SOMBA K'E/YELLOWKNIFE - A proposed Taltson River hydroelectric expansion project has cleared its biggest regulatory hurdle.

On Aug. 6, the Mackenzie Valley Environmental Impact Review Board approved the proposed $700-million project, which would see Deze Energy Corporation expand the Taltson River hydroelectric site and build a 690-kilometre transmission line to the NWT's diamond mines.

The hydroelectric site, located 50 km north of Fort Smith, now produces 18 megawatts of electricity. An expansion would add between 36 and 56 megawatts to be sold to the diamond mines.

The review board set out a number of conditions in its report, which follows a three-year environmental assessment. These include limiting potential adverse impacts on caribou from new winter roads, as well as protecting the ecosystem of Trudel Creek at the Twin Gorges hydroelectric site and the culture of Lutsel K'e Dene First Nation (LKDFN).

"The board's measures to mitigate these impacts will prevent new hunting access to caribou, increase water flow bypass at Twin Gorges, prevent the transmission line from crossing the Lockhart River, and require Deze Energy Corporation Ltd. to create an advisory routing committee," the review board stated in a news release.

The board believes the measures are necessary to prevent "significant adverse impacts" without sacrificing the environmental, social and economic benefits of the project.

"We're pleased with the recommendation that it can proceed, as well as the conditions I think we can live with. They're fair and reasonable," said Dan Grabke, managing director of Deze Energy.

Grabke said it's a relief to have the review board process completed.

"It's been a long process," he said. "A lot of resources, both time and money, have gone into it. It's nice to see that part over with."

Grabke said the review board's approval is a major step in the regulatory process.

"It certainly could have been a show-stopper if they said no, or if it went to environmental review," he said. "Then it would be a whole other process all over again."

Grabke said the corporation's application was filed with the review board in 2007 and millions of dollars have been spent since then, including in producing an almost 4,000-page developer's assessment report.

The review board submitted its report on the project to the minister of Indian Affairs and Northern Development.

The project will proceed to the next stage in the regulatory process, once the minister accepts the report.

Grabke said this next stage, which he estimated will take six months, will involve obtaining land-use permits and water licences.

As for when actual construction might start, he said, "We're looking at about a year from now."

The proponent still has to finish final design, arrange financing, reach agreements with the diamond mines to buy the power and call for tenders.

One of the project's thorniest issues has been the route of the transmission line. Even though the review board has ordered the line not to cross the Lockhart River, Chief Antoine Michel of the Lutsel K'e Dene First Nation is still concerned.

Lutsel K'e doesn't want the transmission line anywhere near the community, he said. "The people are saying no to it."

Michel said he wouldn't mind if the transmission line crossed Great Slave Lake over the Simpson Islands.

"It would be even better if it would go around Hay River, Providence and through Yellowknife. I think that's the best route to take," the chief said.

However, Michel doesn't want the transmission line anywhere on the east side of Great Slave Lake.

Deze Energy's original transmission line proposal to cross the Lockhart River was opposed by LKDFN because it objected to the line crossing the river and Desnedhe Che - considered a sacred area from the mouth of the Lockhart to Artillery Lake.

Deze Energy then proposed an adjusted route in September of last year to avoid the river by veering west below Charlton Bay and crossing a peninsula at Reliance.

When Lutsel K'e also rejected the adjusted route, Deze Energy reverted to promoting the original route across the Lockhart River as its preferred option.

Grabke said there are now some alternatives as to where the transmission line could go in light of the review board ruling out the Lockhart River.

"We suggested one of them during the process that was out there," he noted. "It meant crossing a couple of points near the Lockhart River, but not right at the Lockhart River. Now we've got the opportunity to dig a little deeper and analyze more. There are probably other places that you can do a similar thing."

Deze Energy is still considering a route east of Great Slave Lake in the area below the Lockhart River.

The corporation has rejected other areas for the transmission line as too expensive and technically unfeasible, including crossing Great Slave Lake over the Simpson Islands.

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