UBC Theses and Dissertations

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UBC Theses and Dissertations

Hydro-electric power planning in the Yukon : a case study of the Aishihik Project Nicholls, William Graham 1979

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9 1 H Y D R O - E L E C T R I C P O W E R P L A N N I N G I N T H E Y U K O N : A C A S E S T U D Y O F T H E A I S H I H I K P R O J E C T b y W I L L I A M G R A H A M N I C H O L L S B . A . U n i v e r s i t y o f B r i t i s h C o l u m b i a , 1 9 7 6 A T H E S I S S U B M I T T E D I N P A R T I A L F U L F I L L M E N T O F T H E R E Q U I R E M E N T S F O R T H E D E G R E E O F M A S T E R O F A R T S i n t h e S c h o o l o f C o m m u n i t y a n d R e g i o n a l P l a n n i n g W e a c c e p t t h i s t h e s i s a s c o n f o r m i n g t o t h e r e q u i r e d s t a n d a r d : M a y , 1 9 7 9 ( c ) W i l l i a m G r a h a m N i c h o l l s , 1 9 7 9 I n p r e s e n t i n g t h i s t h e s i s i n p a r t i a l f u l f i l m e n t o f t h e r e q u i r e m e n t s f o r an a d v a n c e d d e g r e e a t t h e U n i v e r s i t y o f B r i t i s h C o l u m b i a , I a g r e e t h a t t h e L i b r a r y s h a l l make i t f r e e l y a v a i l a b l e f o r r e f e r e n c e a n d s t u d y . I f u r t h e r a g r e e t h a t p e r m i s s i o n f o r e x t e n s i v e c o p y i n g o f t h i s t h e s i s f o r s c h o l a r l y p u r p o s e s may be g r a n t e d by t h e Head o f my D e p a r t m e n t o r by h i s r e p r e s e n t a t i v e s . I t i s u n d e r s t o o d t h a t c o p y i n g o r p u b l i c a t i o n o f t h i s t h e s i s f o r f i n a n c i a l g a i n s h a l l n o t be a l l o w e d w i t h o u t my w r i t t e n p e r m i s s i o n . D e p a r t m e n t n f C o m m u n i t y a n d . R e g i o n a l P l a n n i n g The U n i v e r s i t y o f B r i t i s h C o l u m b i a 2075 W e s b r o o k P l a c e V a n c o u v e r , C a n a d a V6T 1W5 D a t e M a y 8, 1979 - i i -A B S T R A C T T h e h i s t o r y o f t h e A i s h i h i k p r o j e c t b e g i n s i n 1 9 7 1 , w h e n t h e N o r t h e r n C a n a d a P o w e r C o m m i s s i o n ( N C P C ) f i r s t i n v e s t i g a t e d t h e s i t e o f t h e p r o j e c t a n d s e l e c t e d i t f o r h y d r o e l e c t r i c d e v e l o p m e n t . T h e M i n i s t e r o f I n d i a n A f f a i r s a n d N o r t h e r n D e v e l o p m e n t r e q u i r e d t h a t l i c e n c i n g o f t h e p r o j e c t b e d e l a y e d u n t i l p e n d i n g l e g i s l a t i o n -t h e N o r t h e r n I n l a n d W a t e r s A c t - b e c a m e o p e r a b l e . T h e l i c e n c i n g p r o c e s s u n d e r t h i s l e g i s l a t i o n i n v o l v e d t h e p a r t i c i p a t i o n o f a n e n t i r e l y n e w l i c e n c i n g a u t h o r i t y , t h e Y u k o n T e r r i t o r y W a t e r B o a r d . A s a c o n s e q u e n c e o f t h e i m p l e m e n t i o n o f t h i s n e w p r o c e s s , t h e c o n s t r u c t i o n o f t h e p r o j e c t b e g a n a b o u t o n e y e a r l a t e r t h a n N C P C o r i g i n a l l y i n t e n d e d . W h e n c o n s t r u c t i o n o f t h e p r o j e c t d i d b e g i n i n A p r i l 1 9 7 3 , i t w a s e s t i m a t e d t o c o s t $ 1 7 m i l l i o n a n d t a k e t w e n t y m o n t h s t o c o m p l e t e . T h e p r o j e c t f i n a l l y c o s t $ 3 9 m i l l i o n a n d w a s n o t c o m p l e t e d f o r t w e n t y - s i x m o n t h s . I n f o r m a t i o n p r e s e n t e d i n t h e s t u d y c o n s i s t s a l m o s t e n t i r e l y o f p r i m a r y w r i t t e n m a t e r i a l s . T h e d o c u m e n t a t i o n p r o v i d e d s h o w s h o w d i f f e r e n t a c t o r s p e r c e i v e d , a n d d e a l t w i t h t h e p r o b l e m s t h a t w e r e e n c o u n t e r e d i n p l a n n i n g , l i c e n c i n g , a n d i m p l e m e n t i n g t h e p r o j e c t . - i i i -O b j e c t i v e s The o b j e c t i v e s o f t h i s study a r e : 1. to d e s c r i b e the h i s t o r y o f the A i s h i h i k p r o j e c t as a c c u r a t e l y as p o s s i b l e , f o c u s i n g on the d e c i s i o n processes and the most important problems t h a t arose d u r i n g the course of the h i s t o r y ; and 2 . to i d e n t i f y the main f a c t o r s t h a t were r e s p o n s i b l e f o r the development o f these problems. Problems The most important problems t h a t are d e a l t w i t h i n t h i s study r e l a t e to the s e l e c t i o n of the p r o j e c t , t o the water l i c e n c i n g p r o c e s s , and to the p r o j e c t p l a n n i n g , implementation and c o s t overruns. 1. S e l e c t i o n of the P r o j e c t Only a p e r f u n c t o r y i n v e s t i g a t i o n o f a l t e r n a t i v e s was made. Thus a q u e s t i o n has p e r s i s t e d as to whether the be s t a l t e r n a t i v e was chosen f o r development. 2 . The Water L i c e n c i n g Process Since t h i s was the f i r s t p r o j e c t made s u b j e c t to the Northern Inland Waters A c t , none of the a c t o r s had p r e v i o u s experience w i t h the l i c e n c i n g p r o c e s s . As a r e s u l t , d i f f e r e n c e s i n p e r c e p t i o n s were h e l d by NCPC and the Water Board about the r o l e o f the Water Board, and t h i s caused f r i c t i o n and de l a y s i n c a r r y i n g out the - i v -l i c e n c i n g p r o c e d u r e . 3 . P r o j e c t P l a n n i n g , I m p l e m e n t a t i o n a n d C o s t O v e r r u n s a . N C P C l a c k e d e x p e r i e n c e i n c o n s t r u c t i n g h y d r o f a c i l i t i e s , a n d w a s n o t w e l l s t a f f e d t o p l a n a n d i m p l e m e n t a s u b s t a n t i a l h y d r o e l e c t r i c p o w e r p r o j e c t . b . N C P C e v i d e n t l y m i s j u d g e d t h e c o s t a n d t i m e r e q u i r e d t o c o n s t r u c t t h e p r o j e c t , a s i n d i c a t e d b y t h e c o s t o v e r r u n a n d t h e f a c t t h a t c o n s t r u c t i o n t o o k 3 0 p e r c e n t l o n g e r t h a n e s t i m a t e d . c . F a c t o r s r e s p o n s i b l e f o r t h e c o s t o v e r r u n a r e n o t e n t i r e l y c l e a r . R e p o r t s o n t h e c o s t o v e r r u n w e r e w r i t t e n b y t h e N C P C m a n a g e m e n t , t h e c o n s u l t i n g f i r m w h i c h d e s i g n e d t h e p r o j e c t a n d m a n a g e d i t s c o n s t r u c t i o n , a n d a n i n d e p e n d e n t c o n s u l t a n t , b u t a q u a n t i t a t i v e a n a l y s i s s h o w i n g w h a t p r o p o r t i o n o f t h e c o s t o v e r r u n w a s c a u s e d b y u n f o r e s e e n i n f l a t i o n a n d w h a t p r o p o r t i o n w a s c a u s e d b y o t h e r f a c t o r s h a s n e v e r b e e n c a r r i e d o u t . C o n c l u s i o n s T h e d i f f i c u l t i e s e n c o u n t e r e d d u r i n g t h e l i c e n c i n g p r o c e s s a r e u n l i k e l y t o b e r e p e a t e d b e c a u s e a l l a c t o r s a r e n o w f a m i l i a r w i t h i t s r e q u i r e m e n t s . C o u n t e r v a i l i n g i n f l u e n c e s t h a t w o u l d e n s u r e a d e q u a t e c o n s i d e r a t i o n o f a l t e r n a t i v e s , r e l i a b i l i t y o f c o s t e s t i m a t e s , a n d e f f i c i e n t i m p l e m e n t a t i o n o f c o n s t r u c t i o n p r o g r a m s a r e n e c e s s a r y t o g i v e t h e p u b l i c c o n f i d e n c e i n p r o c e s s e s f o r s u p p l y i n g e l e c t r i c p o w e r i n t h e Y u k o n . - V -T A B L E O F C O N T E N T S A B S T R A C T T A B L E O F C O N T E N T S P A R T O N E C H A P T E R O N E P A R T T W O C H A P T E R T W O I N T R O D U C T I O N i I . O b j e c t i v e s I I . S y n o p s i s o f H i s t o r y I I I . P h y s i c a l D e s c r i p t i o n I V . H i s t o r y o f N C P C B e f o r e A i s h i h i k V . T h e W h i t e h o r s e S y s t e m A . T h e D e m a n d f o r P o w e r B . M i n i n g D e m a n d V I . A c t o r s i n t h e D e c i s i o n P r o c e s s A . N o r t h e r n C a n a d a P o w e r C o m m i s s i o n B . T h e W a t e r B o a r d - C T h e D e p a r t m e n t o f I n d i a n A f f a i r s a n d N o r t h e r n D e v e l o p m e n t V I I . O v e r v i e w S E L E C T I O N A N D A P P L I C A T I O N -J U N E 1 9 7 1 t o M A Y . 1 9 7 2 I . I n t r o d u c t i o n I I . S e l e c t i o n o f t h e S i t e A . P r e v i o u s K n o w l e d g e B . I n i t i a l S u r v e y s C . • S e l e c t i o n D . S t u d y o f t h e S i t e P a g e i i v 1 1 1 5 1 1 1 2 1 3 1 5 1 6 1 6 1 7 1 9 2 0 2 3 2 3 2 3 2 3 2 4 2 5 2 7 - v i -Page E. A p p l i c a t i o n f o r Water L i c e n c e 2 7 I I I . The Water L i c e n c e Process 2 9 A. I n t r o d u c t i o n 2 9 B. Previo u s Water L i c e n c e Process 2 9 C. D e c i s i o n to Use the N.I.W.A. 3 0 IV. Generation of Information 3 2 A. Environmental Study Delays 3 2 B. The Environmental Impact Study ] 3 4 C. E n g i n e e r i n g Design 3 6 D. E n g i n e e r i n g Study 3 9 V. Summary 4 0 CHAPTER THREE THE FIRST HEARING - MAY, 1 9 7 2 4 7 I. I n t r o d u c t i o n 4 7 I I . P r e p a r a t i o n f o r the Hearing 4 7 A. L e g a l C o n s t r a i n t s 4 7 B. N o t i c e o f the Hearing 5 0 C. A v a i l a b i l i t y o f Reports 5 2 I I I . The Water Board's Mandate 5 2 IV. The Hearing 5 5 V. Summary 6 0 CHAPTER FOUR OUTCOME OF THE FIRST HEARING AND PREPARATIONS FOR RE-APPLICATION - 6 3 MAY 1 9 7 2 TO JANUARY 1 9 7 3 I. Recommendation of the Water Board 6 3 I I . NCPC's Reaction 6 6 - V l l -I I I . IV. V. VI. VII. VIII. CHAPTER FIVE CHAPTER SIX Proposed Construction Schedule Study Delays Environmental Studies Changes i n the Water Licence Application The Pumping Scheme Summary SECOND HEARING AND OUTCOME, DECISION TO PROCEED - JANUARY TO APRIL, 1973 I. Introduction I I . Date of Hearing I I I . Terms of Application IV. Second Hearing V. The Water Board's Decision VI. NCPC's Reaction VII. Decision to Proceed VIII. Summary CONSTRUCTION OF THE PROJECT AND THE COST OVERRUN I. Compliance with Licence Conditions II. The Cost Overrun A. Introduction B. Formulation of Cost Estimates C. Economic Factors D. The Tunnel Contract E. The Construction Schedule Page 68 70 75 77 80 82 88 88 88 89 89 91 96 99 102 104 104 109 109 110 111 112 113 - V l l l -P a g e F . D e t a i l e d P r e p a r a t i o n s 1 1 5 G . I n f l u e n c e o f W a t e r 1 1 7 L i c e n c e D e l a y s H . T h e W a t e r B o a r d ' s 1 2 0 R e a c t i o n I . T h e D a l b y R e p o r t 1 2 1 I I I . S u m m a r y a n d C o n c l u s i o n s 1 2 3 C H A P T E R S E V E N F I N A L S T U D I E S A N D T H E T H I R D H E A R I N G 1 2 9 - A U G U S T , 1 9 7 5 I . I n t r o d u c t i o n 1 2 9 I I . T h e T h i r d H e a r i n g 1 3 0 I I I . I n f o r m a t i o n P r o v i d e d F o r T h e 1 3 3 H e a r i n g A . T h e S y s t e m s S t u d y 1 3 3 1 . E v a l u a t i o n o f B e n e f i t s 1 3 4 2 . A s s u m p t i o n s 1 3 5 3 . S t u d y F i n d i n g s 1 3 7 4 . P r e s e n t a t i o n o f S t u d y 1 3 8 F i n d i n g s B . A s s e s s m e n t o f E n v i r o n m e n t a l 1 3 9 C o s t s I V . S u m m a r y 1 4 4 P A R T T H R E E , . ; . , . C H A P T E R E I G H T C O N C L U S I O N S A N D R E C O M M E N D A T I O N S 1 4 9 I . I n t r o d u c t i o n 1 4 9 I T . R e v i e w o f t h e D e c i s i o n P r o c e s s 1 4 9 I I I . F a c t o r s A f f e c t i n g t h e D e c i s i o n 1 5 3 P r o c e s s a n d O u t c o m e A . S t r u c t u r e o f t h e D e c i s i o n 1 5 3 S y s t e m - i x 1. The A l l o c a t i o n of R e s p o n s i b i l i t y 2 . I n t e r - O r g a n i z a t i o n a l R e l a t i o n s h i p s B. D i f f e r e n c e s i n O b j e c t i v e s and P e r c e p t i o n s C. Experience w i t h the D e c i s i o n Process D. Lack of Resources IV. Problems A f f e c t i n g the Outcome A. Cost Estimates B. Lack of D e t a i l e d P r e p a r a t i o n s C. The Crash C o n s t r u c t i o n Schedule D. I n v e s t i g a t i o n o f A l t e r n a t i v e s V. Recommendations BIBLIOGRAPHY - x -LIST OF FIGURES Page FIGURE 1. AISHIHIK POWER DEVELOPMENT GENERAL LAYOUT FIGURE 2. ORIENTATION MAP OF THE AISHIHIK AREA 10 FIGURE 3. YUKON ENERGY DEMAND 14 FIGURE 4. NOTICE OF MAY 1972 HEARING IN YUKON NEWS, APRIL 28, 1972. 51 FIGURE 5. THE PUMPING SCHEME 81 - x i -ACKNOWLEDGEMENT I w o u l d l i k e t o t h a n k . P r o f e s s o r I r v i n g F o x f o r h i s g u i d a n c e a n d a s s i s t a n c e . , w i t h o u t w h i c h t h i s t h e s i s w o u l d n o t h a v e b e e n p o s s i b l e . . - 1 -PART ONE  CHAPTER ONE  INTRODUCTION T h i s study d e s c r i b e s the h i s t o r y of the A i s h i h i k p r o j e c t . I t d e a l s with how the p r o j e c t was planned and implemented by the Northern Canada Power Commission, and w i t h the procedure t h a t was f o l l o w e d t o o b t a i n a water l i c e n c e . The f i r s t chapter w i l l p r o v i d e a synopsis o f the p r o j e c t ' s h i s t o r y , a d e s c r i p t i o n o f the p r o j e c t i t s e l f and the system w i t h i n which i t opera t e s , and b r i e f l y d e s c r i b e the v a r i o u s a c t o r s i n the d e c i s i o n p r o c e s s . I. OBJECTIVES The o b j e c t i v e s o f t h i s study a r e : 1. to d e s c r i b e the h i s t o r y of the A i s h i h i k p r o j e c t as a c c u r a t e l y as p o s s i b l e , f o c u s i n g on the d e c i s i o n processes and the most important problems t h a t arose d u r i n g the course of the h i s t o r y ; and 2 . to i d e n t i f y the main f a c t o r s t h a t were r e s p o n s i b l e f o r the development of these problems. I I . SYNOPSIS OF HISTORY The h i s t o r y of the A i s h i h i k p r o j e c t spans about four y e a r s . During t h i s p e r i o d the p r o j e c t was s e l e c t e d , designed and c o n s t r u c t e d by the Northern Canada Power Commission (NCPC). The Yukon T e r r i t o r y Water Board a l s o p l a y e d - 2 -a very a c t i v e r o l e i n the p r o j e c t ' s h i s t o r y by determining the c o n d i t i o n s o f the water l i c e n c e on the b a s i s of i n f o r m a t i o n p r o v i d e d to i t by the Power Commission. Many of the main events i n the h i s t o r y are the r e s u l t o f i n t e r a c t i o n s between NCPC and the Water Board. The A i s h i h i k p r o j e c t i s of r e l a t i v e l y s m a l l s i z e , having a g e n e r a t i n g c a p a c i t y of 3 3 MW. The p r o j e c t i s l o c a t e d about n i n e t y m i l e s west of Whitehorse and u t i l i z e s a p o r t i o n of the flow of the Ea s t A i s h i h i k R i v e r . Two small dams were c o n s t r u c t e d to r e g u l a t e the water flows, and very l i t t l e f l o o d i n g has r e s u l t e d from the development. The p r o j e c t was o r i g i n a l l y conceived and s e l e c t e d d u r i n g the summer of 1971, and on August 31, 1971, NCPC a p p l i e d f o r a water l i c e n c e under the Dominion Water Power A c t . At t h i s time the e n g i n e e r i n g design of the p r o j e c t had not been e s t a b l i s h e d . The Department o f Indian A f f a i r s and Northern Development f e l t , however, t h a t s i n c e the procl a m a t i o n of the Northern Inland Waters Act (N.I.W.A.) was imminent, i t would be prudent to ensure t h a t NCPC not appear t o have r e c e i v e d any f a v o u r a b l e treatment by a v o i d i n g the new l e g i s l a t i o n . The Department t h e r e f o r e decided t h a t the a p p l i c a t i o n should be h e l d i n abeyance u n t i l the N.I.W.A. came i n t o e f f e c t . - 3 -Fo l l o w i n g some d e l a y i n the a n t i c i p a t e d date of procl a m a t i o n of the N.I.W.A., the f i r s t h e a r i n g f o r a water l i c e n c e took p l a c e i n May, 1972. I t was expected t h a t NCPC would r e c e i v e a water l i c e n c e a f t e r the h e a r i n g and t h a t c o n s t r u c t i o n would begin the next month. However, i t was determined immediately p r i o r t o the he a r i n g t h a t the Water Board d i d not have l e g a l j u r i s d i c t i o n to grant a water l i c e n c e , because the Reg u l a t i o n s f o r the N.I.W.A. had not y e t been promulgated. The h e a r i n g was t h e r e f o r e h e l d o n l y f o r p u b l i c i n f o r m a t i o n purposes. A f t e r the h e a r i n g , the Water Board found t h a t t h e r e was i n s u f f i c i e n t i n f o r m a t i o n to support the a p p l i c a t i o n , and p r o v i d e d NCPC with a l i s t o f i n f o r m a t i o n requirements t h a t would have to be f u l f i l l e d b e f o r e a water l i c e n c e c o u l d be i s s u e d . Although the Regulations were promulgated i n September, 1972, NCPC was not prepared to r e a p p l y f o r a water l i c e n c e by t h a t time. The second h e a r i n g took p l a c e on January 17, 1973. The second a p p l i c a t i o n c o n t a i n e d c e r t a i n m o d i f i c a t i o n s , i n c l u d i n g a request f o r a l a r g e r storage range on A i s h i h i k Lake and i n c r e a s e d flows to be used f o r power g e n e r a t i o n . NCPC i n d i c a t e d t h a t the economic v i a b i l i t y of the p r o j e c t depended on these r e q u e s t s being granted. - 4 -T h e W a t e r B o a r d d e c i d e d t o i s s u e a w a t e r l i c e n c e t o p e r m i t c o n s t r u c t i o n o f t h e p r o j e c t , b u t d i d n o t g r a n t N C P C ' s r e q u e s t s f o r a n i n c r e a s e d s t o r a g e r a n g e a n d a n i n c r e a s e d a m o u n t o f w a t e r t o b e d i v e r t e d , b e c a u s e t h e B o a r d d e t e r m i n e d t h a t a d e q u a t e i n f o r m a t i o n t o s u p p o r t t h e t e r m s o f t h e a p p l i c a t i o n h a d s t i l l n o t b e e n p r o v i d e d . T h e B o a r d ' s r e c o m m e n d a t i o n w a s s u b m i t t e d t o t h e M i n i s t e r o n F e b r u a r y 1 , 1 9 7 3 . A f t e r s o m e i n d e c i s i o n a b o u t w h a t t o d o , N C P C d e c i d e d i n A p r i l 1 9 7 3 t o b e g i n c o n s t r u c t i o n o f t h e p r o j e c t . T h e p r o j e c t w a s c o m p l e t e d i n t h e s u m m e r o f 1 9 7 5 . A t t h e s t a r t o f c o n s t r u c t i o n t h e p r o j e c t w a s e s t i m a t e d t o c o s t $ 1 7 m i l l i o n ; t h e f i n a l c o s t w a s $ 3 9 m i l l i o n , e x c l u d i n g t h e t r a n s m i s s i o n l i n e . I n o r d e r t o e x p l a i n t h e r e a s o n s b e h i n d t h e o v e r r u n , a r e p o r t w a s p r e p a r e d b y a n i n d e p e n d e n t c o n s u l t a n t , M r . R . N . D a l b y , a t t h e r e q u e s t o f t h e M i n i s t e r . A s a r e s u l t o f t h e f i n d i n g s o f t h i s r e p o r t , i t w a s d e c i d e d t h a t a p u b l i c i n q u i r y i n t o N C P C 1 s h a n d l i n g o f t h e p r o j e c t w o u l d n o t b e n e c e s s a r y . T h e t h i r d h e a r i n g w a s h e l d b y t h e W a t e r B o a r d i n A u g u s t 1 9 7 5 t o d e t e r m i n e w h e t h e r t h e i n c r e a s e d s t o r a g e r a n g e a n d i n c r e a s e d d i v e r s i o n o f w a t e r t o t h e p o w e r h o u s e s h o u l d b e a l l o w e d . N C P C p r o v i d e d t h e W a t e r B o a r d w i t h w h a t - 5 -was c o n s i d e r e d s u f f i c i e n t i n f o r m a t i o n to support these, r e q u e s t s , and they were granted. As of 1978, NCPC had not y e t taken advantage of the i n c r e a s e d storage range. I I I . PHYSICAL DESCRIPTION The A i s h i h i k p r o j e c t i s l o c a t e d i n southwestern Yukon i n the A i s h i h i k B a s i n , approximately 80 a i r m i l e s northwest o f Whitehorse. The A i s h i h i k B a s i n covers an area o f 1630. square m i l e s , and i t s p r i n c i p a l hydrographic f e a t u r e c o n s i s t s of a s e r i e s o f elongated lakes which are connected by s h o r t channels and e v e n t u a l l y d r a i n e d by the A i s h i h i k R i v e r , an 18-mile long t r i b u t a r y o f the Dezadeash R i v e r . The Main l a k e s i n the b a s i n are Sekulmun, A i s h i h i k and Canyon Lakes. A i s h i h i k Lake, the l a r g e s t i n the s e r i e s , i s 3 5 m i l e s long and, on the average, l e s s than 2 m i l e s wide. Sekulmun flows northeastwardly i n t o A i s h i h i k Lake, which then flows i n t o Canyon Lake. The East A i s h i h i k R i v e r , which flows out of Canyon Lake, i s the s i t e o f the hydro development. The p r o j e c t u t i l i z e s the 630 f o o t d i f f e r e n c e i n e l e v a t i o n between Canyon Lake and the confluence o f the Ea s t and West A i s h i h i k R i v e r s , The scheme i s t h e r e f o r e one t h a t i s ab l e t o make use of an e x c e p t i o n a l l y h i g h head and l a r g e water s t o r a g e . O t t e r F a l l s , a s m a l l r a p i d s l o c a t e d j u s t below Canyon Lake, i s an important f e a t u r e o f the p r o j e c t s i n c e i t used t o - 6 -be p i c t u r e d on the back of the f i v e d o l l a r b i l l . Because O t t e r F a l l s has been c o n s i d e r e d an important t o u r i s t s i g h t , and because f i s h p o p u l a t i o n s l i v e i n the R i v e r , not a l l o f the water a v a i l a b l e i s used f o r power p r o d u c t i o n . I t was r e c o g n i z e d a t the o u t s e t of the p r o j e c t t h a t some of the n a t u r a l flow would have to be maintained and t h a t not a l l of the water should be d i v e r t e d from the r i v e r . From O t t e r F a l l s , the r i v e r flows over a s e r i e s of r a p i d s and empties i n t o O t t e r Pool/ a s m a l l 1,000 f o o t wide pond, 55 f e e t below Canyon Lake. I t then drops another 12 0 f e e t t o the top of Rainbow F a l l s , which i s a cut through bedrock dropping another 120 f e e t i n a chute 1200 f e e t l ong. For the next two and one h a l f m i l e s the r i v e r meanders over a s e r i e s of r a p i d s u n t i l i t meets wit h the c o n f l u e n c e of the West A i s h i h i k R i v e r . The hydro scheme i s one t h a t i s p a r t i c u l a r l y a p p e a l i n g from both an e n g i n e e r i n g and a e s t h e t i c p o i n t of view. I t i n v o l v e s no major f l o o d i n g , the c o n t r o l s t r u c t u r e s are very s m a l l , and the powerhouse i s l o c a t e d underground. U n f o r t u n a t e l y , the p r o j e c t makes use of very low stream flows and i s l o c a t e d i n a s e m i - a r i d area. The mean average d i s c h a r g e of the E a s t A i s h i h i k River a t O t t e r F a l l s has been c a l c u l a t e d to be only 370 c . f . s . , and the average annual p r e c i p i t a t i o n over the b a s i n i s o n l y 10.1 i n c h e s . - 7 -Two smal l c o n t r o l dams were c o n s t r u c t e d a t the o u t l e t s of A i s h i h i k and Canyon Lakes. Storage i s developed mainly on A i s h i h i k Lake, and Canyon Lake i s used f o r pondage t o accommodate day-to-day d i v e r s i o n requirements. Water i s d i v e r t e d from Canyon Lake through a s m a l l i n t a k e s t r u c t u r e i n t o a 3.5 m i l e long c a n a l which f o l l o w s the contour o f the west bank of the r i v e r . The c a n a l i s b u i l t almost c o n t i n u o u s l y i n permafrost and c r e a t e s the most v i s i b l e evidence of the p r o j e c t , as i t i s l o c a t e d i n a c l e a r e d right-of-way averaging 3 00 f e e t i n width. At the end of the c a n a l , a v e r t i c a l 12-foot diameter i n t a k e s h a f t was c o n s t r u c t e d to a depth of 600 f e e t below the s u r f a c e . A 3000-foot long pressure t u n n e l c a r r i e s water from there to the powerhouse, which i s l o c a t e d 350 f e e t below the s u r f a c e . The powerhouse c o n t a i n s two F r a n c i s - t y p e t u r b i n e s d r i v i n g two 14.4 MW gen e r a t o r s , which have a continuous o v e r l o a d r a t i n g of about 10 per cent. The maximum g e n e r a t i n g c a p a c i t y o f the p l a n t i s t h e r e f o r e s l i g h t l y over 30 MW. A 14 by 14 f o o t t a i l r a c e t u n n e l leaves the powerhouse and extends 4750 f e e t southward to an opening h a l f a m i l e from the confluence of the East and West A i s h i h i k R i v e r s . The powerhouse i s a l s o connected to