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Dam-ed if they do, dam-ed if they don't

Bipole III drama highlights province's conflict

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This is getting really interesting.

On Wednesday, Terry Sargeant, the chairman of the Clean Environment Commission, notified intervenors to a hearing on Manitoba Hydro's Bipole III -- the controversial north-south transmission line proposed for the western edge of Lake Manitoba -- he is seeking "clarification" from Conservation Minister Gord Mackintosh on how best to assess the environmental and economic impact of the project.

Admittedly, on the excitement scale this ranks only slightly ahead of NASCAR and well below the premiere of Expendables 2. But in the wonky world of utilities and environmental regulation, it's pretty juicy.

For some months now, Hydro has been battling intervenors before the commission over whether to perform a Needs For And Alternatives To (NFAAT) review. Not meant to be a replacement for an environmental impact study, an NFAAT review ensures Bipole III makes economic sense and its benefits could not be found by pursuing some other, less costly course of action.

In its application to the commission, Hydro included a NFAAT review that, unsurprisingly, concluded Bipole III was a good deal and its costs -- in the neighbourhood of $3 billion -- would be recouped by increased export sales of electricity from the Conawapa and Keeyask generating stations. However, intervenors want the commission to allow them to evaluate Hydro's NFAAT analysis by forcing the utility to turn over all the assumptions and calculations that led to those conclusions.

This isn't surprising either; the utility has shown repeatedly at hearings before the Public Utilities Board its calculations are often off the mark. In fact, the PUB has also asked for a NFAAT review. Hydro is resisting, arguing it has already satisfied the NFAAT review requirement. Now, Sargeant seeks clarification from his political masters.

And this is really where things get interesting. The decisions to build Keeyask, Conawapa and Bipole III were not Hydro decisions; they were NDP government decisions. The same government that, as a matter of policy, is pursuing aggressive expansion of its northern generating capacity while also filling the role of environmental watchdog. Although both Hydro and the commission are, technically speaking, arm's-length bodies, the problem and the solution for this dilemma both originate in cabinet.

And that is creating some absurdity.

Consider that the government responsible for the political decision to build Bipole III without conducting a NFAAT review is being asked by Sargeant, a political appointee, to reconsider. That has put Mackintosh directly on the hot seat. Should he agree to a NFAAT, there will be questions about why it wasn't part of the regulatory framework at the outset.

If he says no to a NFAAT, the government will face conflict-of-interest allegations.

Sargeant's decision to go back to the government for clarification puts the commission in a negative light. If it were truly arm's length, the chairman would be allowed to make his own decision about whether a new NFAAT review is needed, or at the very least whether intervenors should be given more leeway to ask Hydro about how it came to its conclusions.

Apart from the commission's drama, it isn't clear why the government did not order a full NFAAT review of Bipole III in the first place. The province recognizes NFAATs are the gold standard for review of any project with a big environmental footprint.

We know this because the province ordered a NFAAT review for both Conawapa and Keeyask. Why not Bipole III as well? Hydro has argued that although it would be impossible to get Keeyask and Conawapa electricity south without Bipole III, the utility needs a new transmission line to ensure reliability of service. The province may have bought into that position as proponent, but it should have rejected it as environmental watchdog.

The Bipole III drama has revealed just how weak environmental law is in Manitoba and how hampered the commission is in fulfilling its mandate as the province's chief environmental watchdog. If the province is concerned about making the right decision, it will err on the side of caution and order a NFAAT review for Bipole III.

Furthermore, it will make NFAAT part of an environmental review of every mega-project.

Unfortunately, when you are acting as both proponent and watchdog, it's sometimes hard to tell what the right decision really is.

dan.lett@freepress.mb.ca

Republished from the Winnipeg Free Press print edition August 23, 2012 A4

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