CBT embarked on major project to secure future of delivery of benefits
By Nelson Daily Editor
By Timothy Schafer, The Nelson Daily
The Columbia Basin Trust is well positioned for future disbursements of cash to local communities thanks to the Crown corporation embarking on the Waneta Dam expansion project, says the CBT’s president and chief executive officer.
In the wake of signing the deal on the $900-million expansion to the dam on the Pond d’Oreille River south of Trail, Neil Muth said the CBT has assumed a measure of risk in the minority partnership (16.5 per cent) they entered into.
Unlike past CBT projects — the Brilliant Dam, Brilliant expansion and Arrow Lakes Generating Station — the CBT will have to finance 100 per cent of the project.
But it is with that risk in mind, Muth added, that the future of the CBT and its finances will be solidified. By assessing the impact of the project on the delivery of benefits, the CBT board was able to decide if they could move forward with the project, Muth explained.
The construction benefits the local economy, he pointed out, but it will also benefit the Columbia Basin through returns on the investment in the future and be spent on the delivery of benefits program to the communities.
“This is a large, civil project and that naturally carries risks. But with our partners, the CBT has done a very good job of mitigating those risks,” he said.
“Part of that (mitigation) comes from investments in power assets, that, once built, the power is sold under long-term contract so you have a very secure revenue source. You are not vulnerable to up and down markets … so we’ll have strong basis financially.”
Total revenue for the CBT in the last year increased to $26.1 million, with 7.69 per cent coming from power projects, 8.29 per cent return from private placements portfolio, and 21 per cent return on market securities.
The CBT suffered like anyone else when the public markets took a hit over two years ago, said Muth, but they have recovered the funds they lost in the market downturn.
It was the reliance on the somewhat uncertain investments that the CBT looked to secure some sort of stability to ensure they could deliver on the five-year agreement — $30,000 minimum to every municipality and electoral area across the board — it signed with communities and affected areas recently.
As the decision on going forward on the Waneta project loomed, Muth said there were two things he really dreaded: one was to tell the community the project was not proceeding, and the other was to be in a position to have to tell the communities they would have to shut down, or strongly curtail, the delivery of benefits programs.
“I think we have found the appropriate balance to allow the project to proceed to protect CBT and the rest of us from those risks,” he said.
The CBT disburses around $15 million to 175,000 people in the Columbia Basin under the delivery of benefits program, with $1.2 million handed over to the Regional District of Central Kootenay, which includes Nelson.
Looking ahead …
The year 2014 holds significant meaning for those living in the Columbia Basin.
That year will be the 10-year notice date whereby either side — Canada or U.S. federal governments — can terminate the 60-year Columbia River Treaty (although no expiry date is given on the evergreen agreement).
The Columbia River Treaty (CRT) is a bi-national trans-boundary water agreement signed in 1961 and ratified by both federal governments in 1964. Either side can make amendments at any time if there is mutual agreement.
The main provision of the treaty is that Canada must provide 15.5 million acre feet (19.1 square kilometres) of water storage annually. Towards this end, the Canadian government constructed three treaty dams: Keenleyside, Mica and Duncan.
The water storage in BC generates additional power in the 11 downstream dams in the U.S. In return for storage, BC is entitled to half of the downstream benefits (Canadian entitlement).
The primary objectives of the CRT are flood control and optimization of power generation. Certain flood control provisions in the CRT do expire in 2024 unless otherwise re-negotiated.
In the treaty, the CBT acts as a facilitator and convenor on behalf of Basin residents.
Source: Columbia Basin Trust