the s u r f a c e by an access s h a f t . Nearly 9000 f e e t o f underground t u n n e l l i n g o p e r a t i o n s were necessary to c o n s t r u c t the p r o j e c t . - 8 -Since the p r o j e c t was put i n o p e r a t i o n , no f l o o d i n g above the h i s t o r i c high e l e v a t i o n of A i s h i h i k Lake has taken p l a c e . The p l a n t appears not t o be l a r g e enough to p r o v i d e any measure of excess c a p a c i t y a f t e r b e i n g commissioned, and the continued use of d i e s e l g enerators has been necessary to meet the power demands of the Whitehorse system. - 11 -IV. HISTORY OF NCPC BEFORE AISHIHIK In 1948 the North-West T e r r i t o r i e s Power Commission- Act was passed by Parliament. The Power Commission was c r e a t e d f o r the purpose of f a c i l i t a t i n g the c o n s t r u c t i o n and o p e r a t i o n of e l e c t r i c power p l a n t s i n the North-West T e r r i t o r i e s . In 1949 the Act was amended to i n c l u d e the Yukon T e r r i t o r y , and was again amended i n 1956 to change the name of the Commission to the "Northern Canada Power Commission". P r i o r to the p l a n n i n g and development of the A i s h i h i k , NCPC had c o n s t r u c t e d the f o l l o w i n g p r o j e c t s : In 194 8 i t assumed r e s p o n s i b i l i t y f o r completing the Snare R i v e r p r o j e c t , l o c a t e d 90 m i l e s northwest of Y e l l o w k n i f e , which was a t t h a t time being c o n s t r u c t e d by the Department of Mines and Resources. NCPC began, c o n s t r u c t i o n of the Mayo R i v e r development i n the Yukon i n 1951 to serve mines i n the Keno H i l l area and the townsite of Mayo. The p r o j e c t was completed the f o l l o w i n g year, and i n 1957 a second g e n e r a t i n g u n i t was added, i n c r e a s i n g i t s g e n e r a t i n g c a p a c i t y to 5.1 MW. In 1956 NCPC begain c o n s t r u c t i o n of a hydro p l a n t a t Whitehorse Rapids on the Yukon R i v e r , two m i l e s upstream from Whitehorse. The p l a n t was commissioned i n 1958 with a g e n e r a t i n g c a p a c i t y of 11.4 MW. - 12 -Development of a second hydro e l e c t r i c power s i t e on the Snare River began i n 1959 and was completed i n 19 60. In 1964 NCPC began construction of the Taltson River project near Fort Smith i n the NWT, and the project was completed i n 1965. NCPC added an additional 9 MW generating unit at Whitehorse Rapids i n 1969. In addition to the planning and development of these hydro projects, NCPC's major operations consisted of the i n s t a l l a t i o n , maintenance and operation of a large number of d i e s e l generating plants. By 1976 NCPC was operating 52 d i e s e l plants, and was supplying power to 64 communities i n the Yukon and the Northwest T e r r i t o r i e s . V. THE WHITEHORSE SYSTEM When the Ais h i h i k project was completed i t added the t h i r d e l e c t r i c a l generation f a c i l i t y to the Whitehorse system. The other two f a c i l i t i e s consisted of the Whitehorse Rapids hydro plant, which produces about 20 MW, and a 20 MW d i e s e l plant located next to Whitehorse Rapids. The d i e s e l generators were seen at the time of t h e i r i n s t a l l a t i o n as an ad hoc means of supplying e l e c t r i c i t y . During the late 1960's i t was anticipated that a l a r g e -- 13 -s c a l e hydro p l a n t would probably be c o n s t r u c t e d i n the Yukon i n order to meet the demands of l a r g e power-consuming mining developments. These mines d i d not m a t e r i a l i z e , but e l e c t r i c a l demands continued t o grow i n sm a l l e r increments. Because of the u n c e r t a i n t y of the magnitude and l o c a t i o n of new growth, NCPC chose to meet the i n c r e a s i n g demands by u s i n g d i e s e l g e n e r a t i o n . ^ In the s h o r t term t h i s was c o n s i d e r e d to be a l e s s c o s t l y a l t e r n a t i v e , and enabled NCPC to keep i t s o p t i o n s open as to the ch o i c e o f the next p l a n t . A. The Demand f o r Power From 1960 to 1966 there was almost no growth i n energy needs i n the Whitehorse system, arid a l l of these needs were met by the Whitehorse Rapids p l a n t . In 1967 and 1968 the Whitehorse Copper Mine began, p r o d u c t i o n , f o l l o w e d by Cyprus A n v i l Mines at Faro i n 1969. The s t a r t of the A n v i l Mine r e q u i r e d t h a t NCPC supply an a d d i t i o n a l 9.3 MW bl o c k o f power. In response to these new demands, p l u s growing demands from the C i t y of Whitehorse, NCPC i n s t a l l e d an a d d i t i o n a l 8 MW g e n e r a t i n g u n i t at Whitehorse Rapids i n 1969, coupled w i t h 9 MW of d i e s e l g e n e r a t i n g c a p a c i t y . - 14 -A n v i l Mine Expansion A n v i l Mine S t a r t s •Whitehorse Copper Mine S t a r t s l o g r-s c a l e o o o o •n o o CN o in IT) T H O U S A N D K I L O W A T T H O U R S FIGURE 3. YUKON ENERGY DEMAND (Source: S t a t i s t i c s Canada, Cat. 57-001) - 15 -By 1971 i t was necessary to i n s t a l l an a d d i t i o n a l 10 MW o f d i e s e l peaking c a p a c i t y i n order to meet a c o n t i n u i n g l o a d growth. B. Mining Demand The demand f o r power i n the Whitehorse system i s very h e a v i l y i n f l u e n c e d by mining. In 1977-78 the Cyprus A n v i l Mine purchased 122 m i l l i o n k i l o w a t t hours, which i s c l o s e t o h a l f of the 27 0 m i l l i o n k i l o w a t t hours produced 2 by the system d u r i n g the same time p e r i o d . The General Manager of NCPC a l s o s t a t e d i n 1972 t h a t : ... d i r e c t and i n d i r e c t consumption by the mines connected t o the system c o n s t i t u t e s roughly 70% of the t o t a l energy g e n e r a t i o n from t h i s system. 3 The s t a r t of the A n v i l Mine i n 1969, and i t s expansion i n 1973 and 1974 has had a fundamental e f f e c t on the g e n e r a t i o n requirements of the Whitehorse system. There i s l i t t l e q u e s t i o n t h a t i f the A n v i l Mine d i d not e x i s t , then the A i s h i h i k p r o j e c t would not have been needed at the time t h a t i t was c o n s t r u c t e d . - 16 -VI. ACTORS IN THE DECISION PROCESS A. Northern Canada Power Commission The Northern Canada Power Commission (NCPC) i s a f e d e r a l Crown c o r p o r a t i o n which operates under the a u t h o r i t y o f i t s own l e g i s l a t i o n , the Northern Canada Power Commission A c t . I t i s concerned w i t h the p l a n n i n g , c o n s t r u c t i o n and management o f p u b l i c u t i l i t i e s , p r i m a r i l y 4 e l e c t r i c a l , on a commercial b a s i s . The Commission i s the p r i n c i p a l producer of e l e c t r i c i t y n o r t h of 60° and operates the main t r a n s m i s s i o n networks i n the Yukon and North-West T e r r i t o r i e s . In a d d i t i o n , i t operates community h e a t i n g , water and sewerage systems 5 i n s e v e r a l l o c a t i o n s . NCPC's b a s i c o b j e c t i v e i s to p r o v i d e u t i l i t y s e r v i c e s to Northern Canada at the lowest p o s s i b l e c o s t . I t i s r e q u i r e d to be s e l f - s u s t a i n i n g , and the accounts of the Commission are s u b j e c t to the a u d i t of the A u d i t o r General of Canada. Funds f o r c a p i t a l expenditures are r e c e i v e d by way of i n t e r e s t - b e a r i n g loans from the f e d e r a l government. The NCPC Act does not s p e c i f y any o p e r a t i n g p o l i c y of the Commission. Changes i n p o l i c i e s are reviewed and decided by the Board of D i r e c t o r s , the members of which are known as Commission Members. Because NCPC r e p o r t s to the M i n i s t e r of the Department of Indian A f f a i r s and Northern Development, the M i n i s t e r i s a l s o r e s p o n s i b l e f o r both - l i -the p o l i c i e s and o p e r a t i o n s of the Power Commission. When the A i s h i h i k p r o j e c t was planned and c o n s t r u c t e d , the Deputy M i n i s t e r of the Department of Indian A f f a i r s and Northern Development, Mr. B a s i l Robinson, was a l s o Chairman of NCPC; and the A s s i s t a n t Deputy M i n i s t e r of the Department r e s p o n s i b l e f o r the Northern A f f a i r s Program, Mr. Digby Hunt, was another Commission Member. B. The Water Board The Yukon T e r r i t o r y Water Board was e s t a b l i s h e d under s e c t i o n 7 o f the Northern Inland Waters Act (N.I,W.A.) which was proclaimed i n February, 1972. The o b j e c t i v e s of the Water Board are s p e c i f i e d i n s e c t i o n 9 of the A c t : The o b j e c t s of the boards are to p r o v i d e f o r the c o n s e r v a t i o n , development and u t i l i z a t i o n of the water res o u r c e s of the Yukon T e r r i t o r y and the Northwest T e r r i t o r i e s i n a manner t h a t w i l l p r o v i d e the optimum b e n e f i t therefrom f o r a l l Canadians and f o r the r e s i d e n t s of the Yukon T e r r i t o r y and Northwest T e r r i t o r i e s i n p a r t i c u l a r . 6 The membership of the Board i s determined by nominations from the Commissioner i n C o u n c i l of the Yukon T e r r i t o r y and by each of the departments of the f e d e r a l government t h a t are most d i r e c t l y concerned w i t h management of water reso u r c e s i n the T e r r i t o r y . - 18 -Nine i n d i v i d u a l s s i t on the Board. U n t i l 1977, s i x o f these people were appointed by the departments of the f e d e r a l government and thr e e by the T e r r i t o r i a l Commissioner. An Order i n C o u n c i l dated May 1977 reduced the number o f r e p r e s e n t a t i v e s from f e d e r a l departments t o th r e e , and i n c r e a s e d the number of l o c a l r e p r e s e n t a t i v e s by th r e e . S e c t i o n 3(2) of the N.I.W.A. s t a t e s t h a t : "no person s h a l l d i v e r t the flow or storage of waters w i t h i n a water management area or otherwise use waters w i t h i n any such area except pursuant to a l i c e n c e h e l d by him or except as a u t h o r i z e d by r e g u l a t i o n s made pursuant to paragraph 26(g)". The water management areas are e s t a b l i s h e d i n the R e g u l a t i o n s f o r the N.I.W.A., and paragraph 26(g) a u t h o r i z e s f o r r e g u l a t i o n s to be made p e r m i t t i n g water to be used without a l i c e n c e , depending on the q u a n t i t y of water, r a t e o f flow, or type o f use i n v o l v e d . S e c t i o n 15(2) a l s o s t a t e s t h a t a hea r i n g must be h e l d i n connection w i t h each a p p l i c a t i o n f o r a l i c e n c e . Once the Act was i n f o r c e , then, any change i n the use of the water r e s o u r c e s i n a water management area -except as a u t h o r i z e d by r e g u l a t i o n s made t o paragraph 26(g) - by NCPC or any other p r i v a t e or p u b l i c group, would r e q u i r e a l i c e n c e to be i s s u e d by the Water Board, and - 19 -a p u b l i c h e a r i n g t o be h e l d i n connection w i t h the l i c e n c e a p p l i c a t i o n . Since the Water Board i s a q u a s i - j u d i c i a l body, any d e c i s i o n i t makes a f t e r a h e a r i n g i s h e l d t h a t does not f o l l o w a l l of the r u l e s o f n a t u r a l j u s t i c e c o u l d c o n s t i t u t e grounds t o a t t a c k the d e c i s i o n . D e c i s i o n s made by the Board r e g a r d i n g the issuance o f a water l i c e n c e must be approved by the M i n i s t e r o f the Department of Indian A f f a i r s and Northern Development. C. The Department of Indian A f f a i r s and Northern Development The Department of Indian A f f a i r s and Northern Development Ac t , s e c t i o n 4, s t a t e s : The d u t i e s , powers and f u n c t i o n s o f the M i n i s t e r of Indian A f f a i r s and Northern Development extend to i n c l u d e a l l matters over which the Parliament o f Canada has j u r i s d i c t i o n , not by law a s s i g n e d to any other department, branch or agency of the Government of Canada, r e l a t i n g to (a) Indian A f f a i r s (b) The Northwest T e r r i t o r i e s and the Yukon T e r r i t o r y - a n d t h e i r r e s o u r c e s and a f f a i r s . . . 7 The Department (DIAND) has c o n t r o l over the a d m i n i s t r a t i o n of l a n d s , waters and of the n a t u r a l r e s o u r c e s i n fehe-two t e r r i t o r i e s . I t a l s o has c o n t r o l over t h e . . J a d m i n i s t r a t i o n o f the N.I.W.A., and NCPC r e p o r t s to the M i n i s t e r of DIAND. The M i n i s t e r , t h e r e f o r e , i s i n - 20 -the p o s i t i o n o f d e c i d i n g whether or not to accept the d e c i s i o n s o f the Water Board, and of being r e s p o n s i b l e g f o r the o p e r a t i o n s and p o l i c i e s o f NCPC. V I I . OVERVIEW The most important a c t o r s i n v o l v e d i n the h i s t o r y of the A i s h i h i k p r o j e c t were the Northern Canada Power Commission, Crippen E n g i n e e r i n g (NCPC's e n g i n e e r i n g consultant)., the Yukon T e r r i t o r y Water Board, and the Department of Indian A f f a i r s and Northern Development. NCPC was r e s p o n s i b l e f o r p l a n n i n g and implementing the A i s h i h i k p r o j e c t , and r e l i e d e x t e n s i v e l y on Crippen E n g i n e e r i n g t o he l p design the p r o j e c t and manage i t s c o n s t r u c t i o n . The Water Board and NCPC, of course, were key a c t o r s i n the water l i c e n c i n g process; and s e n i o r DIAND o f f i c i a l s and M i n i s t e r s of DIAND appear t o have i n f l u e n c e d many of the events t h a t took p l a c e d u r i n g the p r o j e c t ' s h i s t o r y . A number of a d d i t i o n a l a c t o r s a l s o i n f l u e n c e d the h i s t o r y of the p r o j e c t . Pearse Bowden Economic C o n s u l t a n t s were h i r e d by NCPC to prepare environmental impact statements and other r e p o r t s t h a t were used t o support NCPC's water l i c e n c e a p p l i c a t i o n s . The F i s h e r i e s and Marine S e r v i c e of the Department of the Environment a l s o p l a y e d - 21 -some p a r t i n d e s i g n i n g the p r o j e c t and conducted e x t e n s i v e s t u d i e s of the f i s h e r i e s i n the A i s h i h i k water SL system. A very important r o l e was pl a y e d by a s i n g l e i n t e r v e n o r a t the f i r s t h e a r i n g , Mr. R u s s e l l Anthony, who was a r e p r e s e n t a t i v e of the Canadian Environmental Law Research .. Foundation. Mr. Anthony o b j e c t e d to the h e a r i n g being h e l d to i s s u e a water l i c e n c e on the ground t h a t the N.I.W.A. Regulat i o n s had not y e t been promulgated. Because h i s o b j e c t i o n was s u s t a i n e d , Mr. Anthony may have fundamentally a l t e r e d the e n t i r e course of the p r o j e c t ' s h i s t o r y . N a t i v e Indian groups have a l s o had an important i n f l u e n c e on the p r o j e c t . A c l a i m has been made f o r the land occupied by A i s h i h i k V i l l a g e , which i s l o c a t e d on the shores of the A i s h i h i k Lake, and would be f l o o d e d i f the l e v e l of the lake i s r a i s e d above the h i s t o r i c h i g h . Although NCPC i s l i c e n c e d t o r a i s e the l e v e l o f the la k e above the h i s t o r i c h i g h , i t has not y e t done so/"^'because of the land c l a i m . Another important a c t o r was Mr. R. N. Dalby, who wrote a r e p o r t a t the request of the M i n i s t e r on the c o s t overrun f o r the A i s h i h i k p r o j e c t . As a r e s u l t o f the r e p o r t ' s f i n d i n g s , the M i n i s t e r decided t h a t a p u b l i c i n q u i r y i n t o NCPC's h a n d l i n g of the p r o j e c t would not be necessary. CHAPTER ONE REFERENCES AND NOTES J . M. Lowe, NCPC General Manager, L i c e n c i n g Hearing  T r a n s c r i p t , 17 January 1973, p.8. Interview, C. Pearson, Chairman, E l e c t r i c a l P u b l i c U t i l i t i e s Board, 18 August 1978. The E l e c t r i c a l P u b l i c U t i l i t i e s Board i s e s t a b l i s h e d under the Revised Ordinances of the Yukon T e r r i t o r y , and i t i s a purpose of the Board to r e p o r t t o the Commissioner of the Yukon on e l e c t r i c a l energy r a t e adjustments proposed by NCPC. The Board d i d not p l a y a s i g n i f i c a n t r o l e i n the h i s t o r y of the A i s h i h i k p r o j e c t . J . M. Lowe, A i s h i h i k General Hearing T r a n s c r i p t , 24 May 1972, Whitehorse, Y.T., p.5. NCPC, 29'th Annual Review, March 1977, p . l . I b i d . Northern Inland Waters A c t , 1970, c.28 (1st Supp.) S.9. Assented to 26 June 1970. Proclaimed i n f o r c e 28 February 19 72. Department o f Indian A f f a i r s and Northern Development  Act, 1970, S.4. Although the name "Department of Indian and Northern A f f a i r s " i s used e x t e n s i v e l y by the department, the proper l e g a l d e s i g n a t i o n i s "Department of Indian A f f a i r s and Northern Development". The M i n i s t e r can o n l y approve the i s s u a n c e of a water use l i c e n c e , but cannot decide upon the c o n d i t i o n s a t t a c h e d t o i t . Because o f a l o n g - s t a n d i n g and well-known r i v a l r y between DIAND and the Department of the Environment (DOE) over northern n a t u r a l r e s o u r c e s management, the p a r t i c i p a t i o n of the F i s h e r i e s and Marine S e r v i c e of DOE, i n g a t h e r i n g e x t e n s i v e t e c h n i c a l i n f o r m a t i o n about the f i s h e r i e s o f the A i s h i h i k system, which was used by the Water Board i n s e t t l i n g the terms f o r the water use l i c e n c e s , a p p a r e n t l y gave r i s e to a number of problems. While there i s a l a c k of i n f o r m a t i o n concerning what these problems a c t u a l l y were and how they developed, they do not appear to have had a s i g n i f i c a n t e f f e c t on the course of events covered i n t h i s study. An e x c e p t i o n took p l a c e d u r i n g the c o n s t r u c t i o n of the p r o j e c t . See Chapter S i x . Interview, NCPC o f f i c i a l , 1 September 1978. - 23 -PART TWO  CHAPTER TWO SELECTION AND APPLICATION - JUNE 19:71 to MAY 1972 I. INTRODUCTION Th i s chapter w i l l e x p l a i n the f o l l o w i n g ; how the A i s h i h i k p r o j e c t was s e l e c t e d by NCPC; - why the d e c i s i o n was taken to use the Northern Inland Waters Act t o i s s u e the A i s h i h i k water l i c e n c e ; and what i n f o r m a t i o n was generated p r i o r to the f i r s t h e a r i n g f o r a water l i c e n c e , I I . SELECTION OF THE SITE A. P r e v i o u s Knowledge The p o t e n t i a l o f the E a s t A i s h i h i k R i v e r f o r h y d r o e l e c t r i c development was known f o r many years p r i o r to 1971, when NCPC f i r s t began a c t i v e f i e l d i n v e s t i g a t i o n s at the s i t e . Although the A i s h i h i k . had been surveyed d u r i n g the 1950's, i t was l a r g e l y ignored u n t i l 1971, As mentioned, i t had been expected t h a t the next major hydro f a c i l i t y a f t e r Whitehorse Rapids would be a l a r g e r ^ s c a l e p r o j e c t t h a t would meet the demands o f a smelter and low-grade mines. P r i o r to the surveys conducted i n 19.71, the A i s h i h i k s i t e was not c o n s i d e r e d to have as l a r g e a power p o t e n t i a l as i t was l a t e r found capable o f producing. I n i t i a l e s timates made i n the 1950's o n l y had the b e n e f i t of a few years of water flow r e c o r d s , and these records were onl y taken d u r i n g a p e r i o d of abnormally dry y e a r s . More r e c e n t estimates s t i l l underestimated the power p o t e n t i a l of the s i t e because they d i d not r e c o g n i z e the p r a c t i c a b i l i t y of u t i l i z i n g more than the head of O t t e r and Rainbow F a l l s , thus n e g l e c t i n g the p o t e n t i a l of the very steep r i v e r g r a d i e n t between Rainbow F a l l s and the confluence o f the e a s t and west arms of the A i s h i h i k R i v e r . The high s i l t and t i l l banks i n the area a p p a r e n t l y discouraged p r o s p e c t s t h a t t h i s e x t r a head c o u l d be 2 developed. B. I n i t i a l Surveys In June 1971, NCPC began some p r e l i m i n a r y reconnaissance , surveys of p o t e n t i a l s m a l l - s c a l e hydro development s i t e s i n the south c e n t r a l Yukon i n response to s t e a d i l y growing base l o a d s , p l u s the s t a r t of the A n v i l Mine. At t h i s time the A i s h i h i k was earmarked f o r i n v e s t i g a t i o n f o r a p o s s i b l e 20 MW i n s t a l l a t i o n u s i n g a 330 f o o t net head. The surveys were conducted by Messrs. D. Steen, F. Mooney, J . Lowe and.B. Humphrys. With the e x c e p t i o n o f Mr. Humphry who was a j u n i o r member of the survey team, a l l h e l d s e n i o r management p o s i t i o n s and were key decision-makers i n NCPC. Mr. Steen was head of the p l a n n i n g department, Mr. Mooney was the r e g i o n a l manager and Mr. Lowe was the g e n e r a l manager f o r NCPC. - 25 -During the ten days f o l l o w i n g June 2, 1971, the A i s h i h i k , L i t t l e Salmon, T e s l i n and Long Lake systems were a l l surveyed f o r p o s s i b l e hydro development. I n v e s t i g a t i o n of the A i s h i h i k c o u l d not have taken more than a few days, 3 and was conducted u s i n g a i r c r a f t and on f o o t . The i n v e s t i g a t i o n s e s t a b l i s h e d t h a t a 630 f o o t n a t u r a l head might be a v a i l a b l e f o r development, an i n c r e a s e of . 4 3 00 f e e t over p r e v i o u s e s t i m a t e s . P o t e n t i a l a l t e r n a t i v e s i t e s r e c e i v e d no more a t t e n t i o n a f t e r these surveys were completed, and the r e p o r t t h a t was prepared on the f i e l d t r i p gave most o f i t s a t t e n t i o n 5 to the A i s h i h i k s i t e . C. S e l e c t i o n On June 11, immediately a f t e r the survey was made of the A i s h i h i k , NCPC submitted to DIAND an a p p l i c a t i o n f o r l a n d r e s e r v a t i o n at the s i t e . ^ T h i s step was taken i n o r d e r to ensure t h a t NCPC would have l e g a l r i g h t to use the necessary lan d area f o r surveys and development, and a l s o to prevent the p o s s i b i l i t y of s p e c u l a t i v e i n t e r e s t s s t a k i n g m i n e r a l c l a i m s on l a n d known to be needed f o r the p r o j e c t . The a p p l i c a t i o n f o r land r e s e r v a t i o n was taken very promptly, and o n l y f o r the A i s h i h i k s i t e . In a d d i t i o n , no f u r t h e r - 26 -f i e l d s t u d i e s were undertaken of a l t e r n a t i v e s i t e s . In e a r l y J u l y , Mr. Steen gave some c o n s i d e r a t i o n to the p o s s i b l e a l t e r n a t i v e of d e v e l o p i n g the N o r d e n s k i o l d c o a l d e p o s i t s . However, the a n a l y s i s t h a t was undertaken d i d not i n v o l v e any o n - s i t e i n v e s t i g a t i o n s , and was based on data s u p p l i e d by T e s l i n E x p l o r a t i o n L t d . In a d d i t i o n , the purpose of the a n a l y s i s was o n l y to make a c o s t comparison between the c o a l scheme and the A i s h i h i k p r o j e c t . The study found t h a t "a c o a l - f i r e d p l a n t a t the N o r d e n s k i o l d R i v e r c o a l d e p o s i t would not compete e c o n o m i c a l l y w i t h A i s h i h i k Hydro Development", and estimated t h a t the t o t a l c a p i t a l c o s t on an annual b a s i s of the c o a l scheme would be $710,000 p l u s 6.7 m i l l s per k i l o w a t t f o r f u e l , whereas the t o t a l annual c o s t f o r the A i s h i h i k p r o j e c t would be 7 $840,000, and, of course, no f u e l would be needed. The e stimated c o s t of the A i s h i h i k , which was used by Mr. Steen to assess the economic v i a b i l i t y of the p r o j e c t i n comparison w i t h one of i t s most c o m p e t i t i v e a l t e r n a t i v e s , 8 was $7 m i l l i o n e x c l u d i n g the t r a n s m i s s i o n l i n e . I t appears t h a t as e a r l y as June 1971, the same month when i t was e s t a b l i s h e d t h a t 300 f e e t of a d d i t i o n a l head c o u l d be u t i l i z e d f o r the p r o j e c t , NCPC decision-makers became convinced t h a t the A i s h i h i k was the most d e s i r a b l e s i t e a v a i l a b l e to meet the f o r e c a s t demands. Subsequent to - 27 -June 1971, no f u r t h e r f i e l d s t u d i e s were undertaken by NCPC of a l t e r n a t i v e s i t e s t o the A i s h i h i k . . D. Study of the S i t e No f u r t h e r s t u d i e s of the A i s h i h i k s i t e took p l a c e d u r i n g J u l y and August of 1971 except f o r a i r photo coverage and mapping. NCPC d i d not take advantage of the summer months to conduct b i o l o g i c a l , h y d r o l o g i c and g e o l o g i c a l surveys of the area. The reason f o r t h i s i s not known. E. . A p p l i c a t i o n f o r Water L i c e n c e NCPC a p p l i e d f o r a water l i c e n c e under the Dominion Water Power A c t f o r the A i s h i h i k p r o j e c t on August 31, 1971. In co n n e c t i o n with t h i s a p p l i c a t i o n , NCPC informed Mr. I. P e t r i e o f the Northern Economic Development Branch t h a t : F u r t h e r to the Power Commission's f e a s i b i l i t y s t u d i e s i n the Yukon, the A i s h i h i k R i v e r r e p r e s e n t s the most economic power development to meet growing lo a d i n the Yukon area. Compliant with the Dominion Water Power Re g u l a t i o n s , we hereby wish t o submit formal a p p l i c a t i o n f o r l i c e n c e t o u t i l i z e t h i s p a r t i c u l a r l a n d f o r purposes of hydro power development. 