Have lights gone out on Ontario power deal?

Winnipeg Free Press: Mary Agnes Welch - April 4, 2008

It's been five years since Premier Gary Doer started working on a multibillion-dollar power deal with Ontario meant to help the country meet its Kyoto Protocol targets and make Manitoba rich.

There have been countless meetings, piles of studies and upbeat promises that a deal was less than a year away.

Ontario Finance Minister Dwight Duncan, then energy minister, even made a pilgrimage to Churchill several years ago to visit Limestone, Manitoba Hydro's signature dam.

"What do we need to do to make this happen?" Duncan asked Manitoba officials in the plane on the way home.

But for all that talk, insiders worry a major electricity deal with Ontario has been all but shelved as that province moves ahead with nuclear power. And Minnesota -- the other export target -- just passed two laws that don't bode well for future deals.

Meanwhile, exports actually dropped last year -- earning Hydro $592 million as opposed to a record $827 million in 2006 -- as Manitoba's domestic demand climbed.

"It's been disappointing that the government has so clearly not shown leadership on these big power sale deals," said Conservative Leader Hugh McFadyen. "This is supposed to do for us what oil did for Alberta."

The Tories didn't have better luck selling power to Ontario. Under former premier Gary Filmon, a deal to sell $13 billion worth of electricity collapsed, just as Doer's preliminary side deal to send 150 megawatts next door cratered more than a decade later.

Ontario needs about 30,000 megawatts of power over the next decade if it's going to meet demand and allow it to mothball coal-burning power plants such as Nanticoke, Canada's single largest source of greenhouse gases.

But now Ontario has turned to nuclear power, and Manitoba has turned to the west -- Saskatchewan and Alberta -- as possible power customers.

Hydro Minister Greg Selinger met with rookie Ontario Energy Minister Gerry Phillips late last year, who said he would turn his mind to the Hydro deal once his province's nuclear issue was under control.

That could be a while. Last month, Ontario issued a request for proposals to build a new nuclear plant, a project that will take years of controversy and planning to settle.

Ontario's new nuke plant will supply as much as 3,500 megawatts of power, about the same amount Manitoba was hoping to export to Ontario back in the day.

And, Ontario's economy has faltered, especially the manufacturing sector, which sucks up a lot of power.

"They did show an interest," Selinger said. "I said we'd be happy to provide them with the energy but we've got to move these discussions along because there are other parties that are interested as well."

A spokesman said Ontario continues to talk with the Doer government.

The deal with Ontario is bound up with another critical project -- the east-west power grid meant to connect Manitoba to Eastern Canada.

A year ago, Prime Minister Stephen Harper gave the grid his blessing and committed $586 million in environmental funding, most of which was earmarked as a down payment on the $1.5-billion transmission line. It's not clear what's happened to that cash.

It's not all bad news. The province says there is more than enough export interest to spur the construction of Conawapa -- the biggest northern dam the province has ever built.

And, Manitoba Hydro recently inked deals with Minnesota -- selling 250 megawatts to Minnesota Power starting in 2020 and another 375 megawatts to Xcel starting even sooner.

But, Minnesota has a pair of new rules that won't help matters. One bill forces Manitoba Hydro to report to the Minnesota legislature about the social and environmental impacts of its dams on First Nations.

Another law mandates that all Minnesota power companies get 25 per cent of their power from green sources like wind and hydro by 2025. Hydro dams count, but only if they're under 100 megawatts. Nearly all of Manitoba's dams are much bigger than that.

Selinger said neither of those laws is worrisome.

East-west power grid

Long a dream of the Manitoba government as a way to sell power to Ontario and then south into the United States. It would allow Manitoba to sell its clean hydro power to Ontario to help that province finally shut down some of its stinky coal-fired plants. The grid would cost, conservatively, $1.5 billion to build.

Conawapa dam

The grand-daddy of all northern dams, it's slated to be built in about 2021 and it will pump out 1,380 megawatts of power. Manitoba needs a lot of that, but some can be sold to American and Canadian customers for hefty profits.

1. Direct route: 1,750 kilometres

From Conawapa to Sudbury. Preliminary studies say this is the preferred route from a technical, economic and environmental point of view.

2. Thunder Bay route: 1,750 kilometres

From Conawapa to Thunder Bay, then on to Sudbury. There are decent transmission lines into the United States from Thunder Bay, so this is a good option if Manitoba wants to send some power to the Chicago area.

3. Winnipeg route: 2,400 kilometres

The longest route, but also one that gives Manitoba more control over the power flow. Now that the Doer government had kiboshed a transmission line down the east side of Lake Winnipeg, the power line would run down the west side of Lake Manitoba, making this route dramatically longer and more expensive.

4. Far North route: 1,750 kilometres

Running parallel to James Bay and the Quebec border, then south to Sudbury.

-- Source: Northwest Ontario Transmission Study executive summary, July 2006

Manitoba Hydro is the custodian of this province's energy resources, which the Doer government says are key to Manitoba's future. But are they both dragging their feet on wind power and exports? And who is running the show, anyway?

Free Press legislature bureau chief Mary Agnes Welch reports in the first of a three-part series.

Tomorrow: The wind of change?

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