WENDY STUECK

Globe and Mail

February 19, 2008

VANCOUVER — On a sunny day last fall, British Columbia Premier Gordon Campbell and Energy Minister Richard Neufeld donned traditional blankets and cedar headbands to take part in a native blessing ceremony for East Toba/Montrose, a $660-million hydroelectricity project just north of Powell River on B.C.'s Sunshine Coast.

They looked slightly stiff in the Coast Salish regalia, but the symbolism was clear: The province welcomes aboriginal participation in such projects, which some bands are seizing as a rare economic opportunity for remote communities.

"At some point in time, first nations have to step up to the plate and say, 'We are going to be economically self sufficient. We are not going to wait for some government official to do it for us,' " says Ken Brown, chief of Klahoose First Nation, one of three bands involved in the project being developed by Plutonic Power Corp.

Resource development and aboriginal interests have a rocky history in B.C., where a lack of treaties means virtually the entire province is subject to unresolved land claims.

Indian bands' objections over using a lake as a tailings dump factored into a regulatory decision last year that killed Kemess North, a copper-gold project in northern B.C.

Mining and forestry interests have chafed against the obligation to consult and accommodate native interests, a requirement underlined in court rulings.

Increasingly, bands are seeking ownership stakes, royalties, training and employment in resource projects. Developers and financiers are turning to aboriginal partners to help make their projects work.

"A strong partnership between a developer and the band or bands in the relevant area is a huge positive from our standpoint," says Matt O'Brien, president of Connor Clark & Lunn Infrastructure Fund, one of many institutions that's trained its sights on the infrastructure sector. "It speaks directly to the ease with which the project is likely to move through the environmental and regulatory approval process," he says.

For its first investment, the fund bought into the $500-million Harrison Hydro project, a group of six plants in southern B.C. being developed by Cloudworks Energy Inc.

The project kicked off in December, 2006 with a traditional ground-breaking ceremony attended by Douglas Lake band representatives.

The role of bands such as the Douglas Lake and Klahoose is part of a shift in B.C., where the government is turning to the private sector for new sources of electricity instead of only relying on provincially owned utility B.C. Hydro.

That decision, and a flurry of applications for hydro projects on rivers throughout the province, has triggered furious debate over the long-term impact on the environment, the energy supply and prices.

Amid that controversy, Ken Brown is focused on the long-term benefits that East Toba/Montrose could mean for the Klahoose. The band has signed an agreement with Plutonic that features royalties, opportunities for equity participation, and employment and training provisions. The two-part project, scheduled to be operating by 2010, will fuel other economic development for the band by providing steady income and training, and by building roads into areas the Klahoose can use for forestry operations, he adds.

Other bands will likely have developers knocking on their door. The provincial government's recent major projects inventory lists dozens of proposals for hydroelectric projects with an estimated capital cost of more than $2.5-billion.

Last June, the Union of British Columbia Indian Chiefs called for a moratorium on private power development on British Columbia's rivers, citing the need for consultation regarding aboriginal rights and title. However, the group said it supported those first nations that were negotiating or had secured a private power deal.

With rising project costs, bands can find themselves fighting to stay in the picture, says Judith Sayers, chief of the Hupacasath First Nation on Vancouver Island.

The Hupacasath are majority owners of a small hydro project, China Creek, that began operating in 2005. The band's power development company is looking at other projects and sees the potential to have sizable ownership stakes in as many as 10 projects, she says.

Ms. Sayers has made it her mission to encourage bands to seek ownership positions in power projects, saying that even a small one such as China Creek can provide significant economic benefits