Guest Editorial: “I would not invest, too risky”

We have all heard that the proposed hydro-electric generating station at the Bala North Falls is controversial, and divisive, and green energy, and why don’t we all just support it and get on with it already.

Well, why don’t we take this a step further and to really support it, why not look into becoming an investor in the proposed project.

A guideline is that typical hydro-electric generating stations cost about $5M per MW to build, so this should require about $25M in construction financing. And with a 40-year contract with the Ontario government providing guaranteed income well above the rate existing power generators receive, it could make business sense to be an investor.

But any business investment will have risk. Let’s look at some financial risks for the proposed Bala project.

1. The construction would be difficult (that is, more expensive) as the entire Crown land site would need to be excavated at least 50′ deep and the site is surrounded by:
   • A highway in full operation, without a speed limit reduction.
   • A river that will quickly and continuously seep into the excavation (due to the previous powerhouse’s tailrace) and there’s nowhere near to locate the huge settling tank to treat the water before discharge back to the river.
   • Township land that would need to remain safe for tourists throughout the construction period.
     
     
2. The materials handling would be a more difficult than typical as there is very little land nearby to store and transport both construction equipment and excavation fill.
   
   
3. Site access would be difficult as this would require a temporary construction bridge over the historic Bala Falls and that construction vehicles access this through Margaret Burgess Park. I would imagine potential contractors would roll their eyes thinking of the logistical problems (that is, costs would be greater). And I would think the public would be outraged when this destruction of the historic falls becomes widely known.
   
   
4. This proposed project would create dangerous water currents. And this would be a bad time and a place for a generating station with this operation (that is, daily cycling operation) just metres from where families splash and play at the base of the falls:
   • Just as people (certainly displaying poor judgement) have continued to jump off the railway bridge into the north channel, people have always, and would continue to recreate in the water at the base of the north falls.
   • But any injuries or fatalities would most likely result in the proponent being sued as their project would have been the cause of the increased the danger (despite years of warnings exactly about this by the public during the environmental assessment). Perhaps investors could be hidden or indemnified from such legal actions, but having money to invest would be attractive to those looking for people to sue.
   • Note that the Township of Muskoka Lakes would be less likely to be sued as they have repeatedly noted the danger to in-water recreation due to this proposed project (see questions 21 through 36 which were posed to, but never satisfactorily answered by the proponent).
     
     
5. It is now widely agreed that recent weather patterns have more volatility (see here and here), and the proposed construction would require most of the north channel to be obstructed for many months. As the flow capacity of the north channel is needed during high flow events, this would increase the risk of flooding Lake Muskoka.
   
   
6. The construction blasting and excavation would be directly adjacent to, and create a significant risk of damaging both, the highway bridge supports and the north dam. If such damage occurred, it could:
   • Be expensive to repair.
   • Immediately require construction be halted, possibly permanently.
   • Cause great disruption to the local businesses and emergency vechicle travel.
   • Cause fatalities.

That is, this would not be a routine construction project. There would be risk of significant construction delays and increased costs due to the difficult and unusual site. And there would be many risks of causing personal injury and public and private property damage during construction and operation.

So, even with the temptation of government-guaranteed income, this investment opportunity would not be an acceptable financial risk to me.