
11 Wuskwatim Lake. People camping and living there
12 and using the water will not see significant
13 quality changes in the water.
14 Mercury levels in the pike and walleye
15 in the lake may be temporarily increased. The
16 levels would remain lower, though, than those
17 found today at Threepoint and Footprint Lakes, and
18 mitigative measures as noted, and monitoring will
19 take place of mercury in the fish.
20 During construction, indirect effects
21 both positive and negative will occur on community
22 health at Nelson House and social well-being at
23 Nelson House, and these will need to be managed.
24 Income, employment and training are
25 wonderful things, but they are changes for people
262
1 and they could produce issues in terms of their
2 ability to deal with these changes. The people of
3 Nelson House are examining that, they are well
4 aware of it and they are looking at ways to manage
5 the positive and the negative, so that the outcome
6 is good for everyone.
7 Returning population, I noted is a
8 potential issue that has to be managed and
9 monitored by the community. Concern about
10 environmental changes is another dimension that
11 comes from the history of the CRD. No matter what
12 we say, no matter what we do, people who lived
13 through the CRD in Aboriginal communities have a
14 high degree of stress and anxiety, particularly if
15 they are elders, that new changes will not be
16 whatever we say they will be, they will be a lot
17 worse. That NCN, in order to deal with the issue
18 with its community, has to manage and deal with
19 and discuss.
20 In the long term, potential new
21 revenues from this NCN investment, if it is
22 developed and if they make the investment, could
23 help address community priorities in the longer
24 term and contribute to improvements on an ongoing
25 basis in health and social well-being of their
263
1 community.
2 Looking beyond the generation, looking
3 at the transmission projects, it will not result
4 in adverse effects on health. Design and
5 operating standards will avoid risks to health and
6 safety. No adverse health effects are anticipated
7 from exposure to electric and magnetic fields
8 associated with the transmission facilities. The
9 general consensus of world-wide scientific
10 community, as far as we report on it, is that a
11 public health risk from exposure to electric and
12 magnetic fields, or EMF as they are often referred
13 to, is not established. And this position is
14 supported by Federal and Provincial health
15 agencies, and by the Manitoba Clean Environment
16 Commission sponsored EMF experts workshop and
17 position statement in 2001. Manitoba Hydro
18 continues to monitor studies on this subject,
19 though, and measurement of EMF in individual homes
20 will be made available on request for people that
21 have specific concerns.
22 Generation projects effects on NCN
23 culture will also be managed by the community.
24 NCN has identified the need for ceremonies to be
25 undertaken before changes are made to Taskinigup
264
1 and Wuskatim Falls and the area. Although the
2 esthetics may not be a big deal because nobody is
3 there at the moment, these are very important
4 cultural areas for the community, and the treating
5 of them with respect and the ceremonies involved
6 with them in dealing with it, and dealing with the
7 other sacred areas and cultural areas in this
8 traditional Wuskatim Lake area of NCN, is critical
9 to dealing with this in a respectful way. NCN
10 members in the future, if this is developed, could
11 more easily visit the important sites in this area
12 which they have been shut away from so long.
13 Monitoring and contingency plans to
14 protect Wuskatim Lake cultural sites are critical
15 elements, including, as Councillor Thomas and
16 others have noted, it doesn't matter that Manitoba
17 Hydro and the expert team say we don't think there
18 will be any problems of water invading the
19 cultural sites in this area, the elders and other
20 people want to make sure that they will be
21 monitored anyway, and people talk about ways to
22 deal with it in case the experts are wrong.
23 NCN will establish a culture and
24 heritage committee as a community to deal with
25 these issues and to deal with all of the cultural
265
1 ongoing management issues associated with this
2 project.
3 Generation effects on the heritage
4 resource, which is the final component in the EIS
5 guidelines, will not be significant and will be
6 monitored. The heritage resource surveys
7 conducted in areas for the construction camp, the
8 site of the generating station, the access road
9 and the borrow areas for the generation project
10 showed no specific archeological sites being found
11 at the present time. A way marker, which is a
12 marker showing the way, was found and has been
13 relocated. But when these areas are developed,
14 using good, best practice, there will be an
15 archaeologist on site to check as the process
16 unfolds during the construction process for any
17 artifacts or any other heritage resources as they
18 are defined under the Act.
19 NCN elders and members were consulted
20 to ensure that cultural and other sites were
21 identified and protected, both in the planning and
22 in the programs for implementation and
23 construction, and indeed in the long run through
24 the operation of the area.
