Kincardine council

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Kincardine council is pursuing a plan to take over the water and sewer systems at the Bruce Energy Centre.

Currently operated by Bruce Power and owned by Ontario Power Generation (OPG), the $9-million asset would be acquired by the municipality, along with $300,000 from Bruce Power as seed money in a reserve fund for identified repairs.

The decision was made at a special meeting of council June 23 at the municipal administrative centre.

Chief administrative officer John deRosenroll said the underlying intent of this project is to create a stable utility environment for industry at the energy park. Both Bruce Power and the municipality agreed in 2008 to undertake a comprehensive utility condition assessment in order to determine the feasibility of an ownership change of the water and sewage treatment plant in the energy park.

The municipality has the experience in operating utilities, said deRosenroll, and the desire to secure strategic infrastructure that will improve the economic development potential of this area by partnering with local industries.

A land component of the deal proved to be too complicated, said deRosenroll. Instead, Bruce Power will grant a water credit of $220,000, providing the industrial (process) water to the energy centre at no charge for about six years.

Robert Cottrill of the economic development committee said this deal not only stabilizes the utility environment for existing businesses at the energy centre, but provides capacity for future growth of Bruce Power and related businesses outside the fenced nuclear plant site. With more industry in the energy park, it will also offer a diversity of jobs, he said.

"The paramount issue to the economic development committee is that of economic growth, jobs and increased assessment," he said. "This project meets those objectives."

Engineer Bruce Potter of B.M. Ross explained that the systems were all inspected and several deficiencies were noted, to the tune of $70,000 in repair costs.

He also outlined that the diffusers will need replacement within the next 10 years at a cost of about $400,000; and sludge removal at a cost of about $225,000. The process water tower will require remedial work in the order of about $35,000, he said, plus re-coating may be required in five to seven years, at an estimated cost of $200,000.

This puts the total cost of upgrades and repairs over the next seven to 10 years at about $930,000, he said.

Murray Elston of Bruce Power said the company is prepared to transfer the asset and $100,000 in lands supporting the sewage treatment plant and the water tower. Bruce Power will construct a new meter and valve system for the water supply at the fence line.

Potter noted that OPG has agreed to transfer the asset and will provide water in the event Bruce Power no longer holds a lease to the nuclear site.

Economic development and tourism manager Steve Murray said the deal with Bruce Power secures the sewage treatment for the residential sector at the north end of the  municipality which is an area of growth. Plus, Kincardine operating staff can assume responsibility of the current plant and infrastructure without the addition of new employees.

The major benefit, he said, is the municipality will have the ability to allocate sewage capacity for industrial growth, and will no longer be paying Bruce Power $100,000 per year for utility services.

If council does not approve this deal, it stands to lose the remaining industry in the energy park, as well as any future business that may have located there. "To date, doing nothing has not produced any significant new development at the Bruce Energy Centre in two decades," he said.

Municipal solicitor George Magwood said two major agreements have been negotiated, in principle, with Bruce Power: the asset transfer, and the water supply and sewage discharge.

The municipality will assume the customer service agreements with the industries in the energy park, said Magwood, and the asset agreement will contain an unforeseen liability clause for two years, for items not identified in the engineering review. Kincardine would pay the first $25,000 of these repairs and Bruce Power would pay the balance.

Magwood said Bruce Power has agreed to register the "Record of Site Condition."

Ted Dodkin of Greenfield Ethanol, located in the energy park, said the deal sounds good, with the municipality operating the utilities. As for the steam supply, he said the industries need to work toward a lower-cost energy solution.

According to deRosenroll, the financial position is more positive than anticipated. The new estimated revenue from both systems is $137,006.40 per year, including a transfer of $55,000 from the existing sewage treatment plant budget. He expects the municipality will apply for an Intake 2 Southern Ontario Development Grant, through the government, which would help cover the upgrading costs of the facilities.

He recommended council approve the utility transfer project and direct staff to prepare agreements for bylaw passage at the Aug. 11 meeting.

Councillor Ron Hewitt added a friendly amendment to that, asking that a clause be added that indicates who's paying for what on the system, if things don't go as planned.

Ed Roberts of the Tiverton and District Ratepayers Association urged council to consider a third-party engineering review, to be done by Conestoga Rovers, before forging ahead with this deal which could be a "pig in a poke."

"What if it's $1 million to fix up the system in the first three years," he said. "After the first two years, the municipality has to foot the bill."

Industrial water tower at the Bruce Energy Centre

He said the association agrees with the proposal but wants council to take a good close look at it before proceeding.

Charles Juravinski, an investor in the Bruce Energy Centre, supports the deal with Bruce Power. He has about 700 acres of land crying for good development and urged council to get the edge on nearby municipalities with this proposal.

Hanna Ayyad of Bruce Agra Inc.,  has no issue with the plan but is concerned about the availability of steam and how this deal will affect that. He said the essence of cheap steam in the energy park is gone and he wants the municipality to help find a solution to that problem.

Councillor Randy Roppel said council should be very careful how it proceeds with this agreement. He said Tiverton pays for 40 per cent of the lagoon system and that should handle the proposed sewers for Inverhuron, so there's no bonus there for the people of Ward 3 (Bruce Township).

"If we take over the service and the facility goes down for two weeks, what happens then?" he asked. "The industries in the energy park are likely to sue us."

As for staffing, Hewitt asked who pays the short-fall if an increase in operating staff is required. 

The users of the system would pay, said deRosenroll. However, the entire system would be more efficient, and economies of scale dictate there shouldn't be a problem, he said.

Hewitt asked that a clause be put in the agreement, stating who pays for the services if the energy park isn't a go. Staff can add that to the bylaw, said deRosenroll.

"I believe this is our core business, providing services to improve the lives of our residents and assist our businesses," said mayor Larry Kraemer. "I realize we should look at the worst-case scenario, but don't overlook the best -case scenario. We have businesses that have shown an interest in locating here. We have an opportunity to create a positive influence in that event."

Hewitt suggested council consider leasing the services from Bruce Power for five years and see if it works.

"That wouldn't give the long-term security and comfort which is desirable for industry," said Kraemer. "There's more predictability to the model presented by staff."

Deputy mayor Laura Haight said the energy park is a weird situation, with a private company operating the water and sewer. That makes it difficult for industries wanting to locate here because the municipality is not in charge of the services.

This deal is a good case for Kincardine, she said. "We operate the sewage and water in Kincardine now, and if those systems went down for two weeks, I'm sure there are businesses that would want to sue us too, Randy (Roppel)."

As Haight was speaking, Roppel and councillor Mike Leggett, chairman of the economic development committee, talked loudly amongst themselves.

Haight turned to them and asked if they had any questions or anything to say, but they didn't.

"Well, I'm done," said Haight. "It's your project, Mike (Leggett)." And she left.

Leggett then turned on his microphone and said his committee has been working to bring industry to the energy park for years and as of now, it's going nowhere. "This is a huge opportunity to provide a place for business to come. We shouldn't pass it up."

Most of council agreed. In a final recorded vote, mayor Larry Kraemer and councillors Kenneth Craig, Guy Anderson, Marsha Leggett and Mike Leggett were in favour, while councillor Ron Hewitt and Randy Roppel were opposed. Deputy mayor Laura Haight and councillor Gordon Campbell were absent.

A bylaw will come forward at the Aug. 11 meeting.

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Wednesday, June 30, 2010