Seven Indigenous communities have acquired a 40-per-cent stake in a major Alberta power transmission line in the latest energy infrastructure project that will generate returns for First Nations and Métis groups.
Canadian Utilities Ltd. said the deals follow its sale in June of the Alberta PowerLine, a 500-kilovolt transmission line that extends to Fort McMurray, Alta., from just west of Edmonton. The 508-kilometre line went into operation in March.
Canadian Utilities and its partner, Quanta Services Inc., sold the development for $300-million plus the assumption of $1.4-billion of debt, to a consortium including TD Greystone Asset Management. As part of the deal it had offered Indigenous groups the opportunity to acquire up to 40 per cent.
The communities that have invested are Athabasca Chipewyan First Nation, Bigstone Cree Nation, Gunn Métis Local 55, Mikisew Cree First Nation, Paul First Nation, Sawridge First Nation and Sucker Creek First Nation.
Siegfried Kiefer, Canadian Utilities’ chief executive officer, said the groups used different financing structures to acquire their stakes. Some took advantage of financing provided by the purchasers, and others have put together their own funding arrangements. The business is backed by a long-term power supply contract with the Alberta Electric System Operator.
“It’s a terrific investment for the First Nations. It’s essentially a 35-year income stream that’s backed by the government. There’s very little risk,” Mr. Kiefer said on Sunday.
Energy infrastructure is proving to be a key investment target for Indigenous communities seeking to diversify their economies. Mikisew Cree and the Fort McKay First Nation bought 49 per cent of a Suncor Energy Inc. oil sands storage-tank farm for $503-million in 2017. It was financed through a high-yield bond issued to more than a dozen investors and was backed by a 25-year service agreement with Suncor.
Now, at least two groups, Project Reconciliation and Iron Coalition, are among Indigenous consortia looking to buy large interests in the contentious Trans Mountain oil pipeline. Under those proposals, numerous Western Canadian First Nations and Metis communities would get stakes in the pipeline to the West Coast from Alberta, and the $7.4-billion expansion that has recently resumed construction.
As part of the Alberta PowerLine transaction, Canadian Utilities, a unit of Calgary-based ATCO Ltd., will remain the operator, under an escalating price contract. The ability to separate the ownership from operatorship made the initiative possible, Mr. Kiefer said.
The arrangement makes sense for long-distance infrastructure projects, he said.
“It allows economic participation during construction and operations, and allows ownership without compromising the smooth operations by having 20 different unitholders sitting around a boardroom table trying to make decisions,” he said.
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