Report on Manitoba Hydro’s Keeyask Process Costs and Adverse Effects Agreements with First Nations

Press Release

WINNIPEG – Auditor General of Manitoba, Norm Ricard, released his report today on Manitoba Hydro’s Keeyask Process Costs and Adverse Effects Agreements with First Nations.

Payments to First Nations with respect to Hydro development projects can be made for process costs and for adverse effects. Process cost payments are intended to reimburse First Nations for the costs incurred to negotiate a partnership agreement with Hydro. As part of the negotiation process, Hydro and First Nations identify adverse effects on communities. Adverse effects agreements include programs to mitigate or offset the effects. Up to March 31, 2015, Hydro had paid over $270 million for process costs and adverse effect programs related to four of its development projects, this includes $169 million related to the Keeyask project.

The audit focused on the Keeyask project and found that Hydro reimbursed First Nations for process costs in accordance with Hydro’s Reimbursement Policy. The audit also found that Hydro was properly monitoring compliance with key provisions of the four Keeyask adverse effects agreements and that it was meeting its funding obligations under the agreements.

The report notes that Hydro’s claim verification process should be strengthened by making it risk based. “The results of claim audits initiated by Hydro showed that Hydro’s risks varied by First Nation”, stated Ricard, “As such, the nature of verification procedures conducted on higher risk claims should be more extensive than those conducted on lower risk claims.”

To help ensure the adverse effects agreements reflect the collective will of the community, Hydro and the four First Nations impacted by the Keeyask project, developed and signed a Ratification Protocol. The Protocol includes presenting the agreement to members for review, appointing process officers and conducting a referendum. The Protocol states that “Each Keeyask Cree Nation will use its best efforts to comply with the Referendum Rules and the results of the referendum will be accepted…unless there has been a material non-compliance with the Referendum Rules.” The report notes that the Protocol does not include any mechanism to provide all parties with independent assurance that the Protocol was adhered to. “In the absence of such a mechanism, we are concerned that Hydro did not adopt a more robust approach to obtaining assurance that the Ratification Protocol was adhered to, “said Ricard.

– 30 –

Copies of this report are available for the Media in:   ROOM 29 – LEGISLATIVE BUILDING

Online: www.oag.mb.ca

For more information contact:
Norm Ricard, Auditor General
204-945-3790

IBF5