e-Newsletter – January 14, 2015

For a proposed project which the proponent has had ten years to think about, the proposed hydro-electric generating station at the Bala falls is currently in a bizarre state of confusion, for example:

1. The proponent’s application to Transport Canada stated in-water construction work would begin within a time window when such work is not allowed by the Ministry of Natural Resources (MNR). That is, the proponent would be doing in-water construction work for which they do not have approval from the Ministry of the Environment.
    
2. The MNR believes that the approval Transport Canada provided earlier this year included assessing impacts to marine navigation for the Mill Stream and Moon River, but the current rules are that Transport Canada would not have done this safety assessment.
    
3. The proponent has reneged on important and fundamental commitments they made in the competitive process through which they were selected by the MNR. This “materially inaccurate or misleading information” from the proponent enables the province to cancel this mess without cost or liability.
    
4. The proponent provided incorrect information, as they stated their new 2012 plans would be a positive impact to the Bala Portage, when in fact they would permanently eliminate and obstruct it. Such negative impacts require consultation with First Nations, but due to the incorrect information from the proponent this has not yet occurred. So far the Canadian federal and Ontario provincial governments have not met with the Wahta Mohawks to begin this required consultation process. The Wahta have therefore sent this August 24, 2014 letter and this November 12, 2014 letter.
    
5. The proponent’s construction plans have more than a one in four chance of flooding Lake Muskoka. While the proponent says they could remove their upstream cofferdam in such an emergency, this is not a credible claim. How would they ever get insurance for such a high risk to private property and public infrastructure.
    
6. Commercial operation of the proposed hydro-electric generating station would not be permitted until:
   • Amendments to the Muskoka River Water Management Plan are approved (this would be a lengthy and difficult process, and it appears this 699-page document has never been amended before, and the committees involved list 35 people, some of whom have passed away or no longer hold the office or position they did nine years ago when this document was approved).
   • The proponent signs the MNR’s maintenance agreement for the Bala dams. The proponent would then be financially responsible for all minor maintenance of both Bala dams – but it has not yet been agreed what constitutes “major” and “minor” maintenance, and the proponent “negotiating” this when they would already be in construction would be a completely weak negotiating position.
      
7. From the MNR, the proponent still needs; Plans and Specifications approval, a Work Permit, a Lease to Construct, and a Waterpower Lease Agreement – the latter two are legal agreements which would take months to finalize.

All of the above will result in delays, extra costs, and significant risks.

If the proponent would provide sound information to refute any of this, maybe we’d have to “agree to disagree”. But the proponent simply does not offer any believable information to justify their actions. For a company hoping to right now be getting final approvals, raising construction financing, and preparing to begin construction, this is bizarre.

So as a service to those in the investor community that may be considering getting involved with this proposed project, we offer this Guest Editorial.