Quebec project put into limbo -- Environmental veto

The fate of a large wind power project slated for a site near Rivière-du-Loup in Quebec now rests with the provincial energy minister after being vetoed by Quebec's energy agency, the Bureau d'audiences publiques sur l'environnement (BAPE). At public hearings on the project, which started in May, BAPE said the proposal contravened local regulations for wind development. In a report it cites noise, bird, agricultural and visual impacts, and says the project does not have "the consensual support of the community."

The 21-year power purchase agreement with Hydro-Quebec for the output of the Terrawinds project was signed outside of the utility's competitive tendering process. That means the developer does not have to meet the utility's requirement for 60% of project content to be made in Quebec. As a result, says BAPE, only 10.5% of project spending will take place in the region. The agency wants a stakeholder committee to establish ways to maximise local economic benefits.

Migratory birds

The company developing the project, however, says it has already made changes to the Terrawinds proposal that deal with most of the agency's concerns. Skypower Wind Energy Fund LP says it has revised the locations of turbines to comply with local regulations and reduced the project size from 201 MW to 171 MW, dropping 20 turbines in a particularly controversial area. "This is a practical and tangible move that was designed to limit the visual concerns and to limit the number of turbines in sensitive migratory bird areas," says the company.

The project is also expected to generate greater economic benefits than BAPE estimates, says Skypower, pointing out direct expenditures will total C$36.6 million in the region and C$142.5 million in Quebec. In addition, payments to landowners, increased business and tourism, and jobs relating to the wind farm's operation will inject another C$40 million into the community over the life of the project. Surveys conducted in the region have found that about 75% of residents support the plan, SkyPower adds.

The company had hoped to have the project's first 39 MW phase, which is eligible for special tax treatment under the federal government's Canadian Renewable and Conservation Expense program, operating by the end of this year. SkyPower raised C$77 million in flow-through financing under the program and the delays in getting the project underway is complicating how and when investors who bought units can claim related tax deductions. The fund says it has applied to the Canada Revenue Agency for a ruling on a plan to ensure unit holders receive their full deductions.