9 E v i d e n t l y , NCPC had decided by t h i s date t h a t , pending the r e c e i p t o f the necessary l i c e n c e s , i t would c o n s t r u c t the p r o j e c t , and t h a t s u f f i c i e n t i n f o r m a t i o n about the s i t e was a v a i l a b l e to support t h i s c o n c l u s i o n . In c o n t r a s t t o the d e c i s i v e nature o f t h i s a p p l i c a t i o n , NCPC's Report on A i s h i h i k s t a t e s t h a t : - 28 -In order to ev a l u a t e the e n g i n e e r i n g v a l i d i t y , R i p l e y , Klohn & Leonoff I n t e r n a t i o n a l was i n v i t e d on September 1st, 1971 to conduct a s i t e i n v e s t i g a t i o n on matters r e l a t i n g t o the s t r u c t u r e s as a f f e c t e d by s o i l c o n d i t i o n s . A c t i v i t i e s e s s e n t i a l to e s t a b l i s h i n g e n g i n e e r i n g  v a l i d i t y were o u t l i n e d to Management September  3rd, 1971. These i n c l u d e d environmental s t u d i e s , i c e c o n d i t i o n s , survey, s o i l s and g e o l o g i c a l a n a l y s i s , D.W.P. Act a p p r o v a l , c r i t i c a l equipment order , d esign requirements, s c h e d u l i n g , c o n t r a c t o r involvement. 10 (emphasis added) There appears t o be an i n c o n s i s t e n c y here. NCPC informed DIAND on August 31 t h a t the A i s h i h i k r e p r e s e n t e d "the most economic power development" and a p p l i e d f o r a water l i c e n c e t o develop the s i t e . Yet, three days l a t e r i t o u t l i n e d those s t u d i e s t h a t would be e s s e n t i a l to e s t a b l i s h i n g the e n g i n e e r i n g v a l i d i t y of the p r o j e c t . Probably the most important reason why the v i a b i l i t y o f the p r o j e c t c o u l d not have been e s t a b l i s h e d a t t h i s time i s t h a t very l i t t l e was known of the geology of the s i t e . No g e o l o g i c a l surveys had been undertaken when NCPC a p p l i e d f o r the l i c e n c e , y e t the geology o f the s i t e was the f a c t o r which had p r e v i o u s l y discouraged the n o t i o n t h a t the f u l l head between the o u t l e t of Canyon Lake and the confluence o f the East and West A i s h i h i k R i v e r s c o u l d be developed. - 29 -I I I . THE WATER LICENCE PROCESS A. I n t r o d u c t i o n The process of a p p l y i n g f o r and r e c e i v i n g a water l i c e n c e proved to be the most important component of the o v e r a l l p l a n n i n g and decision-making process f o r the A i s h i h i k p r o j e c t . T h i s process i s a l s o of some h i s t o r i c a l s i g n i f i c a n c e as i t i n v o l v e d the f i r s t a p p l i c a t i o n ever made under the Northern Inland Waters Act . As a r e s u l t of i n e x p e r i e n c e w i t h the new l e g i s l a t i o n , t h r e e d i f f e r e n t h e a r i n g s were h e l d i n c o n n e c t i o n w i t h the p r o j e c t . S u b s t a n t i a l d e l a y s i n the s t a r t of the p r o j e c t ' s c o n s t r u c t i o n were caused by the water l i c e n c i n g p r o c e s s , and t h i s f a c t o r was l a t e r c i t e d by NCPC management as the s i n g l e most important reason behind the p r o j e c t ' s c o s t overrun. I t i s necessary, then, t h a t t h i s process be d e s c r i b e d i n some d e t a i l . B. P r e v i o u s Water L i c e n c e Process At the time of NCPC's f i r s t water l i c e n c e a p p l i c a t i o n on August 31, 1971, the Commission was l e g a l l y e n t i t l e d to r e c e i v e a l i c e n c e under the Dominion Water Power A c t . The Northern Canada Power Commission Act, which a p p l i e d a t the time reads: - 3 0 -T h e C o m m i s s i o n i s e n t i t l e d t o r e c e i v e u p o n a p p l i c a t i o n a n y l i c e n c e o r o t h e r a u t h o r i t y u n d e r t h e D o m i n i o n W a t e r P o w e r A c t n e c e s s a r y t o e n a b l e t h e C o m m i s s i o n t o c a r r y o u t t h i s A c t . 1 1 T h e p r e v i o u s a r r a n g e m e n t u n d e r w h i c h N C P C r e c e i v e d i t s w a t e r l i c e n c e s d i d n o t , t h e n , i n v o l v e a s t r i n g e n t r e v i e w p r o c e s s . R a t h e r , i t a p p e a r s t h a t u n d e r t h e p r e v i o u s a r r a n g e m e n t , N C P C w a s a b l e t o r e c e i v e a w a t e r l i c e n c e c o n t a i n i n g v i r t u a l l y a n y c o n d i t i o n s i t r e q u e s t e d . I n c o n t r a s t w i t h t h e m o r e d e m a n d i n g r e q u i r e m e n t s o f t h e N . I . W . A . , o b t a i n i n g a w a t e r l i c e n c e u n d e r t h e f o r m e r l e g i s l a t i o n w o u l d h a v e o n l y b e e n a l e g a l f o r m a l i t y . C . D e c i s i o n t o U s e t h e N . I . W . A . B e c a u s e N C P C w a s a C r o w n c o r p o r a t i o n r e p o r t i n g t o t h e s a m e M i n i s t e r r e s p o n s i b l e f o r t h e i m p l e m e n t a t i o n o f t h e N . I , W . A . , t h e M i n i s t e r , M r . J . C h r e t i e n , a p p a r e n t l y c o n s i d e r e d i t i m p o r t a n t t h a t N C P C n o t a p p e a r t o r e c e i v e a n y p r e f e r e n t i a l t r e a t m e n t b y a v o i d i n g t h e n e w l e g i s l a t i o n . S h o r t l y a f t e r N C P C s u b m i t t e d a p p l i c a t i o n f o r a w a t e r l i c e n c e o n A u g u s t 3 1 , 1 9 7 1 , t h e D e p a r t m e n t i n f o r m e d t h e C o m m i s s i o n t h a t n o c o n s i d e r a t i o n w o u l d b e g i v e n t o t h e i s s u i n g o f a 1 2 w a t e r l i c e n c e u n t i l t h e N . I , W . A . w a s p r o c l a i m e d . A t t h e t i m e t h a t M r . C h r e t i e n m a d e t h i s d e c i s i o n , i t w a s e x p e c t e d t h a t t h e A c t w a s t o c o m e i n t o e f f e c t w i t h i n t h e 1 3 n e x t f e w m o n t h s , a n d b e f o r e t h e e n d o f 1 9 7 1 . I n f a c t , - 31 -i t was not u n t i l February 28, 1972 t h a t the Act was proclaimed. The f o l l o w i n g statement, c o n t a i n e d i n an NCPC memorandum r e f e r r i n g to the minutes of a January 24, 1972 meeting between NCPC and DIAND o f f i c i a l s , e x p l a i n s the reas o n i n g behind t h i s d e c i s i o n . Yates f e l t t h a t IAND c o u l d not proceed to accept a water use program ( A i s h i h i k ) under the Dominion Water Power A c t wit h the Northern Inland Waters Act imminently to be put i n t o e f f e c t . Reason was t h a t p u b l i c and other Departmental o p i n i o n might be t h a t IAND squeezed the Commission i n under the wire so as to avoid the r e g u l a t i o n s as per impending Northern Inland Waters A c t . 14 The A s s i s t a n t Deputy M i n i s t e r , Mr. Digby Hunt, a l s o e x p l a i n e d t h a t : We would have a very d i f f i c u l t time t r y i n g to j u s t i f y l i c e n c i n g the p r i v a t e s e c t o r i f we chose t o make exceptions f o r government agencies and c o r p o r a t i o n s . 15 The f a c t t h a t i t would have t o apply f o r a water l i c e n c e under the N.I.W.A. should not have come as a complete s u r p r i s e to NCPC. Correspondence dated p r e v i o u s to NCPC's o r i g i n a l a p p l i c a t i o n on August 31 mentions t h a t h earings were to be h e l d b e f o r e the Water Board i n connect i o n w i t h the p r o j e c t , and names the Chairman of the Water Board. In a d d i t i o n , Mr. D. Hunt was a t the time the ADM f o r Northern Development f o r DIAND and a member of the Commission f o r NCPC, and Mr. B. Robinson - 32 -was the DM f o r DIAND and the Chairman o f the Commission f o r NCPC. I t would be reasonable to assume t h a t NCPC's management was aware of the p o s s i b i l i t y t h a t the N.I.W.A. would apply. N e v e r t h e l e s s , s i n c e NCPC was given no formal i n s t r u c t i o n s p r i o r t o August 31 to apply under the new l e g i s l a t i o n , i t s t i l l made i t s i n i t i a l a p p l i c a t i o n under the D.W.P.A. Copies of the N.I.W.A. were a v a i l a b l e to NCPC a t t h a t time and i t would not have been d i f f i c u l t f o r NCPC to a s c e r t a i n t h a t the use of the N.I.W.A. would complicate the a p p l i c a t i o n p r o c e s s . IV. GENERATION OF INFORMATION A. Environmental Study Delays S e c t i o n 11(2) of the Northern Inland Waters A c t s t a t e s : The a p p r o p r i a t e board s h a l l r e q u i r e an a p p l i c a n t f o r a l i c e n c e to pro v i d e i t w i t h such i n f o r m a t i o n and s t u d i e s concerning the use of waters proposed by the a p p l i c a n t as w i l l enable i t to e v a l u a t e any q u a l i t a t i v e and q u a n t i t a t i v e e f f e c t s of the proposed use on the water management area i n which the a p p l i c a n t proposes to use such waters. 17 In a d d i t i o n t o the wording o f s e c t i o n 11 of the N.I.W.A., NCPC was given c o n s i d e r a b l e advance warning t h a t an environmental impact statement would be needed. In a l e t t e r from Leo Brandon, Chairman of the Water Board t o NCPC on November 19, 1971, the f o l l o w i n g a d v i c e was gi v e n : - 33 -I . . . suggest t h a t the Regul a t i o n s w i l l i n a l l p r o b a b i l i t y c a l l f o r an environmental impact r e p o r t from the a p p l i c a n t and t h e r e f o r e I t h i n k i t would be wise i f you asked your C o n s u l t a n t s to s t a r t work on an environmental study and r e p o r t because t h i s would r e c o r d the concerns which you r e c o g n i z e i n water development schemes of t h i s nature. 18 With the help o f Crippen E n g i n e e r i n g , NCPC proceeded w i t h b a s i c e n g i n e e r i n g s t u d i e s d u r i n g the autumn and w i n t e r , but i t d i d not h i r e a c o n s u l t a n t t o undertake the p r e p a r a t i o n of an environmental impact statement u n t i l March 9, 1972. I t appears t h a t NCPC decision-makers were not aware of the l e n g t h o f time necessary t o complete an adequate environmental impact r e p o r t , s i n c e at t h a t time the Commission was anxious t o begin c o n s t r u c t i o n as soon as i t c o u l d . Perhaps owing to a l a c k of experience, the o v e r a l l concept o f what an environmental impact statement should accomplish and why i t would be an important component of the p l a n n i n g process f o r a h y d r o e l e c t r i c f a c i l i t y might not have been f u l l y a p p r e c i a t e d . I f NCPC r e c o g n i z e d t h i s need, i t c e r t a i n l y would have begun to undertake the f i e l d , and other necessary work f o r such a study at the same time as the e n g i n e e r i n g s t u d i e s . On February 15, 1972, Mr. Brandon again wrote to NCPC and e x p l a i n e d the need f o r an environmental impact.study, and s u p p l i e d a b r i e f o u t l i n e of what i t should c o n t a i n . - 34 -Included w i t h the NCPC 1s a p p l i c a t i o n f o r a water r i g h t on the A i s h i h i k R i v e r t h e r e must be an environmental impact statement. T h i s statement should c o v e r . t h r e e items: 1. The e f f e c t on w i l d l i f e and f i s h of any a l t e r a t i o n t o the flow or regime of the r i v e r and by the impoundment of any r e s e r v o i r . A B i o l o g i s t s r e p o r t w i l l be r e q u i r e d o u t l i n i n g the s p e c i e s of w i l d l i f e and f i s h p r esent which may be a f f e c t e d and r e f e r e n c e should be made to the seasonal movement of these c r e a t u r e s w i t h i n the water shed i f t h e r e i s an e f f e c t on t h i s movement. 2. The a e s t h e t i c e f f e c t of any new s t r u c t u r e s . I t would be necessary to d e s c r i b e the present scenery w i t h i n the v a l l e y and r e f e r e n c e should be made to the famous O t t e r F a l l s and other water f a l l s near by. The r e p o r t should a l s o d e s c r i b e any consequences to t h i s scenery as a r e s u l t of the h y d r o - e l e c t r i c development. 3. Items of human i n t e r e s t should be d e s c r i b e d . ... I t i s my understanding t h a t the shores of A i s h i h i k Lake have a number of a r c h a e o l o g i c a l s i t e s and a d e s c r i p t i o n of these i s necessary together w i t h the e f f e c t t h a t impoundment may have on them. 19 B. The Environmental Impact Study On March 9, 1972, NCPC h i r e d Pearse-Bowden Economic Co n s u l t a n t s L t d . to undertake the environmental s t u d i e s , and on A p r i l 30, 1972 the r e p o r t A P r e l i m i n a r y Environmental  Impact Statement was completed by Pearse-Bowden and submitted t o the Water Board by NCPC, o n l y seven weeks a f t e r i t had been a u t h o r i z e d . - 35 -The impact statement c o n t a i n e d a comprehensive range of s u b j e c t areas, i n c l u d i n g the b i o l o g i c a l , s o c i a l and a e s t h e t i c e f f e c t s of the p r o j e c t , and o s t e n s i b l y met a l l of the requirements mentioned i n Brandon's o u t l i n e . Owing to the s h o r t time devoted to the study and the l a c k of b a s e l i n e data, the statement was intended by i t s authors t o be: regarded p r i m a r i l y as an assessment of the number, nature and r e l a t i v e magnitude of the environmental problems l i k e l y to be c r e a t e d by the h y d r o e l e c t r i c development r a t h e r than as an e v a l u a t i o n of s p e c i f i c causes and e f f e c t s . 20 The concept of a " p r e l i m i n a r y environmental impact statement" was a l s o d e s c r i b e d by Mr. Bowden, the p r i n c i p a l author of the r e p o r t , as: ... a study to d e s c r i b e the environmental consequences of an a c t i o n as r e v e a l e d by c a r e f u l a n a l y s i s of e x i s t i n g i n f o r m a t i o n , expert information,, expert o p i n i o n , and such reconnaissance surveys and s t u d i e s as may be f e a s i b l e w i t h i n the time a v a i l a b l e . 21 I t was c o n s i d e r e d by NCPC o f f i c i a l s t h a t the statement p r o v i d e d an adequate body of data to enable the Water Board to e v a l u a t e the a p p l i c a t i o n and grant a l i c e n c e t h a t would permit the c o n s t r u c t i o n of the p r o j e c t . As Mr. J . Lowe, General Manager of NCPC, s t a t e d d u r i n g the May 1972 h e a r i n g , f o r which the statement was prepared: - 36 -That i s the environmental impact statement as we see i t , Mr. Chairman. However, should something more e l a b o r a t e be r e q u i r e d , then c e r t a i n l y i t s h a l l be done. We f e e l t h a t ' s s u f f i c i e n t f o r l i c e n c i n g a t t h i s time. 22 C. E n g i n e e r i n g Design A d d i t i o n a l f i e l d s t u d i e s f o l l o w i n g the June 1971 surveys d i d not begin u n t i l September 1971. These s t u d i e s were intended to determine the s o i l and rock c o n d i t i o n s i n the area i n order to s e l e c t the most s u i t a b l e h y d r o e l e c t r i c scheme f o r the s i t e , and were conducted by R i p l e y , Klohn and Leonoff I n t e r n a t i o n a l L t d . , s o i l s c o n s u l t a n t s . Test h o l e p i t s were excavated on both s i d e s of the R i v e r to determine s u b s o i l c o n d i t i o n s and the extent of permafrost, and the surveys extended i n t o the w i n t e r of 1971-72. The e n g i n e e r i n g c o n s u l t a n t f o r the p r o j e c t was Crippen E n g i n e e r i n g L t d . of Vancouver. Crippen E n g i n e e r i n g was r e s p o n s i b l e f o r f e a s i b i l i t y s t u d i e s as w e l l as f o r the d e s i g n of the p r o j e c t and c o n s t r u c t i o n management. Consequently, i t p l a y e d a very c e n t r a l p a r t i n the p l a n n i n g and d e c i s i o n -making process f o r the p r o j e c t . The company had a l s o conducted i t s own s i t e i n v e s t i g a t i o n s p r i o r to being commissioned by NCPC. As NCPC management's Report on  A i s h i h i k s t a t e s : F o l l o w i n g a September, 1971 s i t e i n v e s t i g a t i o n  by the e n g i n e e r i n g c o n s u l t a n t - t o - b e , a r e p o r t was f i l e d on October 4, o u t l i n i n g the nature of the o r i g i n a l concept, i t s advantages and - 37 -p o s s i b l e c o n t i n g e n c i e s and an i n v e s t i g a t i o n program to e s t a b l i s h subsurface data, hydrology, topography, c o n s t r u c t i o n m a t e r i a l t e s t p i t t i n g . (emphasis added) 23 Minutes of a meeting h e l d on October 2 2 , 1 9 7 1 between NCPC o f f i c i a l s J . Lowe, J . Long and D. Steen w i t h Mr. D. Duguid of Crippen E n g i n e e r i n g , i n d i c a t e t h a t by t h i s time the g e n e r a l l o c a t i o n of the powerhouse had not y e t been determined. I t was not known on which s i d e of the r i v e r the powerhouse should be l o c a t e d , and i t was even suggested t h a t the p o s s i b i l i t y of l o c a t i n g the powerhouse j u s t below Rainbow F a l l s be i n v e s t i g a t e d f u r t h e r , which would enable o n l y a 30 0 f o o t head to be developed. As s t a t e d i n the minutes: 4) A penstock to powerhouse on west branch of A i s h i h i k R i v e r might be b e t t e r from a permafrost st a n d p o i n t ( l e s s e x t e n s i v e s i n c e south f a c i n g ) . 5) Powerhouse on West A i s h i h i k not f a v o u r a b l e due to u n c o n t r o l l e d nature of t h i s r i v e r and p o t e n t i a l slope f a i l u r e s i n the predominant steep banks. ... I t was noted t h a t o n l y 3 0 0 ' of head would be a v a i l a b l e by l o c a t i n g powerhouse below Rainbow F a l l s (approximately 50% of t h a t of the o r i g i n a l scheme or 10 MW c a p a c i t y t o t a l ) . More backhoe work was d i s c u s s e d and deemed u s e f u l a t the penstock routes and at the low p r o f i l e dam above Rainbow F a l l s . 24 I t i s not s u r p r i s i n g t h a t the l o c a t i o n o f the powerhouse and the c a n a l had not y e t been determined, s i n c e the s o i l s and g e o l o g i c a l surveys had o n l y begun the p r e v i o u s month. - 38 -An important f e a t u r e of the f i n a l d e s ign of the p r o j e c t i s t h a t the powerhouse i s l o c a t e d underground. D i s c u s s i o n s o f t h i s p o s s i b i l i t y d i d not, a p p a r e n t l y , begin u n t i l November, 1971. As mentioned i n NCPC management's Report on A i s h i h i k : In November, 1971 the concept of an underground powerhouse was d i s c u s s e d by the c o n s u l t a n t and work i n t h i s d i r e c t i o n continued. 25 Another very important f e a t u r e of the p r o j e c t concerns how w e l l i t i s a b l e to i n t e g r a t e w i t h the e x i s t i n g g e n e r a t i o n system. The storage c a p a c i t y of A i s h i h i k Lake enables the f a c i l i t y t o be used very e f f e c t i v e l y f o r w i n t e r peaking, when demands are very h i g h . I t appears t h a t t h i s concept had not been d i s c u s s e d by NCPC u n t i l l a t e March, 1972, two months p r i o r to the water l i c e n c e h e a r i n g s . An NCPC memorandum dated March 23, 1972 s t a t e s : Duguid suggests t h a t a 3rd u n i t p r o v i s i o n a t A i s h i h i k should be c o n s i d e r e d now s i n c e i t would f i r m up and balance system i n f o l l o w i n g way. Upper Yukon l a c k s s u f f i c i e n t water volume to m a i n t a i n hydro peaks i n w i n t e r . A i s h i h i k c o u l d p r o v i d e t h i s peak and cut back p r o d u c t i o n i n summer when p l e n t y of water i n Yukon R i v e r . A i s h i h i k water i s e a s i l y s t o r e d f o r w i n t e r p r o d u c t i o n and i s not s u s c e p t i b l e to l a c k of water s i n c e i t i s p r i m a r i l y a h i - h e a d - l o flow system. 26 The c o n s u l t a n t a l s o wrote to Mr. F. Mooney, NCPC's r e g i o n a l manager f o r the Yukon, on A p r i l 3, and e x p l a i n e d t h a t : - 39 -... one a d d i t i o n a l f a c t has come to l i g h t i n our r e c e n t s t u d i e s p r o v i d i n g another reason why A i s h i h i k should be b u i l t . ... By h o l d i n g back on g e n e r a t i o n a t A i s h i h i k d u r i n g the summer, water c o u l d be s t o r e d to generate a d d i t i o n a l power d u r i n g w i n t e r months, e f f e c t i v e l y f i r m i n g up the a d d i t i o n a l Whitehorse c a p a c i t y . A system study might show t h a t what amounts to s t o r i n g s u r p l u s Upper Yukon water i n A i s h i h i k Lake co u l d be such an advantage t h a t an e a r l y i n s t a l l a t i o n of a t h i r d u n i t c o u l d be j u s t i f i e d . 27 F i n a l l y , the NCPC management's Report on A i s h i k i k s t a t e s : The concept of winter peaking w i t h A i s h i h i k i n combination with Whitehorse Rapids was o u t l i n e d by the e n g i n e e r i n g c o n s u l t a n t A p r i l 3rd 1972. 28 D. E n g i n e e r i n g Study In A p r i l , 1972, the A i s h i h i k R i v e r Power Development  E n g i n e e r i n g Report was completed by Crippen E n g i n e e r i n g . The purpose of the r e p o r t was to supply the Water Board with the necessary i n f o r m a t i o n to grant a water l i c e n c e , and the f o l l o w i n g areas of i n v e s t i g a t i o n were covered: d e s c r i p t i o n of the geology of the area, s o i l s , hydrology and power p o t e n t i a l , e f f e c t s on A i s h i h i k Lake and O t t e r and Rainbow F a l l s , and a d e s c r i p t i o n of the p h y s i c a l l a y o u t of the p r o j e c t . The r e p o r t mentions t h a t l i t t l e was known of the necessary storage requirements or of the p o s s i b l e environmental impacts of the p r o j e c t . As the r e p o r t s t a t e s : - 40 -S u f f i c i e n t i n v e s t i g a t i o n has been c a r r i e d out i n the j u s t completed program to e s t a b l i s h f e a s i b i l i t y o f the p r o j e c t . However, there are s t i l l many unknowns which should be i n v e s t i g a t e d p r i o r t o , or i n the e a r l y stages o f , c o n s t r u c t i o n . 29 The r e p o r t a l s o recommended t h a t a systems study, which would assess how the p r o j e c t c o u l d best f i t i n t o the e x i s t i n g g e n e r a t i o n system, should be c a r r i e d out as soon as p o s s i b l e . A systems study can a s s i s t i n deter m i n i n g the a d d i t i o n a l c a p a c i t y j u s t i f i e d a t both Whitehorse and A i s h i h i k . For the l a t t e r , t h i s i s immediately important s i n c e dimensions of co n d u i t s and powerhouse f o r the a d d i t i o n a l u n i t must be e s t a b l i s h e d . 