ACHO DENE KOE/FORT LIARD
The territorial government bailed out ratepayers nearly two weeks ago to the tune of $20 million when it decided to cover the extra expense incurred by the NWT Power Corporation this summer thanks to unavoidable reliance on diesel power.

This is a construction ready drawing of the geothermal plant that Borealis GeoPower proposed to build in Fort Liard. According to Weledeh MLA Bob Bromley, the company never received the power purchase agreement it needed to move forward with the project that could have greatly reduced Fort Liard's reliance on diesel power. - illustration courtesy of Borealis GeoPower

At the time, Finance Minister Michael Miltenberger said the GNWT would be committing hundreds of millions of dollars in the future to explore and develop alternate energy capacity, especially in the thermal communities.

But Weledeh MLA Bob Bromley has been wondering aloud if the GNWT hasn't already missed opportunities to get communities completely off diesel power, and whether that is a result of the power corporation's reluctance to lose its monopoly on power distribution.

Calgary-based Borealis GeoPower spent about five years working with the Acho Dene Koe First Nation on a geothermal power project that would have generated enough electricity, according to the company, to meet all of Fort Liard's power needs.

By May of last year, the approximately $20-million project was off the table despite support from Natural Resources Canada's Clean Energy Fund for between $10 and $20 million.

At the time, Borealis CEO Tim Thompson said his company never received a power purchase agreement (PPA) from power corp. Without that, the company could not secure the further private investment it needed.

Thompson described a power purchase agreement as a binding contract on the part of the power corporation to purchase power from the plant. With that agreement in hand, Thompson said Borealis could have easily raised the private financing the company needed.

"It was a no cost option to the NWT, (but) we never got to anything that could formally be called terms because nothing was ever signed," Thompson told News/North Sept. 30.

"Without a PPA (binding contract) we cannot close on a capital raise, period," Thompson further clarified by e-mail.

He said financing would have been "pretty much automatic" if Borealis had the power purchase agreement in hand.

But the power corp. and the GNWT do not agree.

"We gave them a term sheet ... offering them marginal cost of diesel fuel for twenty-five years indexed against inflation, and they were unable to get financing with that sheet," said Pam Coulter, a spokesperson with power corp.

"The problem was for these Borealis folks to find the money in the market to make the project a go," said Miltenberger. "They couldn't do it. There was some federal money that lapsed. At the end of the day, it wasn't that viable a project."

Thompson called the government and power corp.'s assertion that Borealis had everything it needed to secure funding with power corp.'s term sheet "an out and out lie."

Thompson said a term sheet is not a binding contract to purchase power, and the two cannot be equivocated.

"A term sheet is the outline of the key elements of a formal PPA (power purchase agreement)," Thompson explained by e-mail.

"A term sheet is non-binding (generally). A PPA is binding."

Bromley agrees Borealis never received what it need to go out to market and secure financing for the Fort Liard project, saying instead the territory effectively killed the project when it handed it off to the power corporation.

"They (power corp.) never provided a power purchase agreement despite the fact that Borealis Geothermal was prepared to offer a 20-year contract with (Borealis) taking all of the risk, at something between one half and two thirds of the current (rates)," Bromley told News/North.

"They (Borealis) had a water licence from the Mackenzie Valley Land and Water board ... and they had investors ready to go. The government turned it over to the power (corporation) and they procrastinated to the point where federal money disappeared and the feasibility went down the drain with it."

Thompson confirmed that Borealis faced long delays in dealing with NTPC.

Borealis had a three-year window in which to close a power purchase agreement with NTPC in order to qualify for federal funding.

"NTPC did not begin negotiating on the term sheet until two years and seven months into the window to close with them," Thompson said. "At the time the federal window closed, we were awaiting clarification on various points from NTPC."

Thompson would not speculate on the reasons for the delays, but Bromley was less reticent.

"NTPC procrastinated because they want a monopoly," Bromley said.

The Fort Liard geothermal project which could have provided direct local employment for up to 12 people, and would have generated revenue for the Acho Dene Koe First Nation, remains viable today, Thompson added.

"We still have investors in Calgary interested even without the (original federal) grant."