Company can withhold payments to Six Nations if protests occur

An electricity project owner warns that it will withhold payments from Six Nations if anyone stops construction on the project after agreements are signed to move forward.

“There are consequences of not following through on the support conditions captured in…the community benefit agreement,” said Matt Jamieson, president of the Six Nations of the Grand River Development Corporation, which has led negotiations on the Lake Erie Connector Project.

Despite that, Six Nations Elected Council decided last week to move forward with the equity ownership of the project, consisting of a 110-km long power cable between Canada and the United States.

Six Nations, as one of the First Nations in the project’s Nanfan Treaty Area, was offered two benefit deals to choose from as a participant in the project: join as a 10 percent equity partner in the project, with a potential economic benefit of $45 million to $90 million; or sign on for royalty payments, with a potential economic benefit between $30 and $40 million.

The cable will be dug in a two-meter trench underneath Lake Erie, connecting Pennsylvania and Ontario at the site of the former Nanticoke Generating Station. The land is currently being used as a cornfield.

Six Nations will also get about $118,000 a year as part of a community benefit agreement.

Project profits that come to Six Nations will funnel through the SNGRDC and its trust board will decide annually how to disperse those funds to community projects.

The $118,000 annual community benefit agreement funds will funnel through elected council.

In order to be a partner, Six Nations has to borrow $26 million from project owner ITC Holdings.

The money will be paid back throughout the lifetime of the project, says Jamieson.

“From a risk perspective, it’s the best model that we could use to mitigate any risks we might have.”

The loan is a non-recourse loan, meaning the company can’t come after any of Six Nations’ assets if it defaults on the loan payments.

“The only thing that we’re pledging is the ownership units in the asset,” he said. “If the project fell apart and we couldn’t pay, ITC can’t come after us.”

ITC touts the project as a money-saver and an environmentally-friendly project that creates clean energy and reduces greenhouse gas emissions.

Currently, Ontario doesn’t have adequate infrastructure to get rid of excess energy, leading it to be wasted. The project would see Canada and the United States alternately share power through the underwater, bi-lateral cable whenever either country has generated an excess of energy, earning Ontario profits from selling the power to the States and reducing electricity costs for Ontario ratepayers.

Jamieson said Six Nations’ legal team has reviewed all the proposals and agreements and has indicated it’s satisfied with that Six Nations’ interests are protected.

Only 49 people participated during the community engagement sessions.

Jamieson said because of that, the decision on which offer to move forward with should rest with elected council.

Six Nations has been in talks with ITC Holdings since the company first approached elected council in 2013.

Site preparation is expected to take place in 2023, with an estimated four-year construction period.

SNGRDC said when the project is decommissioned, the land will go back to its original state.

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