Background: The Niagara Reinforcement Line (NRL) Bundled Solution was presented to the Six Nations Community via community engagement for a period of 60 days. The Six Nations of the Grand
River Development Corporation (SNGRDC) Board of Directors (BoD) approved the NRL
Bundled Solution as a viable business transaction and the SNGRDC Advisory Committee (AC) approved the project’s conformance to the SNGRDC Guiding Principles. In addition, the AC sought Six Nations Elected Council’s (SNEC) commitment to allocate the $12.5 million up-front payment from the transfer payment agreement (TPA), related to gaming modernization in
Ontario to SNGRDC for the purposes of making the equity investment in the NRL transmission line. As a result, SNGRDC will not be required to seek third party financing for the investment and in the process the community will save approximately $8.4 million in long term interest expense.
On February 20, 2018 SNEC approved the NRL Community Engagement Report along with the
AC’s recommendations to pursue the NRL equity investment. In addition, SNEC committed $12.5 million to pursue the bundled solution debt-free.
What is the NRL Bundled Solution and how will it benefit the Six Nations Community?
The Niagara Reinforcement Line is composed of three phases that will (a) Energize the NRL; (b) Acquire ownership interest in NRL; and (c) Optimize the use of transmission assets through new renewable energy development. The solution was tentatively accepted by Hydro One Networks Incorporated (“Hydro One”) and the Ministry of Energy (“ENERGY”) pending general community support from Six Nations of the Grand River. SNEC has now accepted the community engagement report and ratified SNGRDC BoD’s and AC’s recommendations to pursue the NRL Bundled Solution including its approach to address community concerns identified through community engagement.
Summary of each phase and its community benefits:
- a) Energize: SNGRDC’s joint venture with the Aecon Group, A6N Utilities (A6N) – where SNGRDC has a 51 per cent ownership —will be contracted by Hydro One to complete the remaining NRL transmission work in collaboration with Hydro One technicians. Construction is expected to begin in early spring and last approximately five to six months.
– This phase will enable Six Nations to build internal capacity in our workforce and enhance A6N capabilities to complete future work of this kind in the Haldimand
– Construction will create approximately 25 to 35 new local employment opportunities (five to 10 positions through A6N and up to 25 positions through the electrical sub-contractors Thirau).
– The completion of the line will also eliminate the carrying cost incurred by all Hydro
One customers that is a result of the inactive transmission line.
- b) Acquire: SNGRDC will acquire 25 per cent ownership interest in NRL on behalf of Six Nations. SNEC has committed $12.5 million to SNGRDC to acquire the equity without debt and thus saving approximately $8.4 million in long-term interest. The $12.5 million has been allocated from the TPA which were directed to Six Nations “to advance economic development initiatives for Six Nations’ community members”. SNGRDC sought this allocation in order to address community concerns – as identified through community engagement – related to incurring long-term debt to acquire equity.
A third-party financial due diligence assessment of the NRL transaction has deemed the investment to be low risk; it is projected the investment will generate not less than $46 million in net free cash flow over its useful life (i.e. 48 years). SNGRDC will continue to hold an equity ownership of the asset which is expected to retain a residual value well into the future.
Like all equity investments managed by SNGRDC, surplus profits generated through this investment will ultimately flow to the Six Nations of the Grand Economic Development Trust (EDT) for investment in community priorities.
- c) Optimize: Ministry of Energy “ENERGY) will grant a 300 MW Renewable Energy set-aside to Six Nations of the Grand River, to be managed, owned and developed by SNGRDC within the next 15 years. New development will be trigger when ENERGY initiates new large renewable energy procurement in Haldimand County, Brant County, Niagara Region and/or Hamilton Region, with connection points to either the newly energized NRL or the Nanticoke Transmission Line.
– The development of 300 MW of renewable energy will trigger hundreds of millions of dollars of new investment in the region—leading to more employment, contracting opportunities, and long-term economic benefits for our Community.
– Six Nations will play a lead role in shaping how renewable energy projects are developed in the future and will move from a limited partnership role to a managing role in the development of the 300 MW of renewable energy.
– By connecting to existing transmission lines, new projects will maximize the use of existing infrastructure—thus mitigating the need to build new corridors.
In the event a new government unilaterally terminates the set-aside, or where Six Nations is unable to realize the full benefits of the set-aside (i.e. no new large renewable procurement contracts are initiated within the next 15 years), a $15 million termination fee will be paid to
Six Nations of the Grand River.
What Did the Community Engagement Process Include?
SNGRDC undertook a 60-day community engagement process from October 16, 2017 to
December 15, 2017 on the NRL Bundled Solution. The engagement process was fully funded by ENERGY and Hydro One. The community engagement process relied on qualitative data collection and analysis in order to capture the independent thoughts, opinions, and drivers of opinion from the community.
Summary of NRL Communication Strategy:
– All project information was posted to www.snfuture.ca
– A total of 10 engagements session were held (one aired live on CKRZ radio).
– Lunch and Learns were offered to any group/organization (two lunch & learns were booked).
– Every Six Nations household was mailed the project information on three separate occasions.
– Radio Ads aired three times daily on the two local radio stations for a period of 10 weeks.
– A weekly (full or half page) ad was place in both local papers for a period of 10 weeks.
– Two informational videos were created and boosted on Facebook.
What were the Community Engagement Findings?
Based on the engagement report findings, it does not appear that substantive or insurmountable concerns were raised by community participants. Although community turn-out was generally low, a total of 41 formal written submissions were received.
Seven key considerations were identified through community engagement, of which two were deemed outside of the scope of SNGRDC, however a commitment has been made to raise these two issues to the appropriates bodies. Of key considerations within the scope of SNGRDC an approach has been outlined in the NRL Path Forward, on how SNGRDC will address the considerations prior to signing definitive agreements. These considerations include:
– Seek a $12.5 million allocation from SNEC to invest in the NRL, resulting in zero debt and approximately $8.4 million in long-term interest savings.
– Engage an independent third party to conduct a Peer Review of the NRL environmental assessment.
– Approach Hydro One for a scholarship commitment for Six Nations Learners
– Seek Hydro One to conduct a grid stability/reliability study of Six Nations Territory hydro service as a condition of the definitive agreement.
– Align Six Nations Elected Council, SNGRDC, A6N and Hydro One on pursuing the most appropriate course of action should a conflict occur.