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Not once, but twice, the Canada Mortgage Housing Corp. signed off on a controversial $50-million loan for a small northern Ontario town.
And, the Citizen now has learned that both times, the money was aimed at projects that appear to have been doomed.
The story of Blind River’s loan, acquired as part of the federal government’s Economic Action Plan, has become an awkward one for the community of 3,500 — and for the CMHC, which is facing questions about its level of oversight for the loans it gave out.
The federal money, meanwhile, has become an albatross. The town — and taxpayers — may be out millions after Blind River invested a chunk of it in Plasco, the Ottawa waste-to-energy firm that filed for creditor protection last month.
But before it got involved with Plasco, Blind River had a different target lined up for an investment.
The town applied for the $49.5-million loan in 2010 from the Canada Mortgage Housing Corp., proposing to build the solar facility. The project was to include the installation of about 45,000 solar panels on 285 towers over an area of 120 acres and was to provide the residents of Blind River with a low-cost renewable energy supply.
At the time, CMHC was in charge of handing out loans for the Municipal Infrastructure Lending Program, a first-come, first-serve plan to give money to municipalities for infrastructure.
Related
CMHC approved the loan, but for the solar project to work, the provincial power authority would have needed to accept energy from it. That’s how the town would make its money.
The problem is, as the Citizen has learned, the Ontario Power Authority, had no inclination to accept energy from a renewable power project in the region.
A spokeswoman for the Independent Electricity System Operator (IESO), which was created in 2014 and the Ontario Power Authority merged into it, said the town of Blind River falls within an area that is known to be “constrained” when it comes to electrical transmissions and has never been suitable for large scale renewable energy projects.
“I cannot speak specifically to any contracts or applications because of confidentiality provisions,” said Mary Bernard, a spokeswoman with IESO. “But, I can tell you that the area where Blind River is located is constrained for large renewable energy projects. So, if somebody had applied for a large project in 2009 or 2010 … they would have been told they would be denied because they wouldn’t have been able to connect to the grid.”
According to Bernard, getting approvals from the IESO is a key component of securing financing for renewable energy developers. Without the approvals, and the contract guaranteeing payment for the renewable energy that the project generates, there is little reason for a lender to hand over any cash.
“It’s the contract that allows the project to be financeable,” said Bernard. “It allows them to take that to the bank and say, ‘I have a contract. Once I’m done I’m going to start getting paid, and the payback is over a number of years.”
The IESO, or OPA at the time, never approved a contract for Blind River. Although, Bernard admitted smaller scale renewable projects, such as the ones the town has spent more than $20 million on, have been approved.
“Large projects would not have been able to connect to the grid because there are constraints in that area,” she said.
On the North Shore Power Group’s website, the municipally owned utility seems to confirm that it never approached OPA until after it had CMHC’s cash.
“NSPG had a Connection Impact Assessment signed by three engineers stating that up to 9.4 (megawatts) AC could be connected prior to the (Feed In Tariff) program launch. With this in mind the Town was astounded when the project was turned down due to apparent line connectivity (constraint) problems,” reads the “facts and frequently asked questions” section of the utilities website.
But why would the CMHC approve a loan for a project that seemed to have little chance of success?
The Crown corporation seems to suggest it simply took the town’s applying for money at face value.
“Applications were assessed based on program eligibility and readiness to proceed, in reliance on representations by the municipalities, as well as the availability of loan funds,” CMHC spokeswoman Karine LeBlanc.
CMHC gave the money to Blind River even though the municipality changed its mind during the application process, switching to the solar energy park from a previous plan for a biomass energy generating facility. The money ultimately went into a $25-million investment in failed Ottawa energy-to-waste firm Plasco Energy Group. The remainder was used on a number of small scale solar projects.
With Plasco seeking creditor protection last month, Blind River has been left as a creditor, owed nearly $18 million.
“Subsequent to the approval of the loan and advancement of funds, the municipality experienced difficulties they did not anticipate, causing them to change their project scope twice. In both instances, the change to the project scope was assessed under the program guidelines and approved.”
She added: “Unfortunately, the Municipality of Blind River’s project hasn’t proceeded as they had expected and planned, causing financial difficulties for the municipality. However, that does not mean there was any impropriety.”
Aside from not having a buyer for the electricity it planned to generate, the town failed to meet numerous other requirements which it needed to secure funding, including one that stated the money must be used for new construction projects started after January 2009. Plasco’s Trail Road facility, where the money went, was built in 2006. The town’s Annual Repayment Limit (ARL), which acts like a credit rating for municipalities, was also not sufficient to handle such a large loan.
vpilieci@ottawacitizen.com
查看原文...