30 V. SUMMARY In June, 1971, NCPC conducted p r e l i m i n a r y r econnaissance surveys at the A i s h i h i k and s e v e r a l o t h e r s i t e s . The f i e l d i n v e s t i g a t o r s determined t h a t almost twice as much head was a v a i l a b l e f o r development a t the A i s h i h i k s i t e than was p r e v i o u s l y thought p o s s i b l e . Immediately a f t e r the surveys were completed, NCPC a p p l i e d f o r a land r e s e r v a t i o n f o r onl y the A i s h i h i k s i t e . No ot h e r a l t e r n a t i v e s i t e s to the A i s h i h i k were i n v e s t i g a t e d d u r i n g the summer of 1971, and very l i t t l e f u r t h e r i n v e s t i g a t i o n s were made of the A i s h i h i k s i t e d u r i n g the same time p e r i o d . - 41 -In July, 1971, a cost comparison was made between the Aishih i k project and a c o a l - f i r e d a l t e r n a t i v e . The Aishihik project was calculated to cost $7.8 m i l l i o n , which made i t appear to be a much better a l t e r n a t i v e . On August 31, 1971, NCPC applied for a water licence under the Dominion Water Power Act to develop the s i t e , and stated i n i t s request that the Aishihik was the most economic of the available a l t e r n a t i v e s . At that time, the engineering f e a s i b i l i t y of the project had not, apparently, been established. Shortly a f t e r NCPC submitted i t s application, i t was informed by DIAND that the water licence would have to be processed through the Northern Inland Waters Act, which was not yet proclaimed. The contents of the N.I,W.A. were available to NCPC i n September, 1971, when i t was informed that the Aishi h i k water licence would not be issued under the D.W.P.A. The N.I.W.A. states that information about the q u a l i t a t i v e and quantitative e f f e c t s of a proposed water use has to be supplied by the applicant. On November 19, 1971, the Chairman of the Water Board informed NCPC that an environmental impact statement - 42 -would be r e q u i r e d , and advised NCPC t h a t i t should begin the necessary surveys and s t u d i e s to prepare one a t t h a t time. On February 15, 1972, the Chairman again wrote to NCPC and s t a t e d t h a t an impact statement would be r e q u i r e d , and a l s o e x p l a i n e d what items i t should c o n t a i n . NCPC d i d not h i r e a c o n s u l t a n t to begin p r e p a r a t i o n of an impact statement u n t i l March 9, 1972. On March 21, NCPC forwarded a formal a p p l i c a t i o n f o r a water l i c e n c e , and the h e a r i n g was scheduled f o r May 24-25, 1972. Owing to these time c o n s t r a i n t s , the study was completed i n on l y seven weeks and was p r e l i m i n a r y i n nature. The a p p l i c a t i o n proposed t h a t c o n s t r u c t i o n o f the p r o j e c t should begin i n May, 197 2, and would be completed i n December, 1973. Perhaps the bes t a v a i l a b l e e x p l a n a t i o n f o r why NCPC d i d not begin the environmental impact study sooner than i t d i d i s t h a t i t was not f u l l y aware o f the purpose and importance o f the i n f o r m a t i o n t h a t would be c o n t a i n e d i n such a statement. Consequently, the Power Commission c o n s i d e r e d t h a t an adequate statement would be r e l a t i v e l y easy to compile, and t h a t i t would not have an important b e a r i n g on whether or not the Board would i s s u e a water l i c e n c e . I t t h e r e f o r e d i d not gi v e p r i o r i t y t o the p r e p a r a t i o n of an environmental impact statement. NCPC d i d not begin the necessary f i e l d i n v e s t i g a t i o n s to e s t a b l i s h the e n g i n e e r i n g f e a s i b i l i t y of the p r o j e c t u n t i l September, 1971, and not u n t i l November, 1971, d i d NCPC and i t s e n g i n e e r i n g c o n s u l t a n t begin s e r i o u s c o n s i d e r a t i o n of the p o s s i b i l i t y of l o c a t i n g the powerhouse underground. In l a t e March and e a r l y A p r i l of 1972, the concept of adding t o the g e n e r a t i n g c a p a c i t y of the p r o j e c t , and u s i n g i t f o r wi n t e r peaking purposes by t a k i n g advantage o f the sto r a g e c a p a b i l i t y o f A i s h i h i k Lake, was f i r s t d i s c u s s e d . On March 15, 1972, NCPC a p p l i e d t o the Water Board f o r a water l i c e n c e , s t a t i n g i n the a p p l i c a t i o n t h a t i t proposed t o s t a r t c o n s t r u c t i o n i n May, 1972. The f i r s t e n g i n e e r i n g r e p o r t f o r the p r o j e c t was completed i n A p r i l , 1972. L i k e the environmental impact study, the e n g i n e e r i n g r e p o r t was p r e l i m i n a r y i n nature and cont a i n e d l a r g e amounts of t e n t a t i v e i n f o r m a t i o n . These two r e p o r t s t o g e t h e r formed the t o t a l body of w r i t t e n i n f o r m a t i o n made a v a i l a b l e to the p u b l i c b e f o r e the May, 197 2 h e a r i n g . In sum, i t might appear t h a t NCPC was i l l - p r e p a r e d f o r the f i r s t h e a r i n g . Very l i t t l e time and a t t e n t i o n was given to the p r e p a r a t i o n of the environmental impact - 4 4 -s t a t e m e n t , w h i c h t h e W a t e r B o a r d l a t e r f o u n d t o b e i n a d e q u a t e f o r t h e p u r p o s e o f d e c i d i n g u p o n a w a t e r u s e l i c e n c e . I t a l s o a p p e a r s t h a t t h e d e s i g n o f t h e p r o j e c t a n d t h e g e n e r a t i o n o f t e c h n i c a l i n f o r m a t i o n h a d n o t p r o g r e s s e d a s f a r a s i t p e r h a p s s h o u l d h a v e , g i v e n t h a t N C P C i n t e n d e d t o b e g i n c o n s t r u c t i o n i m m e d i a t e l y a f t e r t h e h e a r i n g . I f N C P C s e e m s t o h a v e b e e n i l l - p r e p a r e d , h o w e v e r , i t c e r t a i n l y d i d s h a r e t h i s p r o b l e m w i t h t h e m e m b e r s h i p o f t h e W a t e r B o a r d a n d t h e s e n i o r l e v e l s o f D I A N D , a s s h o w n i n t h e n e x t c h a p t e r . - 45 -CHAPTER TWO  REFERENCES AND NOTES 1. G. E. Crippen & A s s o c i a t e s , " A i s h i h i k R i v e r Power Development", A p r i l 1972, p.2-1. 2. I b i d . 3. NCPC, "Report on F i e l d T r i p t o A i s h i h i k & Ka k i s a R i v e r s , June 1971", i n Report on A i s h i h i k , NCPC, March 1976, r e f . 1.04. 4. I b i d . , p.3. 5. I b i d . 6. NCPC, Report on A i s h i h i k , S e c t i o n 4, p . l . 7. D. Steen, P l a n n i n g Department, NCPC, to J . M. Lowe, General Manager, NCPC, "Power P o t e n t i a l from N o r d e n s k i o l d Coal D e p o s i t s " , 7 J u l y 1971, i n Report on A i s h i h i k , r e f . 2.0. 8. I b i d . 9. J . M. Lowe to I. P e t r i e , Land A d m i n i s t r a t i o n , DIAND, 31 August 1971, i n H y d r o - E l e c t r i c Development, A i s h i h i k  Yukon, S t r u t t Lake NWT, and Northern Canada Power  Commission, ( h e r e a f t e r r e f e r r e d to as the Dalby R e p o r t ) , R. N. Dalby & A s s o c i a t e s , A p r i l 1976, Attachment 1. 10. NCPC, Report on A i s h i h i k , S e c t i o n 1, p . l . 11. Northern Canada Power Commission A c t , Chapter N-21, S e c t i o n (2). 12. NCPC, Report on A i s h i h i k , S e c t i o n 4, p.2. 13. G. Olson, Manager, S p e c i a l P r o j e c t s , NCPC, to A. D. Hunt, A s s i s t a n t Deputy M i n i s t e r , DIAND, 5 A p r i l 1974, "Notes Re Yukon Power". Mr. Olson s t a t e d t h a t : "N.C.P.C. was advised by D.I.A.N.D. to await coming i n t o e f f e c t of the Northern Inland Waters A c t which was expected to be i n the f a l l of 1971". 14. D. Steen to J . Lowe, 25 January 1972, "Minutes o f Meeting IAND/NCPC - January 24/72", i n Report on A i s h i h i k , r e f . 4.08. 15. A. D. Hunt to J . M. Lowe, 5 December 1972. - 46 -16. J . H. Reynolds, NCPC to J . M. Lowe, " A i s h i h i k Land and Water R e s e r v a t i o n " , 18 August 1971; and J . K. Naysmith, Northern Economic Development Branch, to J . M. Lowe, 25 August 1971, both i n Report on A i s h i h i k , r e f s . 4.02 and 4.03. 17. Northern Inland Waters A ct, R.S.C. 1970, c.28, S e c t i o n 11(2). 18. L. V. Brandon, Chairman, Yukon T e r r i t o r y Water Board to F. Mooney, Regional Manager, NCPC, 19 November 1971. 19. L. Brandon to F. Mooney, Regional Manager NCPC, 15 February 1972, i n Report on A i s h i h i k , r e f . 4.09. 20. Pearse Bowden, Economic C o n s u l t a n t s L t d . , " A i s h i h i k R i v e r Power Development, A P r e l i m i n a r y Environmental Impact Assessment", 20 A p r i l 1972, p . i i i . 21. Pearse Bowden Economic C o n s u l t a n t s L t d . , "Environmental I m p l i c a t i o n s of A i s h i h i k R i v e r Power Development, Yukon T e r r i t o r y , A Compendium Report", 30 May 1975, p . l fn. 22. J . M. Lowe, General Hearing T r a n s c r i p t s , 24 May 1972, Whitehorse, Y.T., p.20. 23. NCPC, Report on A i s h i h i k , S e c t i o n 1, p . l . 24. D. Steen t o J . M. Lowe, "Re: Meeting about A d d i t i o n a l Power to Whitehorse Area", 1 November 1971, i n Report  on A i s h i h i k , r e f . 1.13. 25. NCPC, Report on A i s h i h i k , S e c t i o n 1, p.2. 26. D. Steen to J . Lowe, 23 March 1972, i n Report on A i s h i h i k , r e f . 1.17. 27. D. Duguid, c o n s u l t i n g engineer, G. E. Crippen & A s s o c i a t e s L t d . , to F. Mooney, 3 A p r i l 1972, i n Report on A i s h i h i k , r e f . 1.18. 28. NCPC, Report on A i s h i h i k , S e c t i o n 1, p.2. 29. G. E. Crippen & A s s o c i a t e s , " A i s h i h i k R i v e r Power Development", p.8-1. 30. I b i d . , p.8-3. - 47 -CHAPTER THREE THE FIRST HEARING - MAY, 1972 I. INTRODUCTION T h i s chapter d e a l s w i t h the events t h a t took p l a c e immediately be f o r e and d u r i n g the f i r s t h e a r i n g . P r i o r t o the h e a r i n g , i t was expected by NCPC and by s e n i o r o f f i c i a l s i n DIAND t h a t a water l i c e n c e c o u l d , and probably would, be approved immediately f o l l o w i n g the he a r i n g . As Mr. Robinson, Deputy M i n i s t e r f o r the Department, and Chairman of the Commission f o r NCPC e x p l a i n e d t o the M i n i s t e r on March 9, 1972: I t i s h i g h l y d e s i r a b l e . . . t h a t approval be given b e f o r e the end of May. T h i s w i l l culminate i n v e s t i g a t i o n work c a r r i e d out by the Commission over the past twelve months. In our o p i n i o n the Water Board can perform a l l i t s f u n c t i o n s adequately and s t i l l p rocess the a p p l i c a t i o n i n s u f f i c i e n t time. 1 A number of problems a f f e c t e d the outcome of the f i r s t h e a r i n g , however, the most important of which was t h a t the Water Board d i d not y e t have l e g a l a u t h o r i t y t o i s s u e a water l i c e n c e . As a r e s u l t , NCPC d i d not r e c e i v e a water l i c e n c e f o l l o w i n g the h e a r i n g , and was not able t o begin c o n s t r u c t i o n t h a t summer. I I . PREPARATIONS FOR THE HEARING A. L e g a l C o n s t r a i n t s Under s e c t i o n 15 of the Northern Inland Waters A c t , a - 48 -water board may h o l d a p u b l i c h e a r i n g f o r two d i f f e r e n t reasons. 15. C.1). A p u b l i c h e a r i n g may be h e l d i n connection with any matter r e l a t i n g to i t s o b j e c t s where the board i s s a t i s f i e d t h a t such a h e a r i n g would be i n the p u b l i c i n t e r e s t . (2) A p u b l i c h e a r i n g s h a l l be h e l d by a board (a) i n connection w i t h each a p p l i c a t i o n f o r a l i c e n c e or f o r renewal of a l i c e n c e . 2 I t was intended t h a t the f i r s t h e a r i n g would be h e l d under s e c t i o n 15(2) and t h a t a l i c e n c e would be i s s u e d . However, s h o r t l y b e f o r e the h e a r i n g s , a Vancouver lawyer, Mr. R. Anthony, wrote to the Water Board and f o r m a l l y o b j e c t e d to a h e a r i n g being h e l d under s e c t i o n 15(2) on the grounds t h a t a l i c e n c e c o u l d not be i s s u e d u n t i l the N.I.W.A. Regula t i o n s were promulgated. The Board de c i d e d t h a t i t would have to uphold Mr. Anthony's o b j e c t i o n and the h e a r i n g was h e l d under s e c t i o n 15(1) i n s t e a d . The a c t i o n taken by Mr. Anthony may t h e r e f o r e have had a very s i g n i f i c a n t e f f e c t on the course of the h i s t o r y of the A i s h i h i k p r o j e c t . The d e c i s i o n to h o l d the h e a r i n g under s e c t i o n 15(1) must have come at a very l a t e hour. The f o l l o w i n g q u o t a t i o n comes from the minutes of a meeting of the Water Board, which began d u r i n g the a f t e r n o o n of May 24. The h e a r i n g was to begin at 7:00 t h a t evening. - 49 -Mr. Lightbody e x p l a i n e d t o the Board t h a t the procedure on NCPC's a p p l i c a t i o n was c a l l e d under S e c t i o n 15(1) of the NIWA. No a c t i o n c o u l d be taken under 15(2) u n t i l the r e g u l a t i o n s are e f f e c t i v e . The Chairman informed the Board t h a t the r e g u l a t i o n s would not be promulgated u n t i l the Northwest T e r r i t o r i e s , the Inter-Departmental Committee on Water, and the Department of J u s t i c e had pr o v i d e d t h e i r i n p u t and t h a t i t would probably be J u l y when they were complete. ... i t was decided t h a t the Chairman would s t a r t the proceedings by e x p l a i n i n g t o the p u b l i c t h a t the h e a r i n g was not to grant a l i c e n c e but to a s c e r t a i n from the p u b l i c what they f e e l a l i c e n c e a p p l i c a t i o n should c o n t a i n . 3 On the same day t h a t the h e a r i n g was to be h e l d , the Water Board had to info r m NCPC t h a t a l i c e n c e c o u l d not be i s s u e d a t t h a t time. An assumption appears to have been made by a l l major a c t o r s t h a t the h e a r i n g c o u l d be h e l d under s e c t i o n 15(2). A l e t t e r from A. B. Yates t o D. Hunt on March 29, 1972, e x p l a i n s some of the b a s i s f o r t h i s assumption. In r e f e r e n c e to the advice of the D i r e c t o r o f L e g a l S e r v i c e s , the f o l l o w i n g i n f o r m a t i o n was p r o v i d e d : We wish to process the NCPC a p p l i c a t i o n f o r the A i s h i h i k development under the NIWA but i n advance o f the promulgation of the Reg u l a t i o n s . In doing so, do we stand on s o l i d l e g a l grounds? The L e g a l A d v i s o r expressed the o p i n i o n t h a t the a p p l i c a t i o n c o u l d be processed and the l i c e n c e i s s u e d without the p r i o r making o f r e g u l a t i o n s . 4 - 50 -B. N o t i c e of the Hearing The n o t i c e of the h e a r i n g was p u b l i s h e d by the Board i n the Yukon News i n Whitehorse on A p r i l 28, and i n the Canada Gazette on May 16. NCPC a l s o p u b l i s h e d a n o t i c e of the h e a r i n g i n the Canada Gazette on A p r i l 1, but never d i d g i v e n o t i c e i n the l o c a l p r e s s . As a r e s u l t , i t d i d not meet a l l of the requirements of s e c t i o n 17 of the N.I.W.A. which s t a t e s : The a p p r o p r i a t e board s h a l l r e q u i r e an a p p l i c a n t f o r a l i c e n c e . . . to g i v e n o t i c e o f such a p p l i c a t i o n and i n such one or more newspapers, i n c l u d i n g a t l e a s t one t h a t i s i n c i r c u l a t i o n w i t h i n the area a f f e c t e d . . . 5 The f a c t t h a t NCPC d i d not p u b l i s h a n o t i c e i n the l o c a l p ress p r o v i d e d f u r t h e r grounds f o r the r u l i n g by the Water Board t h a t i t was without j u r i s d i c t i o n to proceed w i t h a l i c e n c e h e a r i n g . I t a l s o appears t h a t the n o t i c e t h a t was p u b l i s h e d i n the Yukon News by the Water Board d i d not d e s c r i b e the nature and scope of the proposed development to the p u b l i c very w e l l . - 51 -. . •,:!N-©T-ItSE. ... • NORTHERN INLAND W A T E R S ACT ' -'.'•/ NOTICE OF PUBLIC H E A R I N G : The N o r t h e r n Canada Power CommissIon has • made a w a t e r r i g h t s a p p l i c a t i o n f o r a w a t e r - H c e n c e i n t h e A i s i h i k d r a i n a g e b a s i n t o d i v e r t : a s u p p l y ' o f . 3 5 0 c . f . s . f r o m Canyon L a k e . T h e -p r o j e c t p r o p o s e s t h a t .waters a r e t o b e -with-drawn I n t o a 31/2 m i l e cans'] a n d d i v e r t e d t o , an u n d e r g r o u n d powerhouse downstream f r o m Canyon Lake b e f o r e b e i n g r e t u r n e d t o t h e • E a s t A i s i h i k R i v e r a p p r o x i m a t e l y , o n e m i l e ctbove t h e c o n f l u e n c e w i t h t h e V/est A i s h i h i k . r ? •. A c o n t r o l s t r u c t u r e on A i s h i h i k L ake v i l s ~ s s o p r o p o s e d f o r w a t e r s t o r a g e . P u b l i c h e a r i n g s o n t h i s a p p l i o a t J o n . wi11 b e h e l d i n t h e Y . V.C.A. B u i l d i n g i n White-•horse on May 2 i t t h a t 7 : 3 0 p . m . and a t t h e fCcmmunity. Ha 11 i n H a i n e s J u n c t i o n a t 2 : 3 0 ' p . m . on May 2 5 t h b e f o r e t h e Chairman and mem-b e r s o f t h e Yukon T e r r i t o r y Water B o a r d . Those v / i s h i n g t o speak on b e h a l f o r a g a i n s t t h i s a p p l i c a t i o n s h o u l d r e c o r d t h e i r i n t e n t i o n a t t h e o f f i c e o f t h e Yukon T e r r i t o r y Water Board b e f o r e m i d - d a y on May 1 9 t . h . B r i e f s w i l l b e p r e s e n t e d a t t h e h e a r i n g I n t h e i r — ;, o r d e r o f ' j d a j i v e r y t o t h e ' B o a r d ' s o f f i c e s , .'"". E n g i n e e r i n g r e p o r t s on t h e p r o p o s e d p r e - " J e c t and t h e . a p p l i c a t i o n i t s e l f may b e s t u d -i e d a t t h e V h i t e h o r s e B r a n c h o f t h e Yukon R e g i o n a l L i b r a r y , and i n t h e o f f i c e s o f t h e Water B o a r d . T h e r e w i l l a l s o b e a, c o p y i n t h e g e n e r a l s t o r e a t H a i n e s J u n c t i o n .An" e n v i r o n m e n t -a l r e p o r t w i l l b e a v a i l a b l e on .May 5 t h a t t h e same o f f i c e s . v . 'Room 101 /Dept. o f P u b l i c Works B l d g !T<r" I n l , W h i t e h o r s e . L i o n e l Brandon Chairman Yukon T e r r i t o r y Water B o a r d . F J N O T I C E O F A P R I L 2 8 , M A Y , 1 9 7 2 1 9 7 2 H E A R I N G I N Y U K O N NEW - 52 -C. A v a i l a b i l i t y of Reports The Water Board's n o t i c e mentioned t h a t the e n g i n e e r i n g r e p o r t was a v a i l a b l e at the Whitehorse p u b l i c l i b r a r y , the o f f i c e s of the Water Board, and the g e n e r a l s t o r e a t Haines J u n c t i o n , and t h a t the environmental impact r e p o r t would be a v a i l a b l e on May 5/i a t the same l o c a t i o n . Only a few co p i e s o f the environmental r e p o r t were made a v a i l a b l e , although i t was of most i n t e r e s t t o the p u b l i c , and i t c o u l d o n l y be seen a t a few p l a c e s d u r i n g b u s i n e s s hours. A copy was not pr o v i d e d a t Haines J u n c t i o n u n t i l May 14. The r e p o r t was r e c e i v e d by one group a t t e n d i n g the h e a r i n g s , the Canadian Environmental Law Research Foundation, a f t e r i t requested one on May 17. Other groups a t t e n d i n g the he a r i n g never o b t a i n e d a copy o f the r e p o r t . I I I . THE WATER BOARD'S MANDATE Since the Water Board was a newly-formed agency o p e r a t i n g w i t h c o n s i d e r a b l e a u t h o r i t y and independence, i t was d i f f i c u l t t o p r e d i c t how i t would d e a l w i t h the A i s h i h i k a p p l i c a t i o n . I t was probably not expected t h a t the Water Board would adopt as a c t i v e and p o s i t i v e a r o l e as i t d i d i n a s s e s s i n g the m e r i t s of NCPC's p r o p o s a l . - 53 -The main reason behind the Water Board's unexpected p a r t i c i p a t i o n i n the decision-making process i s because i t s Chairman, Mr. Leo Brandon, was able to e x e r t a st r o n g i n f l u e n c e on the a c t i o n s o f the Board as a whole. U n l i k e the r e s t o f the members of the Board, Mr. Brandon d i d have some c o n s i d e r a b l e experience i n the f i e l d o f res o u r c e s management. Mr. Brandon appears t o have been p e r s o n a l l y committed t o the task of making the Board a management-oriented agency, as opposed to f u l f i l l i n g a much narrower l i c e n c i n g and review f u n c t i o n , as was perhaps expected. Mr. Brandon d i d not attempt to exceed the p r o v i s i o n s o f the N.I.W.A., but r a t h e r t o ensure t h a t the powers t h a t were l e g a l l y v e s t e d i n the Water Board were e f f e c t i v e l y used. As shown below, Mr. Brandon was not w i l l i n g t o meet the ex p e c t a t i o n s p l a c e d on the Board by s e n i o r DIAND o f f i c i a l s . On May 15, Mr. Hunt, A.D.M. f o r Northern Development, wrote t o Mr. Brandon and expressed h i s o p i n i o n o f how the Water Board, as a q u a s i - j u d i c i a l body, should operate: As we begin to s e t the stage f o r o p e r a t i n g the Water Board, I f e e l i t i s important to e s t a b l i s h some g e n e r a l s t r a t e g i e s and p o l i c i e s . I would ask you then to pass along the f o l l o w i n g g u i d e l i n e s t o your Board members. The M i n i s t e r ' s l e t t e r o f appointment to members emphasized t h a t the Board i s a water l i c e n c i n g a u t h o r i t y . I would not want anyone to get the impression t h a t the Board i s - 54 -a management agency r e s p o n s i b l e f o r long-range water p l a n n i n g . T h i s p o i n t should be q u i t e apparent from the f a c t t h a t the Board has no money and no s t a f f . T h e r e f o r e , the Board must not, indeed cannot, conduct any s t u d i e s i n i t s own r i g h t . ... These are ge n e r a l g u i d e l i n e s , but ones which I f e e l you must adhere,to at the present stage of o p e r a t i o n o f the Water Board. 7 Brandon r e p l i e d the f o l l o w i n g month, a f t e r the heari n g s were completed, and c i t e d h i s reasons f o r broader i n t e r p r e t a t i o n of the Board's f u n c t i o n : ... I suggest to you t h a t the second paragraph of your l e t t e r p l a c e s too narrow an i n t e r p r e t a t i o n on the f u n c t i o n s o f the Board and I am sure t h a t when you look i n t o t h i s you w i l l agree t h a t management does i n v o l v e p l a n n i n g . ... Parliament has, i n S e c t i o n 8 (of the NIWA) made i t p l a i n t h a t the M i n i s t e r w i l l p r o v i d e funds f o r s t a f f and c o n s u l t a n t s , and i n S e c t i o n 18 i t has given the Board very wide powers as to how i t manages i t s a f f a i r s and t h a t o f the s t a f f and a d v i s e r s p r o v i d e d to i t by the M i n i s t e r . 8 In h i s r e p l y , Brandon r e f e r r e d e x t e n s i v e l y to the v a r i o u s p r o v i s i o n s o f the N.I.W.A. to support h i s i n t e r p r e t a t i o n . The Chairman's i n t e r p r e t a t i o n of the Board's f u n c t i o n became a key f a c t o r i n improving the q u a l i t y and q u a n t i t y of i n f o r m a t i o n made a v a i l a b l e about the p r o j e c t , both by demanding more i n f o r m a t i o n from NCPC, and by r e t a i n i n g i t s own c o n s u l t a n t s . - 55 -IV. THE HEARING The f i r s t h e a r i n g h e l d under the N.I.W.A. took p l a c e on the evening of May 24 i n Whitehorse and d u r i n g the af t e r n o o n o f May 2 5 i n Haines J u n c t i o n . The h e a r i n g a t t r a c t e d much a t t e n t i o n from both l o c a l and n o n - l o c a l groups, and many o f the submissions were c r i t i c a l o f the adequacy and a v a i l a b i l i t y of i n f o r m a t i o n about the p r o j e c t and about the he a r i n g i t s e l f . In h i s opening remarks, Mr. Brandon e x p l a i n e d t h a t : T h i s meeting i s c a l l e d pursuant t o S e c t i o n 15(1) and the purpose of t h i s h e a r i n g i s to p r o v i d e the p u b l i c w i t h the o p p o r t u n i t y to have e x p l a i n e d to them the proposed a p p l i c a t i o n o f the NCPC f o r a h y d r o - e l e c t r i c development at A i s h i h i k R i v e r and f o r the r e c e i v i n g of b r i e f s and l i s t e n i n g t o persons and spokesmen f o r i n t e r e s t e d groups i n t h i s proposed h y d r o - e l e c t r i c scheme. The Board w i l l not, at t h i s time, decide on the i s s u i n g o f any c o n s t r u c t i o n l i c e n c e , because the proposed a p p l i c a t i o n has preceded the promulgation of r e g u l a t i o n s by the Governor i n C o u n c i l , which i s r e q u i r e d under S e c t i o n 2 of t h i s A c t . 