First Nation can finally tap hydro cash
After more than two decades, power plant project to begin paying $1 million annually
More than two decades after a hydro plant changed the face of a major river in their traditional lands Constance Lake First Nation will start receiving financial benefits from the electricity it generates.
Starting this year, Constance Lake First Nation, about 30 kilometres west of Hearst, Ont., will receive about $1 million annually in benefit payments under an agreement signed with the provincial government in late May.
Those payments will continue until January 2047 as long as the19-megawatt Shekak-Nagagami hydro plant continues to produce electricity for the province, a ministerial directive to the Independent Electricity System Operator shows.
“It’s not the saving grace but it does provide some extra dollars to do some extra things that we want to do for the community,” said Constance Lake Chief Rick Allen.
What it doesn’t do is make up for chronic underfunding by the federal government, the significant changes the dam has caused in the Shekak River, or the fact that the community hasn’t received any payments through its initial partnership agreement, Allen said.
The Shekak-Nagagami project is owned by the Algonquin Power (Nagagami) Limited Partnership between Constance Lake First Nation and subsidiaries of Brookfield Renewable, which acquired the facility in 2006. It sells electricity to the province through a power purchase agreement with the Ontario Electricity Financial Corporation.
The new benefit agreement signed with the province was the first to be formalized under the Ministry of Energy’s grievance table process — a forum for Ontario and First Nations to work out historical energy infrastructure grievances.
“The reliable revenue stream from this project will go a long way in improving economic development opportunities within the community,” said Indigenous Relations and Reconciliation Minister David Zimmer in a May press release.
“This is one of many steps on Ontario’s journey of healing and reconciliation with Indigenous peoples.”
Energy Minister Glenn Thibeault added that the agreement “is an important example of the 2015 Political Accord between First Nations and the Government of Ontario coming to life.”
“Together, over almost two years, we participated in an open, respectful and innovative process that will now result in long-term benefits and increased prosperity for Constance Lake First Nation,” he said.
Several other First Nations are also negotiating benefit agreements with the province over historical energy projects such as the Shekak-Nagagami hydro facility under its grievance table process.
It’s a positive step, Allen said, but one that’s long overdue.
“Yes there are agreements out there that are starting to happen but that should have happened on day one,” he said.
“These are our resources, this is our livelihood and I think it’s time that we get our equal share back.”
For Constance Lake, which has 1,650 members, the newly minted agreement is just “the first bite of the apple” in 20 years, Allen said.
He hopes to also address the project debt that has prevented Constance Lake from benefiting from its partnership agreement with Brookfield.
While Constance Lake has been a partner in the hydro project since 1994, the community didn’t support the dam initially.
“At the very beginning it was forced upon us,” Allen said, adding that the partnership agreement they were offered was a “take it or leave it” deal.
The project’s financial history is complicated. When it became mired in debt, due to lower than expected electricity production and high interest rates — challenges that predated Brookfield’s interest in the project — the Ontario Electricity Financial Corporation (OEFC) had to step in to help cover repayments to financial backers under the power-purchase agreement.
While the financers are now paid off, the OEFC still holds about $48 million on the project and any profit is used to pay that off.
As a result, there have been no dividends to share between Constance Lake and Brookfield.
Brookfield declined to comment on the project’s finances.
At the same time, the dam has caused significant changes to the Shekak River that have affected the community members’ livelihoods and traditions, Allen said.
“It’s right in the heart of our traditional territory,” he explained.
The Shekak is “a major river that many of our elders and many of our people still utilize — I utilize it.
“It’s on my uncle’s trapline and he wasn’t negotiated with during that time. They didn’t ask him what the impacts were going to be,” he said.
But the impacts have been significant.
The dam has “dried up the river” affecting the community’s hunting and fishing grounds, Allen said.
“It’s not the same river it used to be.”
The new benefit agreement with the provincial government is a step in the right direction, but “there’s no money in the world that would bring back that river,” he said.
It’s also not enough to make up for a chronic funding shortfall that affects everything from education to infrastructure in Constance Lake.
Ontario provides $11,500 per student in the public school system, Allen noted, while students in Constance Lake receive $4,500 each from the federal government.
“That’s the kind of thing where our money will go to offset being still treated like we’re not important to Ontario or Canada,” he said.
While the federal government committed new funding for First Nations’ education programs and capital investments in the 2016 budget, a report from the Parliamentary Budget Officer said the difference those commitments make depends on how the funding is allocated and if the federal government addresses “the historical trend of lapsing significant amounts of capital funding.”