Project boosts confidence.

Hydro station good news for area contractors

SAULT STE. MARIE - New reforms designed to encourage development of "green" electricity generation and to reduce property taxes on power dams should ultimately put more green in some Algoma contractors' pockets.

Local contractors, tradesmen and suppliers stand to benefit from Great Lakes Power's (GLP) decision to build a new $75-million hydro-electric generating station near Wawa.

The proposed 45-megawatt High Falls Generating Station, which will replace an aging 'and inefficient 71-year-old station on the Michipicoten Riyer, will be built over an 18-month period starting in the spring of 2001 and will boost power production at the site by 57 per cent.

No new permanent jobs will be created from the plant since GLP stations are digitally controlled from its Sault headquarters, but utility officials say the project will include a strong local construction component among the estimated 310,000 hours of employment within Canada, including 250,000 hours of direct employment at the site.

GLP is finalizing a contract with the design-build contractor, and will not know how local subcontractors, suppliers and labour will be used until the final agreement is signed.

Mike McEwen, GLP's president, says that, when talking with bidders earlier in the process, the utility pressed them to use local content as much as possible.

"We suggested they use local organizations -- contractors, First Nations and the like -- and we did put that into our terms, so we do want to see that happen.

"We're a member of the community, too, and we want to see that come forward into the final contract."

GLP selected a joint venture group of McNamara Construction of St. John's, Nfld. and the international engineering firm of AMEC Inc. as lead contractors. VA Tech Sulzer of St. Catharines and Siemens Canada are the principal suppliers of the turbines and generators respectively.

Rick Thomas, manager of the Sault's Construction Association, calls GLP's announcement "great news" for his 130-member organization.

Buoyed by some major redevelopment work on three area shopping malls, Thomas says it is not unreasonable to suggest that the bulk of the work at High Falls could be directed to local carpenters, electricians, equipment operators and labourers.

"GLP is probably going to have a contract with a large national dam builder, but certainly 99 per cent of the people who actually perform the work will be from this region, certainly from Wawa and the Sault.

"There's no question the project is not so large that it won't attract local bidders. I see good participation by sub-trades and suppliers and some subcontractors for minor components like road building."

Thomas says it is likely uneconomical for the Newfoundland contractor to send an entire construction crew to Ontario.

"And they're probably bound to various trade unions that require that they use people out of the local hiring hall."

Thomas says the much-anticipated High Falls plant has created a buzz among his, membership in a region that has dried up in major capital projects in recent years.

"It's heavy engineering, so it's a sector that's not really been active."

Since the construction season window for large civil works is now closed for the year, project engineers will concentrate on design work over the winter. Subcontracting work will likely be tendered out in February or March.

The decision to proceed with the new High Falls plant came immediately on the heels of long-awaited provincial tax legislation from the Ministry of Revenue.

The Sept. 15 announcement was welcome news for GLP, which had been extensively lobbying the province through their industry group for relief from what McEwen labelled an "onerous tax burden" that represented a major sticking point whether to build new or re-fit the old station.

GLP claims that, until now, the province's method of assessing taxes against hydro-electic infrastructure had offered no incentive to invest in new construction.

The new legislation, expected to be passed into law in early 2001, will replace existing property taxes with lower charges on gross revenues on hydro-electric power plants. The rates will be graduated based on a dam's production, with the smallest plants paying the lowest charges.

The province is also making changes to the way it charges for Crown water rentals. These charges will also be based on a plant's gross revenues.

As well, output from rebuilt or expanded power dams and plants qualify for a 10-year holiday on property tax and water rentals.

It is expected to stimulate investment in sustainable "green" energy sources.

McEwen says the new legislation and a better tax regime puts GLP, the province's largest private utility, on a more level and competitive footing with other energy producers outside Ontario.

He says the project could not have proceeded without these legislative changes.

"We'll still pay taxes on the site, but the treatment is now more even with other forms of generation and adjacent jurisdictions."

High Falls is the oldest of four GLP generating stations on the Michipicoten River.

The current 26-megawatt plant, first built in 1929 by a predecessor company, saw its last major upgrade in 1950.