9 I t appears t h a t both NCPC and the Water Board saw the he a r i n g t o be a " p u b l i c s e r v i c e " i n f o r m a t i o n h e a r i n g and probably d i d not a n t i c i p a t e the amount o f feedback and c r i t i c i s m t h a t d i d occur. The NCPC General Manager, Mr. John Lowe, e x p l a i n e d a t the o u t s e t of the he a r i n g t h a t s u f f i c i e n t i n v e s t i g a t i o n s had taken p l a c e t o determine t h a t the A i s h i h i k would be a very economic p r o j e c t : - 56 -Our s t u d i e s i n d i c a t e d t h a t c o n s t r u c t i o n of the A i s h i h i k now w i l l enable the Commission t o h o l d i t s present wholesale r a t e s i n Whitehorse, w h i l e any other p r o v i s i o n w i l l l i k e l y r e s u l t i n an i n c r e a s e i n the c o s t of power to Whitehorse area consumers. 10 Mr. Lowe a l s o p o i n t e d out t h a t i f c o n s t r u c t i o n was not to begin promptly, e l e c t r i c a l r a t e s would have t o be r a i s e d u n n e c e s s a r i l y : A delay i n g r a n t i n g a l i c e n c e f o r the A i s h i h i k Development i s not without consequence, and i t must be p o i n t e d out how s i g n i f i c a n t a delay of one year would be. Such a delay would r e s u l t i n an i n c r e a s e d o u t l a y of over $2,000,000 which would not otherwise be made, and which o u t l a y would have t o be borne by power consumers on the Whitehorse area g r i d . The A i s h i h i k R i v e r has been s t u d i e d r e l a t i v e to i t s hydro e l e c t r i c p o t e n t i a l f o r the l a s t twenty y e a r s . The scheme as p r e s e n t l y envisaged was looked at i n d e t a i l i n 1971. I t i s r e g r e t t a b l e t h a t t h i s process appears to be a rush, however, I must p o i n t out t h a t the Commission made a p p l i c a t i o n f o r a water power l i c e n c e on the A i s h i h i k R i v e r i n August 1971. 11 Mr. Lowe's statements l e f t the impression t h a t NCPC was w e l l prepared to begin c o n s t r u c t i o n and t h a t i f a l i c e n c e was granted, there would not be any i n c r e a s e i n e l e c t r i c a l r a t e s , but i f the l i c e n c e was to be delayed, then r a t e s would have t o i n c r e a s e . Mr. Mooney, the D i s t r i c t Manager, a l s o emphasized t h i s p o i n t , and mentioned t h a t "the p o r t i o n t h a t householders of Whitehorse would have to pay i s 12 approximately $200 per f a m i l y f o r one year's d e l a y " . - 57 -The f i r s t b r i e f , submitted by P r o f e s s o r Nelson of the Canadian S o c i e t y of W i l d l i f e and F i s h e r i e s B i o l o g i s t s , was s t r o n g l y c r i t i c a l o f the environmental impact statement. P r o f e s s o r Nelson s t r e s s e d the f a c t t h a t any acceptance of the r e p o r t would c r e a t e an u n f o r t u n a t e precedent, and t h a t NCPC *s statements r e g a r d i n g the c o s t s of d e l a y p l a c e d an u n f a i r burden on the Water Board to accept the environmental r e p o r t . The b r i e f a l s o p o i n t e d out NCPC's f a i l u r e t o devote adequate time to the study, which c o u l d have been i n i t i a t e d a f u l l year p r e v i o u s l y , and reminded the Commission t h a t the Act s t a t e s q u i t e c l e a r l y t h a t the onus i s p l a c e d on the a p p l i c a n t t o p r o v i d e the necessary i n f o r m a t i o n t o enable the Water Board to e v a l u a t e the m e r i t s of a p r o p o s a l . Mr. Anthony, r e p r e s e n t i n g the Canadian Environmental Law Research Foundation, submitted a b r i e f t h a t was a l s o c r i t i c a l o f the impact statement, but which c o n c e n t r a t e d on the procedures undertaken to hear the a p p l i c a t i o n -p a r t i c u l a r l y as they concerned the n o t i c e f o r the h e a r i n g . A t h i r d major b r i e f was d e l i v e r e d by Mr. Kupka from the Department of the Environment, F i s h e r i e s S e r v i c e s . Mr. Kupka p o i n t e d out the p o t e n t i a l n e g a t i v e e f f e c t s of the p r o j e c t on l o c a l f i s h e r i e s and recommended t h a t : - 58 -The F i s h e r i e s S e r v i c e p o s i t i o n i s t h a t a water l i c e n c e be h e l d i n abeyance, or as i t turns out the recommendation to the M i n i s t e r be h e l d i n abeyance u n t i l such time as the environmental consequences can be a s c e r t a i n e d . ... I t i s recommended t h a t the Board e x e r t a l l p o s s i b l e i n f l u e n c e i n the f u t u r e to o b t a i n as e a r l y warning as p o s s i b l e of f u t u r e power developments... i n order t h a t there i s maximum time a v a i l a b l e to conduct environmental impact s t u d i e s . 13 Mr. Kupka a l s o informed the Board t h a t the F i s h e r i e s S e r v i c e would be c a r r y i n g out e x t e n s i v e s t u d i e s over the next year to assess the impact of the p r o j e c t on the f i s h e r i e s , and recommended t h a t any f i n a l d e c i s i o n s on lake l e v e l s be r e s e r v e d u n t i l a f t e r the s t u d i e s had been c o m p l e t e d . 1 4 B r i e f s presented by two l o c a l groups, the Yukon Co n s e r v a t i o n S o c i e t y and the Yukon H i s t o r i c a l S o c i e t y , both recommended t h a t any d e c i s i o n about the l i c e n c e should be postponed u n t i l f u r t h e r s t u d i e s c o u l d be completed. During an emotional p r e s e n t a t i o n , Mr. B r i n e o f the C o n s e r v a t i o n S o c i e t y requested t h a t t h e r e be a moratorium of two years i n order to "more i n t e l l i g e n t l y d i v i n e the answers to 15 numerous as y e t unanswered q u e s t i o n s " . Mr. B r i n e a l s o r a i s e d the q u e s t i o n of whether any development should take p l a c e at a l l . In response to t h i s q u e s t i o n , Mr. Boyd, a l o c a l appointee to the Water Board who l a t e r r e p l a c e d Mr. Brandon as Chairman, s t a t e d t h a t : - 59 -... I accept the f a c t t h a t we need power and I a l s o b e l i e v e t h a t where ever we go to get the power, we can accept the f a c t t h a t we're going to get i t ; but to accept the f a c t t h a t we're going to do without i t , t h a t ' s another t h i n g . We need the power, and we are going to g e t . i t . . . Where ever we go f o r the power, and as I say, knowing the Yukon, A i s h i h i k looks l i k e a p r e t t y f a i r spot, I'm e x p r e s s i n g my own o p i n i o n NOW. ( s i c ) 16. Mr. Boyd had a p p a r e n t l y made up h i s mind and informed the p u b l i c of t h a t f a c t b e f o r e the h e a r i n g was over. The Yukon Mine Operators A s s o c i a t i o n , the E n g i n e e r i n g I n s t i t u t e of Canada, and the Whitehorse Chamber of Commerce, a l l submitted s h o r t b r i e f s which supported the development. During the second h a l f of the h e a r i n g , which was h e l d i n Haines J u n c t i o n , the views of l o c a l n a t i v e groups were expressed. C h i e f Ray Jackson of the Champagne-Aishihik Band, s t a t e d i n very e x p l i c i t terms h i s o p p o s i t i o n to the p r o j e c t : L e t me s t a t e now, we are not r e l i n q u i s h i n g any of our r i g h t s to land c l a i m s without a s e t t l e m e n t . We w i l l r e q u i r e compensation where necessary or f o r necessary r e c t i f i c a t i o n to a p a r t i c u l a r problem or we may r e q u i r e both. T h e r e f o r e , i t may not be as cheap power as you may have a n t i c i p a t e d . We are not i n f u l l - a g r e e m e n t to the c o n s t r u c t i o n of the p r o j e c t . T h e r e f o r e we w i l l not g i v e our consent a t t h i s time. 12 - 60 -V. SUMMARY Contrary to p r e v i o u s e x p e c t a t i o n s , the Water Board was without l e g a l j u r i s d i c t i o n to i s s u e a water l i c e n c e f o l l o w i n g the May, 1972 h e a r i n g . I t appears t h a t the Water Board d i d not make i t s d e c i s i o n t o h o l d the h e a r i n g f o r p u b l i c i n f o r m a t i o n purposes u n t i l very s h o r t l y b e f o r e the h e a r i n g took p l a c e . Problems concerning the n o t i c e o f the he a r i n g and the a v a i l a b i l i t y o f , and adequacy of i n f o r m a t i o n c o n t a i n e d i n the e n g i n e e r i n g and environmental r e p o r t s , i n d i c a t e t h a t both NCPC and the Water Board were not w e l l prepared to h o l d a p u b l i c h e a r i n g . A combination of the v a r i o u s problems a f f e c t i n g the p r e p a r a t i o n s f o r the f i r s t h e a r i n g are summarized i n the f o l l o w i n g e x p l a n a t i o n of circumstances experienced by the Canadian W i l d l i f e F e d e r a t i o n , c o n t a i n e d i n a l e t t e r from R. C. Passmore, E x e c u t i v e D i r e c t o r o f the C.W.F. to Mr. Lowe of NCPC on May 30: In view o f the time a v a i l a b l e f o r i t s completion, i t i s not s u r p r i s i n g t h a t the above-noted "Impact Statement" i s q u i t e s u p e r f i c i a l and permits c o n c l u s i o n s which are , i n the main, both t e n t a t i v e and h i g h l y s p e c u l a t i v e . Even more d i s a p p o i n t i n g , from the stan d p o i n t of i t s adequacy as an i n f o r m a t i o n package on which to base p u b l i c h e a r i n g s , i s i t s f a i l u r e t o pro v i d e background on c u r r e n t and p r o j e c t e d assessment of a l t e r n a t e means of meeting p r o j e c t e d needs f o r energy. In the absence o f such i n f o r m a t i o n , and i n view o f the extreme - 61 -shortage o f time i n which to o b t a i n i t , the Canadian W i l d l i f e F e d e r a t i o n was unable to prepare a meaningful statement to p r e s e n t at the hearings on the A i s h i h i k p r o j e c t . 18 The f i r s t h e a r i n g a t t r a c t e d c o n s i d e r a b l e a t t e n t i o n from the p u b l i c , and a number of persons a t t e n d i n g the h e a r i n g s t r o n g l y questioned the adequacy of i n f o r m a t i o n t h a t had been s u p p l i e d by NCPC to support i t s a p p l i c a t i o n . - 62 -CHAPTER THREE  REFERENCES AND NOTES 1. B. Robinson, Deputy M i n i s t e r , DIAND, and Chairman of NCPC to J . C h r e t i e n , M i n i s t e r of Indian A f f a i r s and Northern Development, 9 March 1972, i n Report on  A i s h i h i k , r e f . 4.12. 2. Northern Inland Waters A ct, S . 1 5 ( l ) , (2). 3. Yukon T e r r i t o r y Water Board, "Minutes of Meeting No. 3", 24 to 26 May 1972, p.1,2. 4. A. B. Yates, D i r e c t o r Northern Economid Development Branch t o D. Hunt, 29 March 1972. 5. Northern Inland Waters A c t , S.17. 6. W. McLeod, Water Management i n the Canadian North (Ottawa: Canadian A r c t i c Resources Committee, 1977), p. 21. 7. D. Hunt to L. Brandon, 15 May 1972. 8. L. Brandon to D. Hunt, 12 June 1972. .9. L. Brandon, General Hearing T r a n s c r i p t s , 24 May 1972, p. 1, 2 . 10. J . M. Lowe, I b i d . , p.5. 11. I b i d . , p.6. 12. F. Mooney, I b i d . , p.9. 13. K. Kupka, F i s h e r i e s and Marine S e r v i c e , I b i d . , p.38. 14. I b i d . 15. M. B r i n e , P r e s i d e n t , Yukon C o n s e r a t i o n S o c i e t y , I b i d . , p.40. 16. B. Boyd, Member, Yukon T e r r i t o r y Water Board, I b i d , p.41. 17. R. Jackson, C h i e f , Champagne-Aishihik Band, General  Hearing T r a n s c r i p t , 25 May 1972, Haines J u n c t i o n , Y.T., p.11. 18. R. C. Passmore, E x e c u t i v e D i r e c t o r , Canadian W i l d l i f e F e d e r a t i o n to J . M. Lowe, 3 0 May 1972. The " P r e l i m i n a r y Environmental Impact Statement" was not intended by i t s authors to be an i n f o r m a t i o n package on which to "base p u b l i c h e a r i n g s " as Mr. Passmore i m p l i e d . By v i r t u e o f the p a u c i t y o f a d d i t i o n a l i n f o r m a t i o n , the impact statement might have r e c e i v e d an u n f a i r burden. - 63 -CHAPTER FOUR OUTCOME OF THE FIRST HEARING AND PREPARATIONS FOR RE-APPLICATION - MAY 1972 to JANUARY 1973 T h i s chapter e x p l a i n s the outcome of the f i r s t h e a r i n g and d e s c r i b e s the a c t i o n s t h a t NCPC took to r e a p p l y f o r a water l i c e n c e . I. RECOMMENDATION OF THE WATER BOARD On May 26, one day a f t e r the h e a r i n g was completed, the Water Board made i t s . recommendation by l e t t e r to the M i n i s t e r . The l e t t e r was very c l e a r i n communicating the Board's p o s i t i o n : 1. The Board c o n s i d e r s t h a t t h e r e i s a requirement f o r more power i n the southern Yukon i n the very near f u t u r e . The proposed development of the E a s t A i s h i h i k R i v e r f o r hydro e l e c t r i c power appears to have c o n s i d e r a b l e m e r i t . 2. The proposed development of E a s t A i s h i h i k drainage b a s i n may have e c o l o g i c a l impacts. The development w i l l a l s o have some s o c i o l o g i c a l and a e s t h e t i c e f f e c t s . Present i n f o r m a t i o n i s inadequate to e v a l u a t e these e f f e c t s . 3. However, i t appears t h a t these impacts and e f f e c t s can be kept w i t h i n a c c e p t a b l e l i m i t s i f f u l l s t u d i e s are c a r r i e d out and i f the f i n d i n g s from these s t u d i e s are i n c o r p o r a t e d i n t o the design l i m i t s which w i l l p r o v i d e reasonable c o n t r o l s . 4. Schedule B i s a t t a c h e d t o t h i s l e t t e r which d e f i n e s the s t u d i e s which must be done. These s t u d i e s are of the type which would be r e q u i r e d i f the D r a f t R e g u l a t i o n s which the Board agreed to a t i t s meeting on March 9th were i n e f f e c t . No c o n d i t i o n a l commitment can be made by the Board u n t i l the r e g u l a t i o n s are i n e f f e c t and u n t i l the s t u d i e s are s u f f i c i e n t l y advanced to s a t i s f y the Board. - 64 -5. The Board r e c o g n i z e s the urgency of f u r t h e r power development and t h e r e f o r e the Board recommends t h a t the s t u d i e s i n the attached Schedule B be commenced immediately. 1 The contents of Schedule B e s s e n t i a l l y covered those areas t h a t were a l r e a d y i d e n t i f i e d i n the Crippen and Pearse Bowden r e p o r t s as needing f u r t h e r study. T h i s l i s t of i n f o r m a t i o n requirements c o u l d not, t h e r e f o r e , have been c o n s i d e r e d unreasonable or e x c e s s i v e . In view of l a t e r developments, the most s i g n i f i c a n t of the i t e m i z e d requirements i n v o l v e d the "system study" and f u r t h e r environmental s t u d i e s . The Board r e q u i r e d NCPC t o : 5. c a r r y out a d e t a i l e d study of the i n t e g r a t e d o p e r a t i o n s of A i s h i h i k and Whitehorse Rapids p l a n t s such t h a t optimum use of the p o t e n t i a l of each p l a n t can be determined. 13. t h a t i n c o n s u l t a t i o n w i t h the Board the f o l l o w i n g d e t a i l e d s t u d i e s be undertaken as i d e n t i f i e d i n the p r e l i m i n a r y environmental impact statement. a) w i t h r e l a t i o n t o the flow c o n d i t i o n s over the f a l l s a p e r c e p t i o n and a t t i t u d e study; b) an i n v e s t i g a t i o n of the animal ecology i n the h a b i t a t s t o be m o d i f i e d by the development; c) an i n v e s t i g a t i o n of the botany and p l a n t ecology of a l l areas a f f e c t e d by the development; d). a survey and salvage of a c h a e o l o g i c a l m a t e r i a l i n s i t e s l o c a t e d w i t h i n the proposed c o n s t r u c t i o n areas and those areas of p o s s i b l e f l o o d i n g . 2 - 65 -The M i n i s t e r , J . C h r e t i e n , r e p l i e d to Brandon on J u l y 14, 1972 and gave h i s acceptance o f the Water Board's recommendations. A copy of t h i s l e t t e r was a l s o sent to NCPC: I accept the recommendation of the Board w i t h r e s p e c t t o the f u r t h e r s t u d i e s r e q u i r e d to be c a r r i e d out p r i o r t o the i s s u e o f the water l i c e n c e . ... F o l l o w i n g completion o f the s t u d i e s and of any f u r t h e r work a r i s i n g from them and i n accordance w i t h the Act and the r e g u l a t i o n s f o l l o w i n g t h e i r promulgation I s h a l l be prepared t o approve the i s s u e of the water l i c e n c e f o r t h i s p r o j e c t s u b j e c t t o such c o n d i t i o n s as may then be e v i d e n t . 3 NCPC was l e f t , then, with a s t r o n g assurance t h a t i t would o b t a i n a water l i c e n c e , but not a guarantee. In order to o b t a i n a l i c e n c e , NCPC had t o complete the s t u d i e s and surveys l i s t e d by the Water Board i n "Schedule B". As f a r as the Board i t s e l f was concerned: Members f e l t t h a t u n t i l s t u d i e s were c a r r i e d out they c o u l d not judge the r e s u l t s o f a second h e a r i n g and t h a t NCPC would have to decide whether the c o n t r o l s imposed as a r e s u l t of these s t u d i e s would make the p r o j e c t uneconomic. The g e n e r a l f e e l i n g was t h a t NCPC would r e a d i l y accept the c o n d i t i o n s , would r e a d i l y c a r r y out the s t u d i e s and would consequently encounter l i t t l e o p p o s i t i o n a t a f u t u r e h e a r i n g under S.15(2). Members agreed, however, t h a t they c o u l d not make a f i r m commitment u n t i l the r e g u l a t i o n s were promulgated. 4 E v i d e n t l y the Water Board was not i n c l i n e d to r e f u s e to grant a l i c e n c e , once i t had the l e g a l j u r i s d i c t i o n , - 6 6 -nor to.make the l i c e n c e a p a r t i c u l a r l y s t r i n g e n t one. The Water Board d i d appear, however, to have a s t r o n g i n t e r e s t i n e n s u r i n g t h a t the e n t i r e process was c a r r i e d out c o r r e c t l y , as i t was aware of the f a c t t h a t i t s d e c i s i o n s would s e t important precedents f o r the f u t u r e . The Board a l s o appears to have taken e x c e p t i o n to NCPC's remarks made d u r i n g the f i r s t h e a r i n g about the c o s t s a s s o c i a t e d w i t h any delays i n the is s u a n c e o f a water l i c e n c e . In a l e t t e r to Mr. Yates, D i r e c t o r of the Northern Economic Development Branch o f DIAND, on June 5, 1972, Mr. Brandon mentioned t h a t : The Board was concerned t h a t the N.C.P.C. presented c o s t s as a consequence of any d e l a y i n c o n s t r u c t i o n at the p u b l i c hearings which were i n s u f f i c i e n t l y supported by f a c t u a l economic a n a l y s i s and which r e a l l y r e v e a l s to the Board inadequate p l a n n i n g . 5 I I . NCPC'S REACTION NCPC was ve r y d i s a p p o i n t e d w i t h the outcome of the h e a r i n g , which i t entered e x p e c t i n g to o b t a i n a l i c e n c e t h a t would enable i t t o begin c o n s t r u c t i o n of the p r o j e c t i n the next few weeks. From NCPC's p o i n t o f view, the i n f o r m a t i o n t h a t was a v a i l a b l e was s u f f i c i e n t to grant a water l i c e n c e . W r i t t e n communications exchanged d u r i n g t h a t time i n d i c a t e t h a t NCPC's i n i t i a l r e a c t i o n was to q u e s t i o n the a u t h o r i t y of the Board r a t h e r than cooperate w i t h the Board's - 67 -requirements, which the M i n i s t e r had a l r e a d y accepted. On June 16, 1972, NCPC 1s General Manager, Mr. J . Lowe, wrote to the Deputy M i n i s t e r , Mr. Robinson, and e x p l a i n e d t h a t : My understanding of the Water Board's f u n c t i o n a t the present stage was t h a t i t was to have r e l a t e d t o the recommendation f o r a water use l i c e n c e ; i t i s t h e r e f o r e s u r p r i s i n g t h a t the Board asks f o r f u r t h e r s t u d i e s on matters which are covered i n the E n g i n e e r i n g and E c o l o g i c a l B r i e f s submitted by the Commission. 6 T h i s statement appears t o d i s p l a y an a t t i t u d e h e l d by NCPC management t h a t the Water Board was to simply review and comment on the l i c e n c e a p p l i c a t i o n , and t h a t i t was improperly i n t e r f e r i n g w i t h NCPC's r e s p o n s i b i l i t i e s by r e q u e s t i n g a d d i t i o n a l i n f o r m a t i o n . In r e f e r e n c e to the Board's o p i n i o n t h a t the i n f o r m a t i o n a v a i l a b l e was inadequate, the memorandum a l s o comments t h a t " t h i s p o i n t 7 i s debatable as f a r as an immediate s t a r t i s concerned". NCPC a l s o endeavoured to have the water l i c e n c e i s s u e d by some l e g a l means other than through s e c t i o n 15 (.2). o f the N.I.W.A. On June 13, NCPC o f f e r e d a p r o p o s a l f o r an a l t e r n a t i v e procedure t o Mr. Robinson f o r the M i n i s t e r ' s a t t e n t i o n . The M i n i s t e r c o u l d recommend t h a t a l i c e n c e be i s s u e d now, e i t h e r under the DWPA or under S e c t i o n 26 of the NIWAct and a t the same time d i r e c t the Commission to pay c a r e f u l and p a r t i c u l a r a t t e n t i o n t o those matters mentioned i n the Yukon Water Board's recommendation. 8 - 68 -The p r o p o s a l was a p p a r e n t l y not submitted to the M i n i s t e r , and no such d e c i s i o n was made. No a l t e r n a t i v e , a c c e p t a b l e l e g a l means f o r o b t a i n i n g a water l i c e n c e was a v a i l a b l e to NCPC. I I I . PROPOSED CONSTRUCTION SCHEDULE NCPC f e l t t h a t i t would be ab l e to complete the p r o j e c t i n time t o meet the wint e r demands of 1973-4 i f a water l i c e n c e was i s s u e d immediately f o l l o w i n g the h e a r i n g . I f i t was not to r e c e i v e a water l i c e n c e to permit c o n s t r u c t i o n of the p r o j e c t , NCPC a n t i c i p a t e d t h a t i t would have to pay $2 m i l l i o n e x t r a to i n s t a l l and operate d i e s e l generators to meet the a n t i c i p a t e d requirements. Any d e l a y s i n the s t a r t of c o n s t r u c t i o n were a l s o thought to cause an e f f e c t i v e d e l a y o f almost a f u l l y ear, due to the l o s s o f the summer 1972 c o n s t r u c t i o n season. Another f a c t o r which c o n t r i b u t e d t o NCPC's p e r c e i v e d need to begin c o n s t r u c t i o n as q u i c k l y as p o s s i b l e was t h a t l a r g e i n c r e m e n t a l i n c r e a s e s i n e l e c t r i c a l demand from l o c a l mines were imminent. As the S e c r e t a r y t o the Water Board, Mr. N. Simmonds, r e p o r t e d to the Board on June 20, 1972: New Imp e r i a l ' s new underground o p e r a t i o n w i l l c e r t a i n l y r e q u i r e more power than i t s p r e v i o u s open-pit method. T h i s surge i n demand p l u s A n v i l ' s a n t i c i p a t e d purchase of e l e c t r i c shovels accounts f o r an a d d i t i o n a l l o a d of between 7 and 9 MW. I t can be s a f e l y concluded t h a t t h i s l a r g e l y unforeseen demand i s a dominant - 69 -f a c t o r behind the NCPC's d e s i r e to commence c o n s t r u c t i o n work immediately. 9 Dr. H o l l i n g s h e a d , who was the C o n t r o l l e r of Water Righ t s and who l a t e r became a member of the Water Board, questioned whether NCPC would be able to complete the p r o j e c t by the w i n t e r of 1973-4. As s t a t e d i n the minutes of a Water Board meeting h e l d on May 26, 1972: Mr. H o l l i n g s h e a d s a i d t h a t t h e r e was an even chance t h a t NCPC would have to spend t h i s money anyway because he thought t h a t t h e i r f o r e c a s t c o n s t r u c t i o n program was o p t i m i s t i c . ... Members... agreed t h a t as no p r e l i m i n a r y buying had been done and no tenders had been i s s u e d i t was p o s s i b l e t h a t NCPC were being e x c e s s i v e l y o p t i m i s t i c . 