25 To complete this, on the transmission
266
1 side, the effects on heritage resources will be
2 minimized and are being minimized through routing,
3 and they will be monitored through the
4 development. The routing process avoided known
5 important cultural heritage sites, as Dave Hicks
6 has already set out, and they are very important
7 in various places, including the NCN area around
8 Wuskwatim Lake.
9 Construction phases of the project
10 have the potential though to affect unknown
11 heritage resources. So before construction,
12 surveys along the rights-of-way will be done to
13 identify unknown heritage resources, and newly
14 identified sites will be flagged and/or removed
15 before construction begins. The Manitoba Heritage
16 Resources Branch and First Nations in the area,
17 and Aboriginal communities in the area will be
18 advised as appropriate of anything that is found
19 and how it is being dealt with.
20 That concludes our review of the
21 components by each one of the environments -- and
22 I will ask George Rempel, as the overall
23 coordinator for our team that has been working on
24 this, to just summarize three slides of the
25 overall effects that were put in the integrated
267
1 summary, and then there will be some concluding
2 comments I think from Mr. Wojczynski and
3 Councillor Thomas.
4 MR. REMPEL: Thank you, Cam.
5 As Cam indicated, we have three
6 slides, one each on the generation and
7 transmission projects and then a summary slide.
8 Basically the summary of effects for
9 the generation project builds on the fact that it
10 was designed to be a low impact project. This low
11 head design that we have talked about reduces the
12 amount of flooding, a very key characteristic of
13 this project. The modified run-of-the-river
14 operation balances inflows and outflows. This is
15 not a fill and draw reservoir. The reservoir will
16 be kept very stable. As a result, water level
17 fluctuations on Wuskwatim Lake will be reduced,
18 and the extent of water level fluctuations
19 downstream will be limited.
20 The environmental and cultural
21 considerations have been incorporated into the
22 route selection and the management of access on
23 the road to the site.
24 There will be environmental protection
25 plans, that is a requirement of the guidelines.
268
1 They will be developed before the construction
2 starts. In fact, work has already begun on that.
3 They will meet regulatory requirements and any
4 conditions that are imposed in the event the
5 project is approved, and they will incorporate
6 proven environmental practices, and the
7 contractors will be obligated to conform to these
8 environmental protection plans.
9 With regard to the Wuskatim
10 transmission project, again, it has been designed
11 to minimize effects, and that has been primarily
12 done through careful selection of proposed routes.
13 And Manitoba Hydro has extensive experience with
14 design and construction standards and practices
15 which will reduce environmental effects. Manitoba
16 Hydro has standard environmental protection
17 practices. It incorporates local and traditional
18 knowledge in the construction and operation of the
19 lines, but particularly in the construction.
20 Again, environmental protection plans will be
21 developed before construction starts, and this
22 will outline site specific mitigation measures
23 which will be provided to the contractors, and
24 again, they will be obligated to adhere to these
25 measures.
269
1 So, in summary, the projects have been
2 designed to avoid and minimize adverse effects.
3 Our conclusion, as environmental practitioners, is
4 that they are not going to create significant
5 adverse effects on the environment or related
6 effects on people. We have identified some
7 adverse effects such as erosion and land use
8 changes. They are unavoidable. It is our
9 judgment that these are not significant.
10 We do believe there will be positive
11 bio-physical effects by displacing global
12 greenhouse gas emissions from other sources and by
13 the reduction of fluctuations that presently occur
14 on Wuskwatim Lake.
15 We also believe that there will be
16 positive socioeconomic effects during construction
17 and operation for people in the local region of
18 the projects, as well as throughout the project --
19 throughout the province I should say.
20 That concludes our presentation on the
21 Environmental Impact Assessment. We appreciate
22 your patience. At this point, I believe
23 Mr. Wojczynski and Councillor Thomas are going to
24 wrap up the presentations.
25 MR. WOJCZYNSKI: Mr. Chair, Councillor
270
1 Thomas and I talked, we thought we could get done
2 in less than 10 minutes. If you prefer, we can
3 hold and wait until the morning, but we could try
4 to keep it as brief as possible. We are at your
5 disposal.
6 MR. LECUYER: I hear you saying 10
7 minutes, and I think that is best that we conclude
8 the presentation at this time, with the additional
9 remarks that you are referring to. I think we
10 have sat here through until now, we can continue
11 for -- another 10, 15 minutes won't change that.
12 MR. WOJCZYNSKI: I will start off, and
13 then Councillor Thomas will provide the final
14 remarks.
