Hoping to resurrect an ambitious run-of-the-river project that would rival the capacity of BC Hydro's proposed Site C dam, Alterra Power will sign a partnership agreement with the Homalco First Nation on Friday, handing the tiny band $1.5-million in exchange for an agreement that would allow the Bute Inlet hydroelectric project to proceed in its traditional territory.
The Bute Inlet project stalled last year when Plutonic Power, the developer, dropped out of the running for a power-purchase agreement with BC Hydro, citing confusion over the province's clean-energy policies.
Plutonic Power merged with Magma Energy earlier this year to create Alterra and is now moving forward again. The pact with the Homalco promises the band significant benefits if the project proceeds, including a share of potential revenues and right of first refusal on construction contracts.
The project has the potential to create 1,030 megawatts of electricity – compared to the $8-billion Site C megaproject, which would generate 1,100 megawatts by building a third dam on the Peace River.
Alterra's project, opposed by a number of environmental organizations, would partly dam creeks and rivers with 17 power facilities in the glaciated Coast Mountains above Bute Inlet, located roughly 250 kilometres northwest of Vancouver, and it would require power lines to connect to the provincial grid.
But the project still needs to secure an energy-purchase agreement with BC Hydro. The Crown utility's most recent tender for clean-power proposals was in 2010, and is now not looking for projects of this size.
Although the B.C. Liberal government has encouraged independent power projects, the federal government has promised this project would be subject to the highest level of environmental assessment. And the transmission line would require consent from other first nations.
With construction costs originally forecast at $4-billion, Alterra now says it is too early to speculate on a price. "It's not going to happen in the next five years," said Anders Kruus, Alterra's vice-president for corporate relations. "It's a large project, a very long-term project."
For Homalco Chief Richard Harry, the deal is just part of a plan to dig his band out of debt and create job opportunities for his impoverished community. The band, with 500 members and now based in Campbell River, is also in the midst of buying a local logging operation.
"We have negotiated a good package for Homalco. It is called, for legal reasons, an impact benefit agreement, but I look at it as a real partnership with Alterra," he said in an interview on Thursday.
"If this project goes through, this little band will never have need of anything," he added. "Our young people will enjoy benefits that we never had."
Mr. Harry has been negotiating with Plutonic Power, and later, Alterra, for three years. "We took the position that we owned that resource and if anyone wanted to develop it, they had to look at us as a serious partner."
He said the deal could offer a template for other first nations when it comes to revenue-sharing agreements. The band will receive $6-million every time construction begins on a stream, and $6-million per year for every power station in operation over 40 years. The Homalco are also entitled to a minimum two per cent equity stake in the project, plus employment training and preference on contracting bids.
"Economic development is where we need to go to establish careers and jobs for our youth," the chief said. "We need to encourage our young people to go to university – education is the answer – but unless we create jobs, how do they stay in our communities?"
Justine Hunter