10 Mr. Simmonds a l s o r e p o r t e d on June 13 t h a t : The engineers on the Water Board c o n s i d e r e d t h a t a c o n s t r u c t i o n program i n which two months are so c r i t i c a l c o u l d w e l l be u n r e a l i s t i c and be i l l prepared to meet unexpected setbacks. ... The m a j o r i t y of the Board f e l t t h a t even i f a l i c e n c e were i s s u e d a t t h i s time, NCPC would be unable to meet demand on the w i n t e r of 1973. 11 C o n s i d e r i n g the stage of development of the e n g i n e e r i n g design of the p r o j e c t and the f a c t t h a t tenders had not been i s s u e d , i t might be concluded t h a t NCPC was not very w e l l prepared to begin c o n s t r u c t i o n of the p r o j e c t and complete i t i n the time frame proposed. Members of the Water Board appear to have r e c o g n i z e d t h i s p o s s i b i l i t y q u i t e r e a d i l y . IV. STUDY DELAY? The N.I«W.A. Regulations were promulgated on September 14, 1972, and immediately following that date NCPC could have applied for a water licence. NCPC had not, however, completed the necessary; studies and surveys outlined i n "Schedule B" by t h i s time. In fa c t , the environmental surveys did not begin u n t i l September 30-, six days afte r the Regulations: were, promulgated, and four months af t e r the Water Board recommended they ...he-undertaken. Mr. Brandon l a t e r reported to .Mr.. Hunt....that; Summer 1972., The N.C.P.C. f a i l e d to proceed with required f i e l d studies and were slow, i n a l l further design work, 14 September, 19721 The Regulations, were promulgated under the Northern Inland Waters, Act and therefore^ a hearing could have been held immediately aft e r that date i n order to recommend on a licence. However, the N,C,P,C, had not pursued the studies s u f f i c i e n t l y and were not ready. 12 It i s d i f f i c u l t to explain why NCPC chose t h i s course of action, since any delays i n completing the necessary studies would only have caused delays i n receiving a water licence. NCPC1s actions may have, been the r e s u l t of a. continued misunderstanding of the Water Board's j u r i s d i c t i o n . In a l e t t e r to Mr. Robinson of DIAND on June 16, 19.72, - 71 -Mr. Lowe, NCPC's General Manager, questioned whether the Board had j u r i s d i c t i o n to request a d d i t i o n a l i n f o r m a t i o n - p a r t i c u l a r l y w i t h r e s p e c t to q u e s t i o n s p e r t a i n i n g t o land r e s o u r c e s - and f e l t t h a t some of the s t u d i e s would r e q u i r e an i n o r d i n a t e amount of time and money, and should t h e r e f o r e not be r e q u i r e d . Mr. Lowe made the f o l l o w i n g comments about some of the items l i s t e d i n "Schedule B": 5.. The Board requests a d e t a i l e d study of the i n t e g r a t e d o p e r a t i o n s of A i s h i h i k and Whitehorse p l a n t s such t h a t optimum use of the p o t e n t i a l of each p l a n t can be determined. A d e t a i l e d study... w i l l i n v o l v e a very heavy expenditure and c o n s i d e r a b l e time. Moreover, t h i s c o s t cannot be j u s t i f i e d a t t h i s time u n t i l a u t h o r i t y to b u i l d A i s h i h i k has been r e c e i v e d . ... 8. T h i s requests the d e t a i l e d design o f each s t r u c t u r e t r a n s m i s s i o n l i n e and e x c a v a t i o n . ... We would note t h a t t h i s should not be a requirement t o a l i c e n c e , because of c o s t and t i m i n g . 9. The Board recommends a p l a n showing the l o c a t i o n of a l l s t r u c t u r e s , e x c a v a t i o n s , f i l l a r e a s , access roads, t r a n s m i s s i o n l i n e s and camp f a c i l i t i e s . We are of the o p i n i o n t h a t t h i s request p e r t a i n s to the l a n d use r e g u l a t i o n s and not the Inland Waters A c t . ... 12. T h i s concerns a r e p o r t f o r the p r o t e c t i o n or removal or r e s t o r a t i o n of b u i l d i n g s i n A i s h i h i k V i l l a g e . T h i s i n f o r m a t i o n has been presented- as p a r t of the Commission's B r i e f s and r e p o r t s ; i f i t i s c o n s i d e r e d t h a t such a r e p o r t i s p a r t of the Water Board's j u r i s d i c t i o n and not Land Use, such i n f o r m a t i o n can be gathered i n t o an i n d i v i d u a l r e p o r t . ... 13. c) An i n v e s t i g a t i o n of the botany and p l a n t ecology of a l l areas a f f e c t e d by the development. C o n s u l t a t i o n w i t h the b o t a n i c a l and p l a n t groups i n t e r e s t e d was s t a r t e d e a r l i e r t h i s year and i s t r e a t e d i n the Environmental Impact Statement. T h i s aspect, however, appears t o be Land based and t h e r e f o r e not w i t h i n the j u r i s d i c t i o n of the Water Board. 13 Mr. Lowe ap p a r e n t l y f e l t t h a t t h e r e was s t i l l some o p p o r t u n i t y a v a i l a b l e to have the Water Board's d e c i s i o n changed; t h i s c o n s i d e r a t i o n may have been an important cause behind NCPC's d e c i s i o n not to comply i n i t i a l l y w i t h the Water Board's r e q u e s t s . Given the contents of a l e t t e r sent from the M i n i s t e r to Mr. Robinson, Chairman of the Commission f o r NCPC, on J u l y 25, 1972, i t would appear t h a t by t h a t time there c o u l d be very l i t t l e cause f o r u n c e r t a i n t y : Much of the i n f o r m a t i o n expected from the s t u d i e s recommended by the Board i s . . . necessary before a l i c e n c e can be i s s u e d , so t h a t the necessary c o n d i t i o n s can be a t t a c h e d to i t . ... I w i l l be prepared to i s s u e the Northern Canada Power Commission a water l i c e n c e f o r the A i s h i h i k h y d r o - e l e c t r i c p r o j e c t when the requirements of the Water Board, as i n d i c a t e d by t h e i r recommendations and a t t a c h e d schedule have been met. 14 W r i t t e n communications exchanged d u r i n g August 1972 between Mr. F. Mooney, NCPC's Regional Manager f o r the Yukon, and Mr. Brandon, i n d i c a t e t h a t NCPC s t i l l had a - 73 -l a c k o f understanding of the scope and d e t a i l r e q u i r e d o f the s t u d i e s and surveys l i s t e d i n "Schedule B", and of whether or not they would have to be completed be f o r e a l i c e n c e t o permit c o n s t r u c t i o n o f the p r o j e c t c o u l d be i s s u e d . On August 28, Mr. Mooney wrote t o Mr. Brandon, and made the f o l l o w i n g p o i n t s about the i n f o r m a t i o n requirements: Re: Meeting on August 23, 1972 Between Engineers of the Northern Canada Power Commission and Members of the Yukon Water Board. During the r e c e n t meeting, a d i s c u s s i o n was h e l d on the fo u r t e e n p o i n t s forming "Schedule B - Required S t u d i e s and Surveys" accompanying the f i n d i n g s of the Board f o l l o w i n g the P u b l i c Hearings i n May, 1972. I t was p o i n t e d out by N.C.P.C. t h a t c l a r i f i c a t i o n was necessary on a number of these p o i n t s , p a r t i c u l a r l y the scope and necessary completion dates f o r the s t u d i e s r e q u i r e d by the Board. We a p p r e c i a t e t h a t the preamble to the f o u r t e e n p o i n t s s t a t e d the r e s u l t s should be a v a i l a b l e "as and when r e q u i r e d by the Board". However, i t i s important f o r the Commission to know now which s t u d i e s must be completed and submitted to the Board p r i o r t o issuance o f a c o n s t r u c t i o n l i c e n c e , and which s t u d i e s need not be completed u n t i l a l a t e r date. 15 In r e p l y t o Mr. Mooney 1s l e t t e r , Mr. Brandon s t a t e d : The m a j o r i t y of these surveys were i d e n t i f i e d by your own c o n s u l t a n t s i n t h e i r r e p o r t s as e s s e n t i a l f u r t h e r work bef o r e d e s igns c o u l d be prepared. The M i n i s t e r ' s l e t t e r o f r e p l y to the Water Board and h i s l e t t e r t o the Chairman of NCPC make i t p l a i n t h a t NCPC are a u t h o r i z e d to proceed w i t h a l l surveys and p r e p a r a t o r y work r e q u i r e d by the Board. In no way can i t be s a i d t h a t the Water Board are h o l d i n g up the NCPC. 16 T- 74 -With r e s p e c t t o the environmental surveys, Mr. Mooney a l s o r e p o r t e d t h a t : 13 b). and c) -Animal and p l a n t ecology - The Board decided to c o n s i d e r t h i s f u r t h e r . They w i l l a d v ise N.C.P.C. i n the near f u t u r e as to the extent of the study c o n s i d e r e d necessary. 17 In c o n t r a s t w i t h t h i s understanding, Mr. Brandon p o i n t e d out t h a t : Items 13 B and C were not r e s o l v e d d u r i n g our meeting because the NCPC have not c a r r i e d out any surveys i n t h i s r e s p e c t . The Board i n s i s t s t h a t animal and p l a n t ecology surveys must be done i n order t o cover the impact of any back water e f f e c t on Sekulman R i v e r where muskrat and beaver are known to be present and i n the reach down stream from O t t e r F a l l s where changes to p l a n t l i f e and the ecology of the e n t i r e f l o o d p l a i n may take p l a c e . The Board expects s c i e n t i f i c r e p o r t s on the consequences of any change i n these l o c a t i o n s or i n any area to be a f f e c t e d by f l o o d i n g to be c a r r i e d out. 18 I t would appear t h a t NCPC misunderstood i t s r e s p o n s i b i l i t y t o supply the i n f o r m a t i o n deemed necessary by the Water Board, i n accordance w i t h s e c t i o n 11(2) of the N.I.W.A. As the Act s t a t e s , the i n f o r m a t i o n p r o v i d e d by the a p p l i c a n t should "enable (the Board) t o e v a l u a t e any q u a n t i t a t i v e and q u a l i t a t i v e e f f e c t s of the proposed use 19 on the water management a r e a . . . " The M i n i s t e r had a l s o a l r e a d y accepted the Board's recommendations, which r e q u i r e d t h a t the Commission supply more i n f o r m a t i o n . Perhaps NCPC decision-makers d i d not f u l l y r e c o g n i z e t h e i r r e s p o n s i b i l i t y as an a p p l i c a n t f o r a water l i c e n c e , - 75 -nor a p p r e c i a t e the e f f e c t i v e a u t h o r i t y of the Water Board, s i n c e they f a i l e d to proceed w i t h meeting the Water Board's r e q u e s t s , and thereby delayed the r e c e i p t of a water l i c e n c e . V. ENVIRONMENTAL STUDIES The b i o l o g i c a l surveys were again undertaken by Pearse Bowden, and the i n f o r m a t i o n t h a t was gathered was presented i n A Report on B i o l o g i c a l and B o t a n i c a l Surveys, completed on October 15, 1972. The f i e l d work f o r the r e p o r t was conducted by a b i o l o g i s t and a b o t a n i s t between September 20 and 24, and the study concluded t h a t : On balance the impact o f the p r o j e c t on important s p e c i e s of p l a n t s or w i l d l i f e i s judged t o be minimal. 20 At the request of the Water Board, the Canadian W i l d l i f e S e r v i c e p r o v i d e d a review of t h i s r e p o r t . The review was, on the whole, very c r i t i c a l o f the q u a n t i t y and q u a l i t y of data t h a t was p r o v i d e d : U n f o r t u n a t e l y t h i s r e p o r t has p r o v i d e d a very s u p e r f i c i a l i n s i g h t i n t o the impact of t h i s h y d r o - e l e c t r i c p r o j e c t on the p l a n t communities and animal p o p u l a t i o n s i n the r e g i o n . 21 The C.W.S. review of the Pearse Bowden r e p o r t s t a t e s how .that o r g a n i z a t i o n viewed the o v e r a l l s i t u a t i o n : - 76 -I f s e r i o u s c o n s i d e r a t i o n had been g i v e n to the b i o l o g i c a l i m p l i c a t i o n s of t h i s hydro-e l e c t r i c p r o j e c t when the f i r s t environmental impact statement was prepared, t h i s r e p o r t would not have been necessary, funds would have been saved; and one f u l l year c o u l d have been used t o study p l a n t communities and animal p o p u l a t i o n s i n the r e g i o n . 22 During the January 1973 h e a r i n g , the Pearse Bowden r e p o r t was a l s o c r i t i c i z e d f o r l a c k of adequate data by P r o f e s s o r Nelson, who was a r e p r e s e n t a t i v e of the Canadian S o c i e t y of Environmental B i o l o g i s t s , and who a l s o made a p r o p o s a l 23 to do the same work: I t i s my o p i n i o n t h a t the second environmental impact statement of NCPC on the environmental impact of the A i s h i h i k p r o j e c t i s inadequate i n f u l f i l l i n g the i n t e n t and requirements o f the NIWA. ... An adequate environmental impact statement at the s i t e c e r t a i n l y would r e q u i r e more than f o u r or f i v e days f i e l d s t u d i e s and i t would c e r t a i n l y have to c o n t a i n q u a n t i f i e d data. Now a t the May hearings we gave our o p i n i o n s as to how long such a study would take, we thought i t should be a t l e a s t a year and o f course e n g i n e e r i n g s t u d i e s have been going on f o r more than a year. So the b i o l o g i c a l s t u d i e s would not h o l d back the p r o j e c t a t a l l . 24 J . Wolford o f the U n i v e r s i t y of A l b e r t a Department of Zoology, a l s o wrote to Mr. Brandon on January 16, 1973 and r e l a t e d h i s o p i n i o n of the r e p o r t . The study was seen as " g r o s s l y inadequate" i n s e v e r a l r e s p e c t s , and Wolford concluded t h a t : I f e e l v ery s t r o n g l y t h a t t h i s a p p l i c a t i o n f o r h y d r o e l e c t r i c development on the A i s h i h i k R i v e r must be turned down by the Board and t h a t a reasonable study of expected - 77 -environmental impact be c a r r i e d out. My understanding i s t h a t an i n f o r m a t i v e r e p o r t from F i s h e r i e s S e r v i c e w i l l probably not be forthcoming u n t i l sometime t h i s summer. U n t i l t h a t time, a t the very l e a s t , there are r e a l l y no grounds f o r any d e c i s i o n (other than d e n i a l ) from the Board. 25 A very sharp c o n t r a s t o b v i o u s l y e x i s t e d between the p e r c e p t i o n s of NCPC o f f i c i a l s and those of v a r i o u s i n t e r e s t e d p r o f e s s i o n a l s r e g a r d i n g what c o n s t i t u t e d an adequate body of i n f o r m a t i o n f o r the purpose of a s s e s s i n g the impact of the p r o j e c t . From NCPC's p o i n t o f view, a f i e l d survey conducted by two p r o f e s s i o n a l b i o l o g i s t s f o r f o u r days would enable a s u f f i c i e n t body of data to be gathered about the animal and p l a n t ecology of the area. Other p r o f e s s i o n a l b i o l o g i s t s f i r m l y maintained t h a t one f u l l year i n the f i e l d would be minimal. The Water Board d i d not share the same o p i n i o n w i t h NCPC, and the recommendation the Board made to the M i n i s t e r f o l l o w i n g the January 197 3 h e a r i n g i n d i c a t e d t h a t the b i o l o g i c a l s t u d i e s were not adequate f o r the purpose of g r a n t i n g NCPC's r e q u e s t s . VI. CHANGES IN THE WATER LICENCE APPLICATION During the summer and f a l l of 1972, NCPC determined t h a t some changes were needed i n the c o n d i t i o n s requested i n the water l i c e n c e a p p l i c a t i o n . The changes c o n s i s t e d of a l a r g e r storage range on A i s h i h i k Lake and reduced - 78 -flows over O t t e r and Rainbow F a l l s , r e l a t i v e to the standing a p p l i c a t i o n . NCPC i n d i c a t e d as e a r l y as J u l y 1972, two months a f t e r the f i r s t h e a r i n g s , t h a t these m o d i f i c a t i o n s would be needed. At the J u l y 19, 1972 meeting of the Commission, Mr. Lowe advised t h a t a l i c e n c e f o r any q u a n t i t y of water or storage range o t h e r than 12'6" requested might d e s t r o y the economics of the p r o j e c t . 26 NCPC's p r e v i o u s a p p l i c a t i o n requested 8 f e e t of storage on A i s h i h i k Lake. F o l l o w i n g Mr. Lowe's statement, NCPC continued to express the need f o r an i n c r e a s e d storage range and reduced flows. On August 25, 1972, f o l l o w i n g one of s e v e r a l meetings h e l d between members of the Water:Board and NCPC dur i n g t h a t summer, Mr. F. Mooney, NCPC's Regional Manager f o r the Yukon, wrote to Mr. Brandon and s t a t e d t h a t : As we have d i s c u s s e d on many o c c a s i o n s i n the p a s t , storage on A i s h i h i k i n the order of 10 to 12 f e e t and a maximum compensation flow of 600 c . f . s . months are the two requirements f o r a v i a b l e scheme. 27 Mr. Brandon r e p l i e d t h a t : I f you r e f e r t o your a p p l i c a t i o n and to d i s c u s s i o n s on t h i s you w i l l see (paragraph 1. page 6-1, E n g i n e e r i n g Report) t h a t a l l p r e v i o u s d i s c u s s i o n s have been f o r 8' of storage on A i s h i h i k Lake. The Board may regard an i n c r e a s e of t h i s 8' f i g u r e w i t h alarm because i t c o u l d a f f e c t Sekulmun Lake and Sekulmun R i v e r , the Indian V i l l a g e and - 79 -F i s h e r i e s . T h e r e f o r e , I must inf o r m you t h a t we w i l l keep the d i s c u s s i o n t o 8' of storage because t h a t i s the storage l e v e l a p p l i e d f o r . 2 8 NCPC's r e v i s e d a p p l i c a t i o n , which was submitted f o r the January 1973 he a r i n g , requested t h a t the storage range be 12'6". The reasons f o r NCPC's proposed changes i n i t s f i n a l a p p l i c a t i o n had to do wit h improvements i n h y d r o l o g i c a l i n f o r m a t i o n t h a t were r e a l i z e d d u r i n g the f a l l and wi n t e r o f 1972. A lake l e v e l r e c o r d e r was i n s t a l l e d on A i s h i h i k Lake i n January 1972, and l a t e r i n the year gauges were i n s t a l l e d on Canyon and Sekulmun Lakes. These d e v i c e s enabled a much b e t t e r understanding of y e a r l y i n f l o w s i n t o the A i s h i h i k watershed. I t i s s u r p r i s i n g t h a t NCPC d i d not i n s t a l l them when i t f i r s t began i n v e s t i g a t i n g the s i t e i n 1971. P r e v i o u s l y , h y d r o l o g i c data had been " s y n t h e t i c a l l y " d e r i v e d by a h y d r o l o g i c model u s i n g 21 years o f streamflow r e c o r d s from a s t a t i o n l o c a t e d twelve m i l e s downstream from the confluence of the East and West A i s h i h i k R i v e r s . The a v a i l a b l e data and the analyses employed tended to make e a r l i e r computations of h i s t o r i c a l extremes ; e r r 29 toward being underestimated. I t might t h e r e f o r e have been assumed by NCPC and i t s c o n s u l t a n t s t h a t an 8' storage range would be capable o f r e g u l a t i n g the f u l l watershed r u n o f f without s a c r i f i c i n g a v a i l a b l e water f o r power g e n e r a t i o n . - 80 -Analyses made subsequent to the f i r s t h e a r i n g , which were able to make use of t h i s new h y d r o l o g i c data, found t h a t a c o n s i d e r a b l e i n c r e a s e i n the storage range would be necessary i n order to s a f e l y accommodate the a n t i c i p a t e d v a r i a t i o n s i n r u n o f f and lake l e v e l s . The b a s i c content o f these a n a l y s e s , and the data base t h a t was a v a i l a b l e a t the time were o u t l i n e d i n Crippen E n g i n e e r i n g ' s I n t e r i m Supplementary Report, completed on October 23, 1972. 3 0 In c o n t r a s t w i t h the d e f i n i t i v e nature of Mr. Lowe's and Mr. Mooney's statements r e g a r d i n g the storage range and compensation flows needed to ensure the economic v i a b i l i t y o f the p r o j e c t , the f i n d i n g s o f the e n g i n e e r i n g r e p o r t were much l e s s c e r t a i n . Nowhere i n t h i s r e p o r t was a numerical f i g u r e g i v e n of the necessary storage range. The r e p o r t o n l y mentions t h a t the a n a l y s i s which was undertaken " i n c r e a s e s the r e q u i r e d storage range by a r e l a t i v e l y 31 l a r g e amount". The u n c e r t a i n t y of the outcomes of the 32 a n a l y s i s , and the " p a u c i t y of b a s i c data", were a l s o s t r e s s e d . For example: M e t e o r o l o g i c a l data f o r the A i s h i h i k R i v e r Watershed and r e g i o n a l are extremely scant, making the e s t i m a t i o n o f s e v e r a l parameters l a r g e l y a matter of judgement. 33 V I I . THE PUMPING SCHEME A great d e a l more water i s necessary t o preserve the a e s t h e t i c beauty o f O t t e r F a l l s and maintain i t as a - 81 -FIGURE 5 . THE PUMPING SCHEME r-. 82. t o u r i s t a t t r a c t i o n than i s needed to maintain the f i s h e r i e s between O t t e r F a l l s and the con f l u e n c e o f the E a s t and West A i s h i h i k R i v e r s . Since the head between the bottom of O t t e r F a l l s and the power c a n a l i s o n l y 55 f e e t and the t o t a l head of the pre s s u r e t u n n e l f o r the power generators i s about 630 f e e t , i t i s p o s s i b l e to i n c r e a s e the amount of e l e c t r i c i t y produced by the p r o j e c t without i n c u r r i n g s u b s t a n t i a l c o s t s . NCPC s t a t e d i n September 1972 t h a t i t intended to implement 34 t h i s scheme, but l a t e r withdrew i t s p r o p o s a l . Mr. Brandon l a t e r r e p o r t e d t o Mr. Hunt t h a t : 6 December 1972. The N.C.P.C. advised t h a t they had given up t h e i r p r o p o s a l of pumping water back over O t t e r F a l l s as i t was uneconomic and i n d i c a t e d t h a t the c o s t was over $500,000 per year. In f a c t t h i s c o s t can be demonstrated t o be about one t h i r d of t h i s and i t was apparent t h a t they were going t o c o n f r o n t the Board w i t h i n c r e a s e d demands f o r water and inadequate economic and e n g i n e e r i n g and environmental a n a l y s i s to j u s t i f y t h e i r a p p l i c a t i o n . 35 V I I I . SUMMARY Immediately f o l l o w i n g the h e a r i n g , the Water Board recommended to the M i n i s t e r t h a t the p r o j e c t appeared to have c o n s i d e r a b l e m e r i t , but t h a t the i n f o r m a t i o n p r o v i d e d by NCPC was not s u f f i c i e n t t o e v a l u a t e the e f f e c t s of the p r o j e c t . The Board p r o v i d e d a l i s t of i n f o r m a t i o n requirements t h a t would have to be met be f o r e a l i c e n c e c o u l d be i s s u e d , and the M i n i s t e r accepted the Board's recommendations. - 83 -NCPC i n i t i a l l y r e a c t e d to the Board's d e c i s i o n by q u e s t i o n i n g the Board's j u r i s d i c t i o n , and by seeking a l t e r n a t i v e l i c e n c i n g arrangements. No a l t e r n a t i v e arrangements were a v a i l a b l e , however, and NCPC had no ch o i c e but to comply w i t h the Water Board's requirements. Although the N.I.W.A. Reg u l a t i o n s were promulgated on September 14 and a h e a r i n g f o r a water l i c e n c e c o u l d have been h e l d immediately a f t e r t h a t date, NCPC had not yet completed the i n f o r m a t i o n requirements l i s t e d by the Water Board. I t appears t h a t NCPC had a very poor understanding o f i t s r e s p o n s i b i l i t y to supply i n f o r m a t i o n t o support i t s a p p l i c a t i o n , even though very c l e a r statements had been p r o v i d e d t o NCPC by the Water Board and by the M i n i s t e r t h a t the Board's i n f o r m a t i o n requirements would have to be f u l f i l l e d b e f o r e a water l i c e n c e c o u l d be i s s u e d . I t a l s o appears t h a t NCPC d i d not f u l l y a p p r e c i a t e the purpose of an environmental impact statement, s i n c e the surveys t h a t were undertaken to supplement the p r e l i m i n a r y r e p o r t were conducted i n o n l y f o u r days, f o l l o w i n g a del a y of s e v e r a l months. The r e p o r t t h a t NCPC p r o v i d e d was vehemently c r i t i c i z e d by a number of p r o f e s s i o n a l b i o l o g i s t s , who f i r m l y maintained t h a t a f u l l year would be necessary to complete an adequate environmental survey. - 84 -Given the degree o f f a c t u a l and o b j e c t i v e i n f o r m a t i o n made a v a i l a b l e to NCPC about the need to supply i n f o r m a t i o n b e f o r e a l i c e n c e c o u l d be granted, and giv e n the f a c t t h a t NCPC made v e r y l i t t l e e f f o r t t o generate such-i n f o r m a t i o n , i t may be. concluded t h a t NCPC decision-makers f a i l e d to p e r c e i v e adequately the r e a l na,ture o f t h e i r p o s i t i o n . Consequently, the Power Commission embarked on a course of a c t i o n t h a t served to d e l a y the r e c e i p t of a water l i c e n c e , c o n t r a r y t o i t s own apparent i n t e r e s t s and o b j e c t i v e s . Between the. f i r s t and second hearings f NCPC cha,nged t h e c o n d i t i o n s o f i t s water l i c e n c e a p p l i c a t i o n and i n d i c a t e d t h a t the economic v i a b i l i t y of the p r o j e c t c o u l d depend on having these a d d i t i o n a l requests granted. During t h i s p e r i o d of time NCPC a l s o decided not to implement the pumping scheme, c o n t r a r y to p r e v i o u s statements, - 85 -CHAPTER FOUR  REFERENCES AND NOTES 1. L. Brandon to J . C h r e t i e n , 26 May 1972, i n Dalby Report, Attachment 3. 