15 You have heard much today about the
16 need for alternatives and the EIS. I would like
17 to now briefly summarize both of these in the
18 context of Manitoba Hydro's commitment to
19 sustainable development principles that Mr. Adams
20 referred to this morning in his opening remarks.
21 I will do so very briefly and I will keep it short
22 by listing the 7 principles of sustainable
23 development and how the project embodies these.
24 So, starting off with the integration
25 of environmental and economic decisions, it is one
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1 of the principles, sustainable development
2 principles in Wuskwatim, the environmental and
3 economic factors have been integrated quite
4 clearly in the kind of discussion we had today,
5 resulting in a profitable project that minimizes
6 negative local environmental impacts, creates
7 positive global environmental impacts, and
8 produces overall positive social benefits.
9 A second principle is shared
10 responsibility and understanding. Through
11 NCN/Hydro partnership and through consultation
12 with other people and communities, there is shared
13 responsibility and understanding.
14 Global responsibility, another
15 principle -- clearly, and we have been emphasising
16 throughout the day, Wuskwatim will contribute to
17 global efforts to reduce greenhouse gases and
18 other emissions as well.
19 Other principles as well,
20 conservation -- Wuskwatim will make sustainable
21 use of renewable resources with no anticipated
22 significant adverse environmental effects.
23 Prevention -- major adverse effects
24 are avoided, others are mitigated.
25 Rehabilitation -- construction sites
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1 will be rehabilitated.
2 Stewardship -- current and future
3 generations both will benefit. Perhaps I should,
4 at that point, expand slightly and I will be
5 quick.
6 The current generations will benefit
7 from training, employment, and business
8 opportunities as we talked about earlier. Future
9 generations will benefit from the project
10 benefits, overall the project profits, and the
11 enduring benefits to all Manitoba Hydro ratepayers
12 and to NCN.
13 As well, though, there will be a
14 reliable and clean source of power for domestic
15 customers in the long term and the very long term.
16 Overall, the planning and development
17 of Wuskwatim embodies the principles of
18 sustainable development, and help convince us,
19 help assist us in being confident that Wuskwatim
20 will be Wuskwatim a very beneficial project.
21 Thank you. I will turn it over to
22 Elvis.
23 MR. THOMAS: Thank you, Mr. Chairman,
24 Commissioners. We have now come to the end of our
25 formal presentation today, and I would like just
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1 to make a few brief concluding comments as well.
2 We have focused on three main areas.
3 We have described the whole project to everyone
4 here. And also we have focused on the need for
5 and alternatives to, area of concern, and also the
6 Environmental Impact Statement and the role that
7 our people have played in the role of traditional
8 knowledge in the whole process.
9 Article 8 of the Churchill River
10 Diversion implementation agreement that NCN
11 ratified and signed in 1996, which is commonly
12 referred to as the Northern Flood Agreement
13 implementation agreement, signed by our people
14 includes an article A process that requires that
15 Manitoba Hydro consult with our First Nation prior
16 to proceeding with any future hydroelectric
17 development in our traditional territory, which is
18 now referred to as our resource management area.
19 They also have to obtain our consent and deal with
20 compensation issues prior to the start of
21 construction.
22 Now, when Hydro first began
23 considering the Wuskwatim project a number of
24 years ago, the corporation complied with article 8
25 and approached our First Nations to ask us, to see
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1 if we wanted to look at the possibility of
2 participating in developing the Wuskwatim project.
3 The NCN Chief and Council decided, yes, this would
4 be a good opportunity to explore. And I, as a
5 member of council, was given the future
6 development portfolio to ensure that this issue
7 can be looked at as well as can be.
8 Along with that, a former negotiator
9 for the implementation agreement, Marcel Moody,
10 was leading negotiations at that time, and there
11 was also a former Chief, Norman Linklater. Both
12 of those people I saw as being valuable to this
13 process, so I engaged them as my co-managers, and
14 they became a part of my team to oversee the
15 future development portfolio.
16 We hired our own legal, financial and
17 engineering advisors. On top of that, we also
18 made sure that, if this is going to be a
19 meaningful process, that we would engage in a
20 community driven process. By that, it used to be
21 that outside experts, advisers, consultants, you
22 name them, they all seem to be leading the
23 situation with respect to trying to negotiate for
24 the best interests of our people. We found that
25 it ended up being a long drawn out process where
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1 all the benefits went to them as opposed to my
2 people. So we had enough of that. The Chief and
3 Council decided that we were going to take the
4 bull by the horns and start negotiating for a
5 deal. It wasn't too long when we concluded the
6 implementation of the 1996 agreement, and we
7 started receiving benefits for our community, and
8 we also negotiated strongly to have an article 8
9 process included that would require Manitoba Hydro
10 to come to us first before doing anything again
11 within our traditional territory, efforts or
12 activities that would severely impact upon our
13 rights as First Nations people.
