Thank you, Mr. Speaker. I’d like to follow up with my statement earlier today. Recently, Borealis GeoPower in partnership with Acho Dene Koe First Nations of Fort Liard and the federal government developed a geothermal power project, the feasibility of which was confirmed by a third-party review. The company met with every obligation for a Mackenzie Valley Land and Water Board permit. The failure of NTPC to provide a power purchase agreement stopped the project.
Let me start with one specific. What was GNWT’s investment of taxpayer dollars and funds into this project? That is, including third-party review and other costs that we covered, how much did we contribute to the evaluation and development of this project proposal? Mahsi.
Thank you, Mr. Bromley. Minister of Finance, Mr. Miltenberger.
Thank you, Mr. Speaker. The records indicate $190,000. Thank you.
A power purchase agreement from the Power Corporation was a condition for the federal funding available. Despite a three-year window in which to provide the necessary power purchase agreement was not forthcoming from NTPC. The government has said that it provided the terms for an agreement, knowing full well that this falls short of the requirement for the PPA. This failure cost residents, businesses and government millions of dollars in the loss of local jobs. Borealis was willing to shoulder all financial risks.
Why did the government not direct this fully owned subsidiary to provide a power purchase agreement for this key energy initiative?
Work was done towards a power purchase agreement with Borealis. It was realized that a power purchase contract would be quite complex and timely to negotiate. In order to facilitate Borealis’s discussion with financing partners like Husky Energy and one other large energy player, we gave them a term sheet which provided a 25-year contract at the marginal cost of diesel, committing customers to 25 years of diesel rates that was indexed to inflation of diesel. Borealis took this term sheet but was unable to find a partner to complete this $16 million dollar project. Our due diligence, through a third-party consultant, had the project cost at about $21 million, despite the federal government pledging $7 million towards the project.
It’s a complex project, so we are not going to approve it and we are going to lose all these benefits.
Some say that NTPC is monopolistic. Perhaps this philosophy is based on some legitimate concerns that need to be addressed. For example, money that is tied up in the power diesel generation infrastructure, infrastructure that may be rendered obsolete when more economical and environmentally friendly power systems such as this are introduced to our communities.
What role does stranded infrastructure play in this and ongoing Power Corporation reluctance with this government’s endorsement to promote and support progressive third-party power generation projects, and how will the government deal with them? Mahsi.
Mr. Speaker, the Power Corporation is a Crown corporation, ostensibly arm’s length, but it has, in fact, evolved into a much closer working relationship, very similar to the working relationship that we have with the Housing Corporation. It is a vehicle of our social and economic policy and energy policy and sits at the table with other deputies. Comes to all the high level meetings with the chairman of the board and the president to look at how do we move on things like the expansion of hydro, how do we look at generation issues, handling things like the installation of the solar array in Simpson, the work in Colville Lake. It was referenced in my comments this morning, doing the wind mapping in places like Storm Hills between Inuvik and Tuktoyaktuk. The Power Corporation is a very critical aspect of our energy policy in delivery in the Northwest Territories. Thank you.
Thank you, Mr. Miltenberger. Final, short supplementary, Mr. Bromley.
I might add, Mr. Speaker, the most expensive power in the world is what this Power Corporation is producing, and this Minister is letting this go, passing up what other opportunities we have missed like this.
The Minister will be happy to learn that despite government failure and the best efforts of NTPC to stand and watch this exciting opportunity evaporate, Borealis GeoPower is still prepared to move forward with this project without the federal subsidy.
My question is: Is this government now prepared to move forward and capitalize on this still available and valuable opportunity? Mahsi.
Of course, we are open to all alternative energy opportunities that are out there. I would point out that this project, two or three years ago, was projected to cost anywhere from $16 million to $20 million for 600 kilowatts, which is a very, very expensive price to pay. We had offered up a 25-year power purchase agreement. In addition to the cost to install, there were some very significant ongoing costs because of the high mineral content of the water. It would require ongoing scaling and potential drilling of additional holes and wells.
We would be more than willing to revisit this to see if there is any of the economics and dynamics that have changed. Thank you.
Thank you, Mr. Miltenberger. Member for Hay River North, Mr. Bouchard.
