SOMBA K'E/YELLOWKNIFE - A proposal to expand the Taltson River Hydroelectric site is being reconsidered.

A proposal to expand the Taltson River hydroelectric facility has been put on hold. - photo courtesy of Deze Energy Corporation

"We're looking at a pause," said Premier Floyd Roland. "That's happened in the past. When you look at some of the past projects in the Northwest Territories, a request to pause to have another look at it is the same thing we're doing here."

The main reason for reconsidering the $700-million project is the NWT diamond mines won't be buying enough power to make the project feasible.

"Clearly, the plan initially to go strictly to the diamond mines is not going to work for the financing of this project, so we're going to have to expand that base and look at how we can make that happen," said Roland.

The diamond mines are still interested in buying some power, he noted. "They can't take all of what we were hoping they would take."

The Taltson River hydroelectric site, 64 km north of Fort Smith, produces 18 megawatts of electricity. An expansion would add between 36 and 56 megawatts.

The project proponent is Deze Energy Corporation, a partnership of the NWT Energy Corporation, Akaitcho First Nations and the Northwest Territory Metis Nation.

Over $13 million has already been invested into the proposal.

Roland raised the possibility that a transmission line may not go around the East Arm of Great Slave Lake as proposed by Deze Energy, but around the south side of the lake.

The south-around-the-lake option has been long rejected by Deze Energy as too expensive. It would cost at least $200 million more than the East Arm route depending on the design of the line.

A transmission line around the East Arm of the lake has been vehemently opposed by Lutsel K'e Dene First Nation since it would cross its traditional land.

Chief Antoine Michel is pleased to hear the East Arm route may be abandoned.

"How long have we been fighting that?" he said. "We told them not to go towards the East Arm, and that's where we stand."

The chief is confident this is the end of the idea to build a transmission line around the East Arm.

"Nothing will go around there," he said.

Michel is also encouraged to hear a route south around the lake will be considered.

"We told them right from the start, take it around the lake on the south side, not on the east side," he said.

Roland said a couple of months of preliminary work are needed to weed out some of the issues on what's a viable alternative. "Is it around the lake to look at providing, for example, electric heat to some of our communities? Do we look at other business opportunities and industry, for example Tamerlane and Avalon and those types of companies?"

Tamerlane Ventures plans to open a mine in the Pine Point area, while Avalon Rare Earth Inc. is considering building a hydrometallurgical plant, also at Pine Point.

"There's been previous work done that looked at some of these options, but we're going to have to update some of the information to see if those numbers are still accurate or if maybe the business case has improved," Roland said. "As well, we have to look at the grid going south."

On March 2, Deze Energy Corporation submitted a letter to the Mackenzie Valley Environmental Impact Review Board requesting more time to address gaps in the current business case for the project.

Deze Energy remains committed to developing Taltson's renewable energy, said Don Balsillie, the corporation's chairperson, in a news release. "However, recent discussion with NWT diamond mines clearly indicate that their collective mine life and commitments to buy power cannot, on their own, support financing and construction of the project at this time."

Deze Energy had hoped to have a construction decision in time for mobilization on the 2012 winter road.

"NT Hydro remains committed to working with our aboriginal partners, through Deze, to find ways to develop the Taltson project," said NT Hydro chairperson Brendan Bell.

Deze Energy has committed to updating the review board on a quarterly basis over the next year.

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