14 We established a team. We made sure
15 that our people were hired to be the consultants.
16 We hired also financial, legal, engineering
17 advisors, and these people are all working for us.
18 We direct them as opposed to them directing us.
19 So there has been quite a significant change. As
20 a result, by doing things that way where our
21 people are involved via open houses, newsletters,
22 and other forms of communication, something that
23 has not been done by any government that I have
24 seen in Canada, whether it is the Manitoba
25 Government or the Government of Canada, they have
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1 not consulted with the people in the way that we
2 have. We have established a process that is truly
3 historical in nature and different from the way
4 business is done as usual.
5 So, with that, we feel confident that
6 we will -- we have been involved in this process
7 that will produce a very positive impact for our
8 people.
9 If you will note from all the
10 presentations that have been done, we have focused
11 on three main areas, in addition to other things
12 as well, of course. One being employment and
13 training. We have tried to secure employment for
14 our First Nations people, for NCN, because it is
15 our area that is going to be developed and
16 impacted. But we have also taken into
17 consideration that there are other people living
18 in Manitoba and Canada, and we factor that into
19 our thinking as well, and tried as best we can to
20 spread out the opportunities and the benefits that
21 would be materializing from this project.
22 We have also tried to secure the
23 contracts, the direct contracts where we could do
24 some of the work that is going to be needed for
25 the project. And we have also come to a point
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1 where we have also asked for some ownership. Our
2 people asked us, or directed us to go out and
3 negotiate with Hydro to see if we can own a
4 portion of the dam. We initially started with 10
5 percent, we ended up with 33 percent. We think
6 that is a very good achievement for us. Hydro so
7 graciously decided they were going to consider
8 that as a good -- part of the deal that we are
9 negotiating.
10 We think it is a very wise decision,
11 to ensure that we can partner in projects that
12 occur on our traditional territory. And I think
13 that will help to set the stage for the any
14 upcoming ing projects that are going to be
15 considered. We have done things in a way that is
16 quite different.
17 We have had two -- or we are going to
18 have had two, by the time we finish, referendums
19 on this issue. The first one we got back in
20 September of 2001. We received 66 percent overall
21 support. In Nelson House per se or proper, we
22 received 82 percent support from our community.
23 Now, that is a very strong amount of support that
24 we got from our people to pursue this deal.
25 In addition, when we finalized the
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1 project development agreement, most of which is
2 previewed in the summary of understandings that
3 has also been put forward to the Commission --
4 excuse me, I think it was bad water in the first
5 place -- the project development agreement itself
6 will be taken to the people, again, and we will
7 have another secret ballot vote in a referendum to
8 either get approval or not get approval for this
9 particular project.
10 We want the Chairman and Commissioners
11 to keep in mind that we have had a number of
12 critics as well along the way. In any democratic
13 society, you will find you do not have 100 percent
14 support from all the people that put you in
15 positions of leadership. You will have some
16 people that think they have better ideas than you
17 do, and they voice those kind of concerns.
18 In addition, just as a final comment,
19 we have had various environmental groups -- and I
20 don't want to disparage or say anything negative
21 towards the people who are expressing genuine
22 interest about impacts on the environment -- but
23 we have had one very significant environmental
24 group come in while we were living our way of
25 life, and they protested against us capitalizing
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1 on the fur trade. That totally decimated our way
2 of life. They did not have anything to offer in
3 its place. I hope that that doesn't happen this
4 time around. That you will hear their concerns,
5 but at the same time, if they have nothing better
6 to offer, I suggest that perhaps maybe our way of
7 doing things might be a better option to pursue.
8 With that, I thank you very much for
9 taking the time to listen to me and also my
10 people. Thank you.
11 MR. LECUYER: Thank you very much. I
12 realize you have been sitting at the front and
13 speaking to us all day, and we will reconvene
14 tomorrow morning, and we will expect you will
15 still be sitting and answering to us, or speaking
16 to us again for some days to come -- not only to
17 us, but to anyone present and participating who
18 has questions, concerns to address. So, we are
19 early in the process. We have gone along way in
20 one short day. I thank you for that. We will
21 reconvene tomorrow, Mr. Grewar, again at 9:00
22 o'clock?
23 MR. GREWAR: That's correct,
24 Mr. Chairman, 9:00 a.m.
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