Proposed SaskPower Plant Servicing Agreement Approved

There may have been a few questions to ask about the final agreement - given if came straight to Council and not through Executive Committee first - but in the end in a unanimous vote the development and servicing agreement for SaskPower’s proposed $700 million natural gas fired electrical generating station was approved.

The plant, to be built in the City’s new Southeast Industrial Park, will see 800 workers working on it during its construction phase. The design phase is set for 2020 with the servicing work for the plant to be completed in September 2021 with the majority of SaskPower’s construction work to commence following that.

SaskPower proposes to build its $700 million plant on 108.77 acres (adjusted from the original 109.82 acres). The purchase price is based upon $5,600 per acre or a total purchase price od $609,112.

“We have been behind the scenes been negotiating with SaskPower. Working on the details of servicing the industrial park and the SaskPower site,” city manager Jim Puffalt said.

As part of the agreement SaskPower has agreed to pay for 70 percent of the 16 inch water line to serve the site as they require only a 12 inch line but the higher capacity line is needed to service the entire industrial park. The City’s share of the $7.12 million will be approximately $2.5 million which they hope to recover through additonal land sales - most notably the sale and exclusive rights to develop the industrial park to Carpere Canada.

“As we have a cost sharing partner at this time it makes sense to size the lines such as they cover the full industrial park and the 700 and some acres that are included in there,” Puffalt said.

The sanitary sewer will be built by the City and paid for 100 percent by SaskPower with the City responsible for its operation upon completion.

“This is no different than any other industrial or residential subdivision is the developer in essence pays the costs they are required to. The City pays the upsize and once the warranty period is completed then the City takes over maintenance of the associated infrastructure.”

SaskPower will additonally pay $1.5 million for roads and $300,000 for the storm sewer.

The only infrastructure item which SaskPower will pay for and operate is a waste water line which will go directly to the City’s sewage lagoons.

SaskPower will install power and the natural gas infrastructure to the area estimated to cost about $4 million.

In documents obtained through a Freedom Of Information request by MJ Independent the cost of the natural gas line was initially to be paid for in its entirety by the ill fated Canadian Protein Innovation proposed pea protein plant.

There will be a dispute resolution process which will bypass the present system used by the City as well as SaskPower will have a say in the tenders, documents and awards which also bypass the City’s present purchading policy.

Due to the low amount of process water needing to go to the sewage lagoons - the majority of water will evaporate - a unique sewage rate of 15 percent of water used will be charged.

SaskPower will pay the standard water rate but there is a clause in their contract that if any future tenant of the Southeast Industrial Park negotiates a reduced water rate then the Crown will receive the same reduced rate.

“It is a great deal for the City of Moose Jaw an opportunity to bring servicing to the Industrial Park at a fraction of the cost if the City was trying to do it itselt,” Puffalt said.

Responding to a question by Councillor Scott McMann if the City could end up liable with only $1.5 milliin put up for road upgrades Puffalt said he did not envision it as the majority of the roadwork necessary was upgrading upgrading some of the heavy haul routes and some of the existing roads heading to the plant. SaskPower will build a constructuon access road to the east of the plant.

“The rest of the roads are going to be upgraded so it should be nothing on us. Future development is a different story of course,: Puffalt said.

Regarding the liabilty the City could be exposed to Councillor McMann asked for an explaination ot the $2.5 million dollars and the wording in the financial implications of the report.

“It mentions another party is it going to be an additional cost there? Why was the additional party even mentioned? It wasn;t clear there,’ he said.

Puffalt said the $2.5 million the City could find itself exposed to is the worst case scenario but additional land sales should take care of that liability.

“We are in negotiations with another developer that has until the end of February to decide if they are proceeding or not,” Puffalt said.

Councillor Brian Swanson expressed a similar opinion regarding the $2.5 million risk.

“That to me is some of the concern is the City will receive approximately $600,000 for the sale of the land and we are going to spend $2.5 million,” Councillor Swanson said.

Councillor Swanson would go on to express his concerns that Administration had the deal for 13 months but now they had to review and vote on a 90 page deal in one evening.

“This had been with Administration for 13 months and my first night to look at it is the night it has to be approved if the schedule is to maintained.” he said, adding later in the disciussion “coming to Council like this you don’t want to vote against it but you coulf think there could be a better agreement.”

Councillor Swanson said he did not like the deal given to SaskPower to get a reduced water rate if any future industrial park tenenat could negotiate one.

Puffalt said the water rate agreement was “due to the major investment into the community it was something that was suggested and seen to be a reasonable approach.”

Despite the questions the agreement passed unanimously.

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