2. I b i d . , "Schedule B". 3. J . C h r e t i e n to L. Brandon, 14.July 1972. 4. Yukon T e r r i t o r y Water Board, "Minutes of Meeting No. 3", 24 to 26 May 1972, p.5,6. 5. L. Brandon t o A. B. Yates, D i r e c t o r , , N o r t h e r n Economic Development Branch, 5 June 1972. 6. J . M. Lowe to B. Robinson, Deputy M i n i s t e r and Chairman NCPC, 16 June 1972, p . l . 7. I b i d . , p.2. 8. J . M. Lowe to B. Robinson, 13 June 1972, p.5. 9. N. Simmonds, S e c r e t a r y , Yukln T e r r i t o r y Water Board, "Comments on N.C.P.C.'s d r a f t l e t t e r to the M i n i s t e r - June 13, 1972", 20 June 1972, p . l . 10. Yukon T e r r i t o r y Water Board, "Minutes of Meeting No.3", 24 to 26 May 1972, p.3. 11. N. Simmonds, "Comments", p . l . 12. L. Brandon to D. Hunt, 25 March 1974, p . l . 13. J . M. Lowe to B. Robinson, 16 June 1972, p.3,4,5. 14. J . C h r e t i e n t o B. Robinson, 25 J u l y 1972,p.1,2. 15. F. Mooney to L Brandon, 28 August 1972, p . l . 16. L. Brandon to F. Mooney, 6 September 1972, p . l . 17. F. Mooney to L. Brandon, 2 8 August 1972, p. 3. 18. L. Brandon to F. Mooney, 6 September 1972, p.2. 19. Northern Inland Waters A ct, S e c t i o n 11(2). 20. Pearse Bowden Economic C o n s u l t a n t s , "A Report on B i o l o g i c a l and B o t a n i c a l Surveys A i s h i h i k R i v e r Power Development", 15 October 1972, p.4. - 86 -21. Canadian W i l d l i f e S e r v i c e , "A Report on B o t a n i c a l and B i o l o g i c a l Surveys - A i s h i h i k Power Development, Yukon T e r r i t o r y " , 15 January 1973, p.7. The Canadian W i l d l i f e S e r v i c e had a l s o p l a y e d a p r e v i o u s , i f a b o r t i v e r o l e , i n conducting b i o l o g i c a l surveys f o r the A i s h i h i k p r o j e c t by o f f e r i n g to NCPC an impact study p r o p o s a l on t e r r e s t r i a l communities. A d r a f t of t h i s p r o p o s a l was submitted to NCPC by the Water Board on 1 August 1972. (A. B. H o l l i n g s h e a d , C o n t r o l l e r of Water Rights t o F. Mooney 2 August 1972, p.2). The t o t a l c o s t of the proposed study was $37,000, and a c o n d i t i o n of the study was t h a t i t would l a s t a minimum of one year, and c o u l d be extended f o r four a d d i t i o n a l months i f more i n f o r m a t i o n was r e q u i r e d . During a meeting between NCPC and the Water Board on August 23, "NCPC r e p o r t e d the terms of r e f e r e n c e f o r these s t u d i e s and t h a t t h e i r p r o p o s a l would be presented to the Board and through the Board to the Canadian W i l d l i f e S e r v i c e " . (Yukon T e r r i t o r y Water Board, "Minutes of Meeting No.4", 23 and 24 August 1972, p.4), Apparently the CWS and NCPC c o u l d not then agree on these terms of r e f e r e n c e , and the CWS d i d not conduct the s t u d i e s . I t i s l i k e l y t h a t the one year minimum was r e q u i r e d by CWS i n order to complete a proper study but was unacceptable to NCPC. 22. Canadian W i l d l i f e S e r v i c e , "Review", p.8. 23. G. Bowden to author, 17 A p r i l 197 9. 24. J . S. Nelson, Department of Zoology, U n i v e r s i t y of A l b e r t a , L i c e n c i n g Hearing T r a n s c r i p t , 17 January 1973, p.54,55. 25. J . Wolford, Department of Zoology, U n i v e r s i t y of A l b e r t a , to L. Brandon, 16 January 1973. 26. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.12. 27. F. Mooney to L. Brandon, 25 August 1972. 28. L. Brandon to F. Mooney, 6 September 1972, p.2. 29. Acres C o n s u l t i n g S e r v i c e s L i m i t e d , "Review of Submission on M a t e r i a l P e r t a i n i n g to the A i s h i h i k H y d r o - E l e c t r i c P r o j e c t NCPC A p p l i c a t i o n f o r Amendment of Water Use L i c e n c e " , August 1975, p.2. 30. G. E. Crippen & A s s o c i a t e s , " A i s h i h i k R i v e r Power Development I n t e r i m Supplementary Report", 23 October, 1972. - 87 -31. I b i d . , p.3. 32. I b i d . , p.2. 33. I b i d . , p.4. 34. L. Brandon to B. Trevor, Regional D i r e c t o r of Resources, 18 September 1972. 35. L. Brandon to D. Hunt, 25 March 1974, p.2. - 88 -CHAPTER FIVE SECOND HEARING AND OUTCOME, DECISION TO PROCEED - JANUARY TO APRIL, 19 73 I. INTRODUCTION Th i s chapter d e s c r i b e s what took p l a c e d u r i n g the second h e a r i n g , and e x p l a i n s the outcome of the h e a r i n g and the events t h a t took p l a c e p r i o r to NCPC's d e c i s i o n t o proceed w i t h the c o n s t r u c t i o n of the p r o j e c t . I I . DATE OF HEARING The minutes of a meeting of the Water Board h e l d on November 28, 1972 s t a t e t h a t : Members agreed t o the proposed n o t i c e of p u b l i c h e a r i n g and decided t h a t i f b r i e f s were presented a p u b l i c h e a r i n g would be h e l d i n Whitehorse on January 17, 1973 under S e c t i o n 15(2) of the Northern I n l a n d Waters A c t . 1 No r e c o r d i s a v a i l a b l e of NCPC having submitted a new formal a p p l i c a t i o n f o r a water l i c e n c e b e f o r e the Board's November 1972 meeting. I t appears t h a t the Water Board s e t t h i s date i n order to prov i d e an i n c e n t i v e to NCPC to complete the necessary s t u d i e s and surveys and to expedite the implementation o f the p r o j e c t . As the Chairman l a t e r r e p o r t e d : In order to get the p r o j e c t underway, I s e t a mid-January date f o r the formal p u b l i c h e a r i n g . 2 - 89 -I I I . TERMS OF THE APPLICATION NCPC's second a p p l i c a t i o n requested t h a t 12.5 f e e t of storage be allowed on A i s h i h i k Lake and t h a t the average annual flow r e l e a s e s over O t t e r F a l l s be 4 40 c . f . s . months. The f i r s t a p p l i c a t i o n i n May 1972 requested o n l y 8 f e e t of storage and 600 c . f . s . months f o r the flow r e l e a s e s . NCPC co n s i d e r e d t h a t i t s request f o r an i n c r e a s e d storage range and decreased flow r e l e a s e s over O t t e r F a l l s was a c t u a l l y a compromise p r o p o s a l , and emphasized t h a t an optimum use of water would e n t a i l a 17.5 f o o t storage range and no flow r e l e a s e s . IV. SECOND HEARING Submissions to the h e a r i n g were gi v e n by r e p r e s e n t a t i v e s of a number of p u b l i c o r g a n i z a t i o n s . The C.E.L.R.F., repr e s e n t e d by Mr. K. Beauchamp, expressed continued disappointment w i t h the n o t i c e given on the h e a r i n g and the a v a i l a b i l i t y of the e n g i n e e r i n g and environmental r e p o r t s . P r o f e s s o r Nelson of the Canadian S o c i e t y of Environmental B i o l o g i s t s a l s o gave a severe c r i t i c i s m of the environmental impact statement. The contents of both of these submissions i n d i c a t e t h a t some of the major problems encountered d u r i n g the f i r s t h e a r i n g had s t i l l not been c o r r e c t e d by the Water Board or by NCPC. - 90 -The c o s t estimates f o r the p r o j e c t and i t s e f f e c t on the r a t e s t r u c t u r e were a l s o q uestioned d u r i n g the h e a r i n g s by both Yukon E l e c t r i c and the P u b l i c U t i l i t i e s Board. NCPC's c u r r e n t estimate f o r the c o s t of the p r o j e c t was $15 m i l l i o n , and i t c a l c u l a t e d t h a t the c o n s t r u c t i o n of the p r o j e c t would not s i g n i f i c a n t l y a f f e c t power r a t e s . Mr. Choate of Yukon E l e c t r i c , which i s a p r i v a t e company r e s p o n s i b l e f o r the d i s t r i b u t i o n of power i n the Whitehorse area, s t a t e d t h a t i t would be very d i f f i c u l t f o r NCPC to m a i n t a i n i t s present r a t e s t r u c t u r e i f the A i s h i h i k 3 p r o j e c t were c o n s t r u c t e d . The company recommended t h a t the g r a n t i n g of a l i c e n c e be d e f e r r e d u n t i l NCPC p r o v i d e d more i n f o r m a t i o n about a l t e r n a t i v e g e n e r a t i o n schemes, and 4 about c a p i t a l and o p e r a t i n g c o s t e s t i m a t e s f o r the p r o j e c t . The P u b l i c U t i l i t i e s Board a l s o requested t h a t more i n f o r m a t i o n be given by NCPC on the c o s t s of p r o d u c t i o n 5 and the e f f e c t s of the p r o j e c t on the r a t e s t r u c t u r e . These requests came from two very i n t e r e s t e d and informed o r g a n i z a t i o n s , and i t i s c l e a r t h a t they were not s a t i s f i e d w i t h NCPC's c o s t estimates and economic a n a l y s e s . The e ventual c o s t of the p r o j e c t and the r e s u l t i n g r a t e i n c r e a s e s cannot t h e r e f o r e be c o n s i d e r e d to have been u n f o r e s e e a b l e . As mentioned, members of the Water Board a l s o r e c o g n i z e d t h i s p o s s i b i l i t y at the time of the f i r s t h e a r i n g . .9.1 T-. Another important submission at the hearing was presented by Mr. P h i l l i p s of T e s l i n Exploration Ltd. Following additional studies conducted since the l a s t hearing, the company maintained that i t would be possible to i n s t a l l a thermal coal plant at Divis i o n Mountain ( i . e . Nordenskiold) that would produce e l e c t r i c i t y at costs that were lower than NCPC's current estimates for the cost of power produced from the Aishih i k . ^ NCPC's estimates for power costs at Aishihik were, of course, u n r e a l i s t i c a l l y low, yet Teslin's proposal was s t i l l competitive. The Yukon Native Brotherhood indicated opposition to the project on the grounds that t h e i r land claims had not been se t t l e d . The Aish i h i k Indian Band also expressed opposition on the grounds that there had not been enough native input into the studies conducted for the project. V. THE WATER BOARD'S DECISION On February 1, 1973, Mr. Brandon wrote to the Minister, giving the Board's recommendations on the water licence application: On reviewing the engineering and environmental information provided by the applicant and the b r i e f s , the Board found that the Northern Canada Power Commission had not completed some of the studies i n the d e t a i l required i n Schedule B of my l e t t e r to you dated May 26. This i s p a r t i c u l a r l y the case with respect to item 5 which required a detailed study of the integrated operation of the proposed Ais h i h i k project with the Whitehorse Rapids plant. I t was also the case with item 13 i n the same schedule which requires more f i e l d work. ... - 92 -On going through the f o r e c a s t power demand to 19 83 c a l c u l a t i o n s show t h a t , w i t h i n the coming f i v e y e a r s , i f the A i s h i h i k c o n s t r u c t i o n commences now i t would be p o s s i b l e to operate the power c a n a l and i n t a k e to meet f u l l power demand and s t i l l keep the A i s h i h i k l a k e l e v e l s t o w i t h i n a s i x f o o t storage range. The Board concluded t h a t i n g r a n t i n g a water l i c e n c e there i s no. immediate need to r a i s e the A i s h i h i k l a k e l e v e l above i t s n a t u r a l h i g h water. Consequently the Board agreed unanimously to recommending to you t h a t the a p p l i c a t i o n f o r a water l i c e n c e be granted and i n c l u d e the f o l l o w i n g p r o v i s i o n a l c o n s t r a i n t s . 1. The r e g u l a t e d mean monthly l e v e l s of A i s h i h i k Lake s h a l l not exceed 3002.5 nor s h a l l they f a l l below 2996.5.,, 2. The r e g u l a t e d mean monthly l e v e l s of Canyon Lake s h a l l not exceed e l e v a t i o n 2975, nor s h a l l they f a l l below 2972.,. 3. The flow r e l e a s e over O t t e r F a l l s s h a l l be no l e s s than 1000 c . f . s . months per year. The p a t t e r n of r e l e a s e s h a l l be s p e c i f i e d at the Board's d i s c r e t i o n and may be r e v i s e d from time to time. 4. The flow r e l e a s e over Rainbow F a l l s s h a l l be no l e s s than 25 c . f . s . w h i l e flow r e l e a s e over O t t e r F a l l s takes p l a c e . The above c o n s t r a i n t s may be r e l a x e d . However, t h i s w i l l r e q u i r e the f o l l o w i n g documentation: 1. System a n a l y s i s s t u d i e s by NCPC of the p e r i o d 1975-1985 showing the economic advantages of l a r g e r ranges of storage on A i s h i h i k Lake or s m a l l e r flow r e l e a s e s over O t t e r F a l l s . 2. Environmental s t u d i e s by c o n s u l t a n t s or government agencies r e g a r d i n g the r e s u l t a n t impact on s o c i a l and b i o l o g i c a l i n t e r e s t s i n the r e g i o n . Because of the p o s s i b i l i t y of f u t u r e r e l a x a t i o n of the above c o n s t r a i n t s the Board w i l l a l l o w NCPC to c o n s t r u c t the c o n t r o l dam on A i s h i h i k Lake i n such a manner t h a t a l a r g e r range of r e g u l a t i o n would be p o s s i b l e . 7 - 93 -The B o a r d d e c i d e d t h a t a s l o n g a s i n f o r m a t i o n a b o u t t h e e n v i r o n m e n t a l e f f e c t s o f t h e p r o j e c t a n d a b o u t t h e r e a l b e n e f i t s o f a n i n c r e a s e d s t o r a g e r a n g e a n d r e d u c e d f l o w s was i n s u f f i c i e n t , i t was n o t p r e p a r e d t o m e e t N C P C ' s r e q u e s t s . The r e q u e s t s w o u l d a f f e c t b o t h e n v i r o n m e n t a l c o s t s a n d p o w e r g e n e r a t i o n b e n e f i t s , a n d t h e B o a r d f e l t t h a t n e i t h e r o f t h e s e w e r e a d e q u a t e l y d o c u m e n t e d . The B o a r d ' s c o n c l u s i o n t h a t a n i n c r e a s e d s t o r a g e r a n g e was n o t n e c e s s a r y was l a r g e l y b a s e d o n a d v i c e g i v e n b y i t s own c o n s u l t a n t , P r o f e s s o r E . K u i p e r , C h a i r m a n o f H y d r a u l i c E n g i n e e r i n g a t t h e U n i v e r s i t y o f M a n i t o b a a n d a u t h o r o f t w o w e l l - k n o w n t e x t b o o k s o n t h e e c o n o m i c s a n d d e v e l o p m e n t o f w a t e r r e s o u r c e s . F o l l o w i n g t h e h e a r i n g , P r o f e s s o r K u i p e r p r e p a r e d a r e p o r t f o r t h e W a t e r B o a r d w h i c h f o u n d t h a t " t h e r e a r e n o d i f f i c u l t i e s i n o p e r a t i n g t h e i n t e g r a t e d s y s t e m w i t h 6 f e e t o f r e g u l a t i o n o f o A i s h i h i k L a k e " . P r o f e s s o r K u i p e r a l s o n o t e d t h a t : To p r o v e t h e d e s i r a b i l i t y o f p r o c e e d i n g i m m e d i a t e l y w i t h t h e A i s h i h i k R i v e r P o w e r D e v e l o p m e n t , one w o u l d h a v e t o c o n d u c t c o m p a r a t i v e s y s t e m s a n a l y s e s , o v e r a p e r i o d o f a t l e a s t t e n y e a r s , o f a l t e r n a t i v e s e q u e n c e s o f d e v e l o p m e n t . S u c h a n a n a l y s i s h a s n o t b e e n p r o v i d e d b y N C P C . T h e r e f o r e , i t i s a t t h i s t i m e n o t c e r t a i n t h a t t h e A i s h i h i k R i v e r P o w e r D e v e l o p m e n t i s i n d e e d t h e m o s t e c o n o m i c a d d i t i o n t o t h e W h i t e h o r s e P o w e r S y s t e m . We c a n do no m o r e t h a n s u r m i s e t h a t t h i s i s p r o b a b l y t h e c a s e . - 94 -I t i s to be hoped t h a t i n the f u t u r e the N.C.P.C. w i l l produce adequate documentation to back up i t s a p p l i c a t i o n s f o r water l i c e n c e s . . . I f the r e i s no q u a n t i t a t i v e i n f o r m a t i o n on the economic advantages or on the environmental d e g r a d a t i o n i t becomes impo s s i b l e f o r the Board to pass proper judgement. P r o f e s s o r Kuiper's a n a l y s i s i n d i c a t e d t h a t a s i x f o o t storage range on A i s h i h i k Lake would not r e s u l t i n d i e s e l energy b e i n g e x t e n s i v e l y used over the f i r s t s i x years i n o r d e r to make up f o r l o s t power produced from the A i s h i h i k p r o j e c t . There i s no doubt t h a t the d i e s e l energy,... can be reduced w i t h a l a r g e r range of r e g u l a t i o n on A i s h i h i k Lake. However, we are then g e t t i n g i n t o the problem... of determining whether or not the consequent f i n a n c i a l gains would j u s t i f y the consequent environmental damages. The onus i s on the power company t o prove t h i s p o i n t . 11 The c o n c l u s i o n s made by the Water B o a r d 1 s c o n s u l t a n t about the magnitude of c o s t s r e s u l t i n g from a s i x f o o t storage range stand i n sharp c o n t r a s t with NCPC's e v a l u a t i o n s of the b e n e f i t s a s s o c i a t e d w i t h a l a r g e r range. P r o f e s s o r Kuiper a l s o recommended i n h i s r e p o r t e x a c t l y those c o n d i t i o n s which were subsequently recommended to the M i n i s t e r by the Water Board. E v i d e n t l y P r o f e s s o r Kuiper's a n a l y s i s and c o n c l u s i o n s had c o n s i d e r a b l e i n f l u e n c e over the Water Board's d e c i s i o n . - 95 -Another important reason behind the Water Board's d e c i s i o n to o n l y a l l o w a s i x f o o t storage range i n v o l v e d the e f f e c t s of any f l o o d i n g of the A i s h i h i k V i l l a g e , which would take p l a c e i f the n a t u r a l high water mark was exceeded. C e r t a i n l e g a l , s o c i o l o g i c a l and p o l i t i c a l problems would have r e s u l t e d from f l o o d i n g A i s h i h i k V i l l a g e . No arrangement had y e t been made with the A i s h i h i k Band and o t h e r Native o r g a n i z a t i o n s , and to f l o o d the V i l l a g e c o u l d have e s t a b l i s h e d an important precedent w i t h r e s p e c t to Indian land c l a i m i s s u e s i n the North i n g e n e r a l . The Water Board r e c o g n i z e d the p o t e n t i a l complexity of the necessary n e g o t i a t i o n process and was r e l u c t a n t to c r e a t e any such precedent. In a l e t t e r from J . C h r e t i e n to C h i e f E l i j a h Smith, P r e s i d e n t of the Yukon Brotherhood on A p r i l 17, 1973, the M i n i s t e r h i m s e l f acknowledged the g r a v i t y and importance of the p o t e n t i a l e f f e c t of the A i s h i h i k p r o j e c t on l a n d c l a i m i s s u e s , and e x p l a i n e d some of the reasons why he chose to accept the Board's d e c i s i o n : ... a t t h i s p o i n t where we are about to e n t e r i n t o what may w e l l be one of the most s i g n i f i c a n t n e g o t i a t i o n s ever undertaken between a government and a group of c i t i z e n s i n the h i s t o r y of Canada, I want to assure you t h a t t h i s d e c i s i o n has been taken without p r e j u d i c e to the e v e n t u a l outcome of these n e g o t i a t i o n s . At t h i s p o i n t i n time I do not b e l i e v e t h a t e i t h e r of us can f o r e c a s t w i t h any degree of r e l i a b i l i t y how long the n e g o t i a t i n g process may take and I concluded t h a t I c o u l d not delay a d e c i s i o n a f f e c t i n g the l i v i n g c o s t s and the a v a i l a b i l i t y of e l e c t r i c a l power f o r a l l Yukon r e s i d e n t s u n t i l we know the outcome of our n e g o t i a t i o n s . 12 - 96 -Mr. Brandon l a t e r r e p o r t e d some of the reasons behind the Water Board's d e c i s i o n : Immediately a f t e r the h e a r i n g s , I a d v i s e d the Department t h a t the Board were unanimous i n t h e i r o p i n i o n t h a t the p r o j e c t should go ahead, because i t was c l e a r l y more economic than prese n t thermal power g e n e r a t i o n , there was an urgent need f o r more power development and the N.C.P.C. had no other a l t e r n a t e p l a n s . ... The c o n d i t i o n s imposed i n the l i c e n c e gave the N.C.P.C. approval to c o n s t r u c t immediately and time to do t h e i r homework without f u r t h e r d e l a y . Furthermore, i t gave the Department time to r e s o l v e the p o l i t i c a l and s o c i a l problems a s s o c i a t e d w i t h the Indian V i l l a g e . 13 VI. NCPC'S REACTION A f t e r c o n s i d e r i n g the contents of the Water Board's recommendations to the M i n i s t e r , NCPC management prepared a r e p o r t e n t i t l e d " A p p r a i s a l of the Proposed A i s h i h i k Water L i c e n c e C o n d i t i o n s " . The r e p o r t made the f o l l o w i n g "Recommendations to the Commission": The terms of the Water Board's recommendations impose severe r e s t r i c t i o n s on the p r o j e c t and i n t r o d u c e a c o n s i d e r a b l e element of u n c e r t a i n t y i n t o the p r o j e c t d e s i g n . While t h e r e i s encouragement t h a t the r e s t r i c t i o n s may be r e l a x e d i n the f u t u r e , there i s no guarantee o f t h i s . No prudent i n v e s t o r would commit c a p i t a l to a p r o j e c t where the p r o s p e c t s f o r net b e n e f i t s are so s e v e r e l y emasculated and which remains so u n c e r t a i n . The Commission must s e r i o u s l y q u e s t i o n whether i t would be prudent to commit funds to c o n s t r u c t i o n of the A i s h i h i k p r o j e c t under the present c o n d i t i o n s of the l i c e n c e u n l e s s the r e s t r i c t i o n s can be r e l a x e d or removed. 14 ^ 97 -In order to support these recommendations , the. r e p o r t presented the f o l l o w i n g f i n d i n g s : The r e d u c t i o n of the storage range from u n r e s t r i c t e d to 6. f e e t would cause a l o s s of between $ 0 , 8 m i l l i o n a n n u a l l y i n power b e n e f i t s , when the p l a n t i s f u l l y loaded, as r epresented by the present c o s t o f replacement d i e s e l p l a n t g e n e r a t i o n . T h i s i s almost 50% of the t o t a l economic b e n e f i t s of the p r o j e c t . Over a 5 0-year p r o j e c t l i f e the c o s t o f replacement power would be $ 6 5 to $ 8 5 m i l l i o n . ... The combined r e d u c t i o n i n the flow of water a v a i l a b l e f o r power p r o d u c t i o n i n v o l v e s a c o s t of between $ 0 . 4 and $ 0 . 5 m i l l i o n a n n u a l l y i n power b e n e f i t s . Over a 5 0-year p r o j e c t l i f e the l o s s of power b e n e f i t s would be $ 3 4 - $ 4 2 m i l l i o n . As noted the c o n d i t i o n s of the l i c e n c e imposed by the Water Board s e v e r e l y r e s t r i c t the g e n e r a t i o n o f e l e c t r i c power. The power consumers of the Yukon w i l l have to o b t a i n replacement from a l t e r n a t i v e sources a t c o n s i d e r a b l e c o s t , when the power c o u l d be o b t a i n e d from the A i s h i h i k p r o j e c t f o r l i t t l e a d d i t i o n a l c o s t . ... The net economic b e n e f i t from the A i s h i h i k P r o j e c t can be s t a t e d as the savings i n c o s t by o b t a i n i n g power at A i s h i h i k r a t h e r than from the next best a l t e r n a t i v e source. The t o t a l net annual b e n e f i t of the r e s t r i c t i o n s imposed by the Water Board, i f maintained f o r the l i f e of the p r o j e c t , r e q u i r e the s a c r i f i c e of $ 1 . 