And, the Citizen now has learned that both times, the money was aimed at projects that appear to have been doomed.
The story of Blind River’s loan, acquired as part of the federal government’s Economic Action Plan, has become an awkward one for the community of 3,500 — and for the CMHC, which is facing questions about its level of oversight for the loans it gave out.
The federal money, meanwhile, has become an albatross. The town — and taxpayers — may be out millions after Blind River invested a chunk of it in Plasco, the Ottawa waste-to-energy firm that filed for creditor protection last month.
But before it got involved with Plasco, Blind River had a different target lined up for an investment.
The town applied for the $49.5-million loan in 2010 from the Canada Mortgage Housing Corp., proposing to build the solar facility. The project was to include the installation of about 45,000 solar panels on 285 towers over an area of 120 acres and was to provide the residents of Blind River with a low-cost renewable energy supply.
At the time, CMHC was in charge of handing out loans for the Municipal Infrastructure Lending Program, a first-come, first-serve plan to give money to municipalities for infrastructure.
Related
CMHC approved the loan, but for the solar project to work, the provincial power authority would have needed to accept energy from it. That’s how the town would make its money.
The problem is, as the Citizen has learned, the Ontario Power Authority, had no inclination to accept energy from a renewable power project in the region.
A spokeswoman for the Independent Electricity System Operator (IESO), which was created in 2014 and the Ontario Power Authority merged into it, said the town of Blind River falls within an area that is known to be “constrained” when it comes to electrical transmissions and has never been suitable for large scale renewable energy projects.
“I cannot speak specifically to any contracts or applications because of confidentiality provisions,” said Mary Bernard, a spokeswoman with IESO. “But, I can tell you that the area where Blind River is located is constrained for large renewable energy projects. So, if somebody had applied for a large project in 2009 or 2010 … they would have been told they would be denied because they wouldn’t have been able to connect to the grid.”
According to Bernard, getting approvals from the IESO is a key component of securing financing for renewable energy developers. Without the approvals, and the contract guaranteeing payment for the renewable energy that the project generates, there is little reason for a lender to hand over any cash.
“It’s the contract that allows the project to be financeable,” said Bernard. “It allows them to take that to the bank and say, ‘I have a contract. Once I’m done I’m going to start getting paid, and the payback is over a number of years.”
The IESO, or OPA at the time, never approved a contract for Blind River. Although, Bernard admitted smaller scale renewable projects, such as the ones the town has spent more than $20 million on, have been approved.
“Large projects would not have been able to connect to the grid because there are constraints in that area,” she said.
On the North Shore Power Group’s website, the municipally owned utility seems to confirm that it never approached OPA until after it had CMHC’s cash.
“NSPG had a Connection Impact Assessment signed by three engineers stating that up to 9.4 (megawatts) AC could be connected prior to the (Feed In Tariff) program launch. With this in mind the Town was astounded when the project was turned down due to apparent line connectivity (constraint) problems,” reads the “facts and frequently asked questions” section of the utilities website.
But why would the CMHC approve a loan for a project that seemed to have little chance of success?
The Crown corporation seems to suggest it simply took the town’s applying for money at face value.
“Applications were assessed based on program eligibility and readiness to proceed, in reliance on representations by the municipalities, as well as the availability of loan funds,” CMHC spokeswoman Karine LeBlanc.
CMHC gave the money to Blind River even though the municipality changed its mind during the application process, switching to the solar energy park from a previous plan for a biomass energy generating facility. The money ultimately went into a $25-million investment in failed Ottawa energy-to-waste firm Plasco Energy Group. The remainder was used on a number of small scale solar projects.
With Plasco seeking creditor protection last month, Blind River has been left as a creditor, owed nearly $18 million.
“Subsequent to the approval of the loan and advancement of funds, the municipality experienced difficulties they did not anticipate, causing them to change their project scope twice. In both instances, the change to the project scope was assessed under the program guidelines and approved.”
She added: “Unfortunately, the Municipality of Blind River’s project hasn’t proceeded as they had expected and planned, causing financial difficulties for the municipality. However, that does not mean there was any impropriety.”
Aside from not having a buyer for the electricity it planned to generate, the town failed to meet numerous other requirements which it needed to secure funding, including one that stated the money must be used for new construction projects started after January 2009. Plasco’s Trail Road facility, where the money went, was built in 2006. The town’s Annual Repayment Limit (ARL), which acts like a credit rating for municipalities, was also not sufficient to handle such a large loan.
vpilieci@ottawacitizen.com
查看原文...
