Hydro One H-T has unveiled a new equity partnership model that will offer First Nations a 50-per-cent equity stake in transmission projects worth more than $100-million, opening the door for millions of dollars’ worth of economic benefits for participating Indigenous communities.
The model grew from evidence that Hydro One’s previous approach to Indigenous consultation wasn’t working, chief operating officer David Lebeter said Wednesday in an interview.
“We had project milestones that were being pushed out. You could see costs going up, you could see frustration from all the parties that were involved, and everybody recognized the need to change,” Mr. Lebeter said.
The model, announced Thursday in Toronto, reflects increased emphasis on Indigenous participation in the power sector, driven by factors including the Truth and Reconciliation Commission and Indigenous communities’ determination to have a say in projects built on, through or near their reserves or traditional territories.
For Hydro One, that means shifting from an approach in which equity stakes were negotiated on a case-by-case basis to a standard starting offer of 50 per cent.
By avoiding a lengthy negotiation process, Hydro One hopes to be able to move more quickly to building its network.
“If a community is not feeling heard as a partner, it’s going to impact their participation in all aspects of the project, including regulatory aspects,” said Penny Favel, Hydro One’s vice-president of Indigenous relations.
“That delay in projects is what kills projects – and we were experiencing some delay.”
Publicly traded Hydro One is Ontario’s largest electricity transmission and distribution provider, with about $30.4-billion in assets as of the end of 2021.
Hydro One rolled out its new equity model earlier this year with First Nations partnership Gwayakocchigewin LP, or GLP, in which nine Indigenous communities will have the option to invest in the proposed Waasigan transmission line project in Northwestern Ontario.
There are now plans to apply the model to five planned transmission projects in Southwestern Ontario.
In recent years, Indigenous communities and organizations have flagged access to capital as a barrier to Indigenous participation in major projects.
Under the Indian Act, on-reserve property in general can’t be used as collateral for a loan, discouraging conventional lenders. Legislative barriers posed by the Indian Act, as well as the relative remoteness of many Indigenous communities and limited financial and human resources, “put Indigenous equity investment in new projects at a significant competitive advantage,” said the First Nations Major Projects Coalition in a 2022 report.
Hydro One is aware of such concerns and plans to work with individual communities to help ensure they have access to capital at competitive rates, Ms. Favel said.
“That is front of mind for all of us. ... It’s a pretty hollow offer if they can’t have access to funds,” she said.
First Nations have been calling for access to equity participation for years, said Chief Clayton Wetelainen of the Wabigoon Lake Ojibway Nation, which is part of the Gwayakocchigewin group.
“To make new projects go, proponents have to have these equity [agreements] with First Nations,” Mr. Wetelainen said.
In its final report in 2015, the Truth and Reconciliation Commission made 94 calls to action, including Recommendation 92, that the corporate sector in Canada adopt the United Nations Declaration on the Rights of Indigenous Peoples as a “reconciliation framework.” Since then, both the provincial government in B.C., in 2019, and the federal government, in 2021, have passed legislation to implement UNDRIP.