'It's a no-brainer'

The Qulliq Energy Corp. will likely build Iqaluit's next hydroelectrical plant at Jayne's Inlet after all, following a decision by the corporation's board late last month to go ahead with a feasibility study for it.

This means the QEC is now unlikely to move ahead with a more expensive hydro plant on the Armshow River, just across the bay from Iqaluit.

That site, known as Armshow Long, was recommended this past April by a special committee made up of representatives from Iqaluit, Kimmirut and Pangnirtung.

But after taking a second look at Jayne's Inlet, which the corporation's consulting engineers favoured as far back as early 2007, the QEC now believes the site can churn out just as much electricity as the Armshow River.

"It's a no-brainer," Simon Merkosak, the chair of the QEC's board, said of the decision to opt for Jayne's Inlet over Armshow.

Merkosak said a dam at Jayne's Inlet could be built for roughly $150 million, about half of what a dam and power station at the Armshow River would require – and generate at least as much electricity.

And he said another big advantage with the site is that a dam and power station at Jayne's Inlet would not disturb popular fishing spots.

In early QEC documents, the Jayne's inlet site is listed as being capable of generating only five megawatts of power.

But after more study, QEC officials found a dam at Jayne's Inlet could generate up to 15 megawatts, more or less equal to Armshow Long.

In the peak months of January and February, Iqaluit requires about nine megawatts. That drops to around five or six megawatts in the summer.

As Iqaluit's population increases and people find new ways of using electricity, that demand is likely to grow.

Jayne's Inlet is located on the south side of Frobisher Bay, further down the bay from the Armshow River.

A dam near Jayne's Inlet, where a powerful river rushes down to meet Frobisher Bay, would likely be built about 10 kilometres upstream from the inlet.

The dam would create a reservoir that would link up with some nearby lakes that feed the river, guaranteeing a continuous flow of water in all seasons to turn the huge turbines that create the electricity.

Transmission lines, about 84 kilometres in length, would curve around the end of the bay to feed the electricity to Iqaluit.

It's been estimated that the construction project could generate up to 300 jobs. At least 20 per cent of contracting opportunities could go to local companies.

Its selection follows three years of work and $4.1 million worth of spending on studies and consultations that began in 2005, when the QEC started looking at 14 possible sites, all located within 100 kilometres of Iqaluit.

By the fall of 2006, that list of 14 was whittled down to five with the help of consultants from Manitoba Hydro and the Knight Piésold firm.

Merkosak says the QEC's next big task is to seek and then hire a consultant to do a feasibility study on a Jayne's Inlet hydroelectric plant, which will include more test drilling at the site.

Whoever does such a study will likely have to figure out a more precise construction cost figure and exactly how much electricity the plant could produce and at what cost.

Right now, Iqaluit's diesel generating plant burns up to 13 million litres of diesel each year, about one-third of the diesel the QEC imports into Nunavut each year.

The QEC has estimated that for every one-cent increase in the global price of oil, the GN's budget takes a $400,000 hit.

"We have to get away from our dependency on fuel oil," Merkosak said, saying a hydro plant at Iqaluit would benefit everyone in Nunavut.

He said the QEC is also doing a "desktop" study of the Kivalliq region's hydroelectric potential. That means a study that would compile all the written work that's been done in the area so far.

Another big task for the QEC will be figuring out how to pay for an Iqaluit hydro plant.

And borrowing is not an option. That's because the Government of Nunavut, under the Nunavut Act, is not allowed to take on long-term debt greater than $200 million at any one time.

And right now, the GN's long-term debt stands at around $130 to $140 million.

So the most likely solution will be to find a private entity, perhaps a southern-based power company, to take on the job of building and operating the plant and then sell the power back through the QEC.

"We don't want to blow that debt-cap out of the water," Merkosak said.

Another option is to adjust Nunavut's debt-cap to allow the borrowing of more money, an issue that Premier Paul Okalik has raised at recent premiers' meetings.

Yet another would be a loan guarantee from the federal government, an idea promoted by Energy Minister Ed Picco.

Meanwhile, Merkosak said, the QEC will continue to do environmental studies and start another round of consultation with Iqaluit residents.

The QEC's environmental and socio-economic studies will eventually be incorporated into an environmental impact statement, which would be required by regulatory bodies like the Nunavut Impact Review Board and the Nunavut Water Board.