3 to $ 1 . 4 m i l l i o n of these annual b e n e f i t s , more than 7 0% of the net economic b e n e f i t of the p r o j e c t . 1 5 The NCPC management's a n a l y s i s estimated t h a t 7 0% of the net economic b e n e f i t of the p r o j e c t would be l o s t i f the Water Board's c o n d i t i o n s were not r e l a x e d . The method used to a r r i v e at t h i s c o n c l u s i o n assumes t h a t the next best a l t e r n a t i v e source i s d i e s e l g e n e r a t i o n , and t h a t the c o s t of the Board's r e s t r i c t i o n s c o u l d be c a l c u l a t e d on the b a s i s of how much i t would c o s t to supply the l o s t power us i n g d i e s e l g e n e r a t i o n over the l i f e o f the p r o j e c t . - 98 -The r e p o r t a l s o s t a t e s t h a t NCPC conducted i n v e s t i g a t i o n s of a l t e r n a t i v e s i t e s t o the A i s h i h i k : The A i s h i h i k P r o j e c t . . . of a l l the p o s s i b l e a l t e r n a t i v e s i t e s c o n s i d e r e d , had the l e a s t environmental impact. More economic s i t e s w i t h h i g h e r environmental c o s t s were passed over. 16 D i e s e l power was not, then, the o n l y a l t e r n a t i v e , and ot h e r s i t e s were a p p a r e n t l y more economic, but NCPC chose not to i n v e s t i g a t e them because of concern f o r environmental impacts. I t i s perhaps q u e s t i o n a b l e whether d i e s e l power would have been the next b e s t a l t e r n a t i v e source over the l i f e of the p r o j e c t . Information a v a i l a b l e about the c o s t o f producing e l e c t r i c i t y u s i n g c o a l , f o r i n s t a n c e , i n d i c a t e d t h a t i t was comparable, i f not l e s s expensive, than A i s h i h i k power, even though c u r r e n t estimates f o r the c o s t of the p r o j e c t were onl y $15 m i l l i o n . The p o s s i b l e use o f c o a l was never mentioned i n the r e p o r t . The r e p o r t a l s o makes no mention of the problems a s s o c i a t e d w i t h f l o o d i n g A i s h i h i k V i l l a g e , although t h i s was one of the most important reasons behind the Board's d e c i s i o n to r e s t r i c t the storage range. Nor does the r e p o r t make mention o f P r o f e s s o r Kuiper's a n a l y s i s , which contends t h a t there was no immediate need f o r a l a r g e r storage range g i v e n the expected lo a d growth. Since the NCPC r e p o r t i n d i c a t e d t h a t the economic v i a b i l i t y o f the p r o j e c t would be l o s t i f the Water Board's - 99 -r e s t r i c t i o n s were enforced, then a degree of i n c o n s i s t e n c y i s apparent between these f i n d i n g s and NCPC's e a r l i e r c l a i m s about the p r o j e c t ' s o p e r a t i n g parameters. NCPC's e a r l i e r a p p l i c a t i o n which requested 8 f e e t o f storage and 600 c . f . s . months compensation flows, would not appear to have made the p r o j e c t e c o n o m i c a l l y v i a b l e . I t i s e v i d e n t t h a t the a n a l y s i s presented i n the NCPC management's r e p o r t exaggerated the c o s t s i n v o l v e d with the Water Board's r e s t r i c t i o n s . V I I . DECISION TO PROCEED NCPC i n i t i a l l y d e d i c e d not to go ahead wi t h the p r o j e c t under the l i c e n c e c o n d i t i o n s . I t was ap p a r e n t l y assumed by NCPC t h a t the c o n d i t i o n s of the l i c e n c e were very l i k e l y to remain even i f i t pr o v i d e d the s t u d i e s and surveys requested by the Water Board, and t h a t these c o n d i t i o n s would probably d e s t r o y the economic v i a b i l i t y o f the p r o j e c t . A f t e r some c o n s u l t a t i o n w i t h s e n i o r DIAND o f f i c i a l s and with Mr. Brandon, NCPC decided i n l a t e A p r i l 1973 to proceed with the p r o j e c t , almost t h r e e months a f t e r the Water Board recommended on the water l i c e n c e a p p l i c a t i o n . Mr. Brandon l a t e r r e p o r t e d t h a t : - 100 -Jan.... Apr. , 197 3',. i " ... The N.C.P.C. refused to go ahead with the project under the licence conditions. I t i s my opinion that the Department should have ordered the N.C.P.C. to proceed at once. Late i n A p r i l , I had to f l y to Ottawa and meet once more with the N.C.P.C. and persuade them to go ahead though the conditions of the water licence remained unaltered. I t was obvious, therefore, a f t e r the discussion, that the project should have commenced i n January. 17 The following account of events leading to the decision i s provided i n the Dalby Report: NCPC Management advised the Commission on March 28, 1973 that "Management studies cast serious doubts on the a d v i s a b i l i t y of proceeding at Aishihik under the constraints imposed i n the recommendations, which, without modification, would r e s u l t i n making the small Aishihik project uneconomic". Mr. Digby Hunt — "suggested that the Commission would be w i l l i n g to take the r i s k of proceeding with the f u l l A i shihik project i f c e r t a i n of the conditions were relaxed and d e f i n i t e assurances could be given by the Water Board as to future use of water so as to make the project economic. Decision of Commission A p r i l 9, 1973 "... i t was agreed to proceed with Aishihik power development at 33MW conditional upon receipt of the l e t t e r of interpretation from Mr. Brandon", Chairman of the Yukon T e r r i t o r y Water Board. The Yukon Te r r i t o r y Water Board agreed to grant NCPC a water licence on A p r i l 24, 1973 with certa i n conditions. After considering the conditions of the licence and the content of the A p r i l 24 l e t t e r from the Chairman, Yukon T e r r i t o r y Water Board, Mr. J. M. Lowe, General Manager, NCPC, recommended that the Commission should "... proceed with the Aishihik power development at 33MW capacity, i n the b e l i e f that the Water Board w i l l relax the i n i t i a l r e s t r i c t i o n s granting a larger storage range and - 101 -by reducing the required quantity of compensation flow to values which- w i l l make t h i s development the most economic of the presently available a l t e r n a t i v e s " , 18 The delay i n making t h i s decision to proceed with construction may have had an important e f f e c t on the cost of the project, since NCPC chose to avoid making expenditures during t h i s time, period on detailed engineering design and other f i n a l preparations for constructing the. project.. NCPC appeared to have, b e l l eyed that i t was very l i k e l y that i t would not construct the. project under the conditions imposed .by the WJater Board' s recommendations, and that i t was therefore- prudent to avoid such, expenditures, As the Dalby Report also mentions: NCPC management held back on commitments for detailed engineering to hold down costs i n the event that a suitable licence could not he obtained, 19 When the decision was taken to proceed with, construction, i t was also determined that the project should be. completed i n time to meet the winter demands of 19.74'-5f which allowed a construction period of only twenty months, NCPC embarked upon t h i s construction schedule eyen. though detailed preparations had not been completed, The combination of possibly inadequate preparations a,nd very t i g h t scheduling may have had a, very important e f f e c t on the f i n a l cost of the. project, as shown i n the following section on the cost overrun. - 102 -V I I I . SUMMARY NCPC's requests f o r an i n c r e a s e d storage range and decreased compensation flows were not granted by the Water Board, due to a l a c k o f i n f o r m a t i o n s u p p l i e d by NCPC. The Water Board d i d decide t o i s s u e a water l i c e n c e t o permit c o n s t r u c t i o n o f the p r o j e c t because i t c o n s i d e r e d t h a t t h e r e was "an urgent need f o r more 20 power development and NCPC had no a l t e r n a t e p l a n s " . The c o n d i t i o n s t h a t the Water Board p l a c e d i n the l i c e n c e appear to have been h e a v i l y i n f l u e n c e d .by advic e g i v e n t o i t by i t s own c o n s u l t a n t , P r o f e s s o r Kuiper. NCPC c o n s i d e r e d the r e s t r i c t i o n s imposed by the water l i c e n c e t o be very severe, and i t ap p a r e n t l y gave s e r i o u s c o n s i d e r a t i o n to abandoning the p r o j e c t a l t o g e t h e r . As a r e s u l t , i t decided to av o i d making expenditures on d e t a i l e d p r e p a r a t i o n s u n t i l the d e c i s i o n was made i n A p r i l 1973 t o proceed w i t h c o n s t r u c t i o n of the p r o j e c t . - 103 -CHAPTER FIVE  REFERENCES AND NOTES 1. Yukon T e r r i t o r y Water Board, "Minutes of Meeting No. 5", 28 November 1972, p.3. 2. L. Brandon t o D. Hunt, 25 March 1974, p.2. 3. R. Choate, V i c e P r e s i d e n t , Yukon E l e c t r i c , L i c e n c i n g  Hearing T r a n s c r i p t , p.45. 4. R. Choate to L. Brandon, 5 January 1973. 5. L. Dickson, Chairman, E l e c t r i c a l P u b l i c U t i l i t i e s Board to L. Brandon, 9 January 1973. 6. M. P h i l l i p s , T e s l i n E x p l o r a t i o n L t d . , L i c e n c i n g Hearing  T r a n s c r i p t , p.51. 7. L. Brandon to J . C h r e t i e n , 1 February 1973, p.2,3,4., i n Dalby Report, Attachment 4. 8. E. Kuiper, "Report, A i s h i h i k R i v e r Power Development", February 1973, p.7. I t i s not known what o p p o r t u n i t y was given to NCPC to respond to P r o f e s s o r Kuiper's r e p o r t b e f o r e the Water Board made i t s d e c i s i o n . 9. E. Kuiper, "Report, A i s h i h i k R i v e r Power Development", p.1,2. 10. I b i d . , p.7. 11. I b i d . , p.7,8. 12. J . C h r e t i e n , to C h i e f E. Smith, P r e s i d e n t , Yukon Indian Brotherhood, 17 A p r i l 1973. 13. L. Brandon t o D. Hunt, 25 March 1974, p.3. 14. NCPC, " A p p r a i s a l of the Proposed A i s h i h i k Water L i c e n c e C o n d i t i o n s " , February 1973, p.7, i n Dalby Report, Attachment 5. 15. I b i d . , p.5,6. 16. I b i d . , p.3. 17. L. Brandon to D. Hunt, 25 March 1974, p.3. 18. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.13,14. 19. I b i d . , p.4. 20. L. Brandon to D. Hunt, 25 March 1974, p.3. - 104 -CHAPTER SIX CONSTRUCTION OF THE PROJECT AND THE COST OVERRUN I. COMPLIANCE WITH LICENCE CONDITIONS P a r t B of the water l i c e n c e i s s u e d on A p r i l 24, 1973 r e q u i r e d t h a t NCPC submit to the Water Board a l l c o n s t r u c t i o n p l a n s , q u a r t e r l y progress r e p o r t s and planned water r e l e a s e schedules. 1. The l i c e n c e e s h a l l f i l e w i t h the Water Board f i n a l d e s ign and c o n s t r u c t i o n p l a n s and s p e c i f i c a t i o n s f o r each s t r u c t u r e and work, i n c l u d i n g c o n s t r u c t i o n camp plans and f a c i l i t i e s , t o be approved by the.Board p r i o r to the s t a r t of c o n s t r u c t i o n o f each s t r u c t u r e . . . . 4. The l i c e n c e e s h a l l f i l e w i t h the Water Board f o r i t s a p p r o v a l a d e t a i l e d c o n s t r u c t i o n schedule i n c l u d i n g planned r e l e a s e p a t t e r n s d u r i n g c o n s t r u c t i o n . 5. The l i c e n c e e s h a l l p r o v i d e p r o g r e s s r e p o r t s on the c o n s t r u c t i o n works on a r e g u l a r b a s i s . 1 NCPC was a l s o r e q u i r e d t o comply wi t h a l l c o n d i t i o n s of the T e r r i t o r i a l Lands Act and R e g u l a t i o n s . A c c o r d i n g to the Water Board Chairman, NCPC d i d not comply w i t h a l l of the c o n d i t i o n s of P a r t B of the water l i c e n c e nor wit h some of the requirements of the T e r r i t o r i a l Lands A c t and R e g u l a t i o n s . On J u l y 27, 1973, Mr. Brandon wrote t o NCPC, in f o r m i n g the General Manager t h a t c e r t a i n requirements were not being met: The c o n d i t i o n s o f the water l i c e n c e f o r t h i s p r o j e c t r e q u i r e t h a t q u a r t e r l y r e p o r t s be pro v i d e d to the Board. The f i r s t r e p o r t i s now due, and a proper c o n s t r u c t i o n schedule i s long overdue. - 105 -P a r t 'B' of the water l i c e n c e r e q u i r e s you f i l e plans w i t h the Board and t h a t you r e c e i v e approval from the Board p r i o r to c o n s t r u c t i o n . There have been a number of i n s t a n c e s where work has preceded the f i l i n g o f plans without p r i o r approval.,... I have not r e c e i v e d any i n s t r u c t i o n s from the M i n i s t e r r e q u i r i n g exemption f o r the N.C.P.C. from f u l l compliance w i t h the T e r r i t o r i a l Land Act and R e g u l a t i o n s , and the presen t f a i l u r e o f the N.C.P.C. to comply w i l l i n g l y w i t h these Acts seems to r e v e a l an a t t i t u d e which i s not found here when d e a l i n g w i t h i n d u s t r i e s l i k e o i l and mining companies and wit h such government Departments as P u b l i c Works. Your w i l l i n g compliance i s r e q u i r e d . Recently your o f f i c e sent some t e l e x e s t o myself r e q u e s t i n g f u r t h e r enlargement of the c a n a l c l e a r i n g beyond the 300 f e e t shown i n your p l a n s . I now understand you are r e q u e s t i n g an i n c r e a s e beyond 400 f e e t f o r t h i s . You should see to i t t h a t j u s t i f i c a t i o n f o r t h i s i s p r o v i d e d . I mention t h i s because i t i s t y p i c a l of the demands made of the Board f o r enlargement of v a r i o u s p a r t s o f t h i s hydro e l e c t r i c p r o j e c t . 2 Mr. Brandon a l s o l a t e r r e p o r t e d t o Mr. Hunt t h a t : "there have been many breaches of Land Use Requirements on the p r o j e c t and the Water, Lands and F o r e s t s S t a f f have had to c o n t i n u a l l y p r e s s u r e the N.C.P.C. to produce plans 3 and progress r e p o r t s " . In c o n t r a v e n t i o n of the terms o f the water l i c e n c e , which s t i p u l a t e d t h a t "the r e g u l a t e d mean monthly l e v e l s a t A i s h i h i k Lake s h a l l not exceed 3002.5feet", NCPC r a i s e d the l e v e l o f A i s h i h i k Lake above t h i s e l e v a t i o n d u r i n g most of the summer of 1975. T h i s a c t i o n c o n s t i t u t e s - 106 r-. the most s i g n i f i c a n t v i o l a t i o n o f l e g a l and a d m i n i s t r a t i v e requirements t h a t took p l a c e d u r i n g the c o n s t r u c t i o n of the p r o j e c t . The f o l l o w i n g "Statement of A l l e g e d V i o l a t i o n " i s con t a i n e d i n a r e p o r t on the case by the Northern N a t u r a l Resources and Environment Branch of DIAND: Between 13 May 1975 and 30 September 1975 the Northern Canada Power Commission d i d u n l a w f u l l y r e g u l a t e the mean monthly l e v e l s at A i s h i h i k Lake i n excess of 3002.5 f e e t i n c o n t r a v e n t i o n to t h e i r Water Use L i c e n c e Y3L5-0001 and the Northern Inland Waters Act s e c t i o n 3 ( 2 ) . 4 In l a t e J u l y the maximum e l e v a t i o n was reached a t 3004.5 5 f e e t , which i s o n l y a few f e e t above the h i s t o r i c h i g h . A c c o r d i n g to submissions made a t the t h i r d h e a r i n g , h e l d i n August 1975, t h i s i n c r e a s e s t i l l r e s u l t e d i n e x t e n s i v e e r o s i o n of the s h o r e l i n e o f A i s h i h i k Lake, caused damage to f i s h p o p u l a t i o n s and w i l d l i f e , and f l o o d e d p a r t o f A i s h i h i k V i l l a g e . A submission by the F i s h e r i e s and Marine S e r v i c e of the Department of the Environment mentioned t h a t : ... the Northern Canada Power Commission has allowed water l e v e l s on A i s h i h i k Lake to f a r exceed those s p e c i f i e d i n i t s i n t e r i m water l i c e n c e and has p r e c i p i t a t e d severe s h o r e l i n e e r o s i o n and slumping. These occurrences are sugge s t i v e o f contempt f o r the terms of t h e i r l i c e n c e and f o r the environmental consequences of t h e i r a c t i o n s . 6 - 107 -Synergy West, a p r i v a t e c o n s u l t i n g f i r m which was h i r e d by the Yukon Na t i v e Brotherhood t o assess the impact of the proposed l i c e n c e on A i s h i h i k V i l l a g e , r e p o r t e d t h a t : ... e r o s i o n i s o c c u r r i n g , one s p i r i t house has f a l l e n i n t o the l a k e , o t h e r s are endangered. The dock has been almost inundated; the f r e s h water s p r i n g , the v i l l a g e ' s water supply, has been rendered u s e l e s s and f l o o d e d , s e v e r a l s t r u c t u r e s have been p a r t i a l l y inundated, and a c c e s s i b i l i t y t o cabins has been c u t o f f . ... Massive s i l t i n g as a consequence of slumpage and e r o s i o n has o c c u r r e d , w i t h the ne g a t i v e consequences as p r e d i c t e d by the F i s h e r i e s . In f a c t , NCPC has f a i l e d t o p o l i c e t h e i r own a c t i v i t i e s , and r a i s e d the l e v e l of the la k e i n excess of the l e v e l granted by t h e i r water l i c e n c e , with no adequate warning to the A i s h i h i k Band so t h a t they might p r o t e c t t h e i r p r o p e r t y . 7 The e f f e c t s on A i s h i h i k V i l l a g e r e s u l t i n g from the i n c r e a s e d water l e v e l s appear to have been s i g n i f i c a n t , y e t NCPC d i d not info r m the A i s h i h i k Band t h a t the i n c r e a s e s were to take p l a c e . A c c o r d i n g to the Northern N a t u r a l Resources and Environment Branch r e p o r t , the main reasons f o r the i n c r e a s e i n the lak e l e v e l were the poor progress on the c o n t r o l s t r u c t u r e s a t Canyon and A i s h i h i k Lakes and the powerhouse, and hig h e r than normal r u n o f f s d u r i n g the e a r l y summer. NCPC decided t h a t i n order to ensure an adequate r e s e r v e of storage at the r e s e r v o i r , i t would allow the l e v e l o f the lake t o r i s e to 3002.5 f e e t , w i t h the i n t e n t i o n of subsequently making r e l e a s e s to h o l d the lake a t - 108 -t h a t e l e v a t i o n . Contrary t o the water l i c e n c e , t h i s p l a n was not f i l e d with the Water Board. When NCPC r a i s e d the lake t o the maximum a l l o w a b l e e l e v a t i o n , the c o n t r o l s t r u c t u r e s were not y e t complete and were not t h e r e f o r e able to withstand h i g h r a t e s of flow. During the e a r l y summer an unexpected second r u n o f f peak o c c u r r e d , and i t was determined t h a t r e l e a s i n g enough water to maintain the lake l e v e l s c o u l d cause damage to the two c o n t r o l s t r u c t u r e s . However, the Northern N a t u r a l Resources and Environment Branch r e p o r t found t h a t i n s u f f i c i e n t a c t i o n was taken by NCPC to reduce the i n c r e a s e s . As the r e p o r t c o n c l u d e s : The l i c e n c e d l a k e l e v e l c o u l d have been reached 1 J u l y , 1975 w i t h the r e l e a s e of the maximum p o s s i b l e flows. However, the maximum p o s s i b l e was not r e l e a s e d because the Canyon Lake overflow weir had not been i n s p e c t e d . For s a f e t y reasons t h i s e x p l a n a t i o n i s a c c e p t a b l e , however, t h e r e i s no apparent j u s t i f i c a t i o n f o r the long delay i n i n s p e c t i n g the s t r u c t u r e (from 25 June to 21 J u l y ) . From 21 J u l y t o 30 September, N.C.P.C. r e l e a s e d l e s s than the maximum p o s s i b l e . Except f o r the p e r i o d when the breakdown o c c u r r e d a t the power p l a n t t h e r e does not appear j u s t i f i c a t i o n f o r t h i s a c t i o n . In summary, i t does not appear t h a t N.C.P.C. took a l l necessary steps to reduce the lake l e v e l s of A i s h i h i k when the o p p o r t u n i t y was a v a i l a b l e a f t e r 2 5 June 19 7 5 and the problem was not a t t a c k e d w i t h a l l due d i l i g e n c e . 9 - 109 -E v i d e n t l y NCPC d i d not comply w i t h a l l a d m i n i s t r a t i v e and l e g a l requirements d u r i n g the c o n s t r u c t i o n p e r i o d , p a r t i c u l a r l y as they r e l a t e d t o p r o v i d i n g the Water Board w i t h plans and r e p o r t s , and then f a i l e d t o take adequate measures t o ensure t h a t the l e v e l o f A i s h i h i k Lake was not i n c r e a s e d above the l i c e n c e d l i m i t . I I . THE COST OVERRUN A. I n t r o d u c t i o n The c o s t of the A i s h i h i k p r o j e c t i n c r e a s e d from approximately $17 m i l l i o n at the s t a r t of c o n s t r u c t i o n to a f i n a l c o s t of about $39 m i l l i o n (both e x c l u d i n g the t r a n s m i s s i o n l i n e ) . The overrun amounts t o $22 m i l l i o n , or a 130% i n c r e a s e i n the c o s t of the p r o j e c t , i f i t i s accepted t h a t an overrun should be c a l c u l a t e d as being the d i f f e r e n c e between the estimated c o s t a t the s t a r t o f c o n s t r u c t i o n and the f i n a l c o s t . The c o s t o f the p r o j e c t has to be borne s o l e l y by e l e c t r i c power consumers i n the Yukon, and has r e s u l t e d i n s i g n i f i c a n t i n c r e a s e s i n power rates.^® In order to account f o r and e x p l a i n the reasons behind the overrun, three d i f f e r e n t r e p o r t s were compiled d u r i n g 1976, a f t e r the p r o j e c t was completed. Crippen E n g i n e e r i n g p r o v i d e d a r e p o r t , " A n a l y s i s of Cost Overrun", and the NCPC management compiled the Report on A i s h i h i k . ^ - no -Another document, known as the Dalby Report, was w r i t t e n 12 by an independent c o n s u l t a n t . The Dalby Report was intended to "review and r e p o r t on the f a c t s surrounding the p u b l i c concern surrounding the c o s t of the A i s h i h i k p r o j e c t " , as s t a t e d i n the terms of r e f e r e n c e f o r the 13 r e p o r t . B. Formulation of Cost Estimates The f o l l o w i n g t a b l e p r o v i d e s a h i s t o r i c a l r e c o r d of the c o s t estimates formulated d u r i n g the course o f p l a n n i n g and c o n s t r u c t i n g the p r o j e c t , and of r e l a t e d events. Date Estimated Cost* 1971 J u l y 7 $7 m i l l i o n October 4 $9 m i l l i o n December 28...$11 m i l l i o n Source D. Steen, "Cost Comparison: A i s h i h i k R i v e r v s . Nor d e n s k i o l d C o a l " , NCPC Report on A i s h i h i k , s.2. Crippen E n g i n e e r i n g A n a l y s i s of Cost Overrun, Appendix 1, p . l . I b i d . 1972 March — F i r s t a p p l i c a t i o n submitted to Water Board. A p r i l $12.9 m i l l i o n I b i d , p. 2. May 2 4 . — F i r s t water l i c e n c e h e a r i n g . October 19....$16.2 m i l l i o n I b i d . ( s i z e of p r o j e c t i n c r e a s e d to 33 MW). 1973 January 17 — Second h e a r i n g h e l d . March 2 0 $16.75 m i l l i o n Report on A i s h i h i k , s.8,p.3. A p r i l 12 — NCPC decides to begin c o n s t r u c t i o n of p r o j e c t . October 19 — "The f i r s t r e a l i n d i c a t i o n of A i s h i h i k c o s t s g e t t i n g out of hand came i n an October 19, 1973 l e t t e r (from) D.R.Duguid, P.Eng., P r o j e c t Manager, Crippen E n g i n e e r i n g . . . " Dalby Report, p.14. December $17.82 m i l l i o n A n a l y s i s of Cost Overrun, Appendix 1, p.6. 1974 October 10 — "October 10, 1974 meeting of the Commission Mr. Lowe gave l a t e s t c o s t e stimates at $28.5 m i l l i o n f o r the power p r o j e c t . . . " Dalby Report, p.15. 1975 March $32.9 m i l l i o n 1976 January $39 m i l l i o n * E x c l u d i n g t r a n s m i s s i o n l i n e . A n a l y s i s of Cost Overrun, Appendix 1, p.11. Report on A i s h i h i k , s.8,p. I t appears t h a t the c o s t estimates were, f o r the most p a r t , prepared by Crippen E n g i n e e r i n g , which had the r e s p o n s i b i l i t y of both d e s i g n i n g the p r o j e c t and of managing i t s c o n s t r u c t i o n . There i s no evidence t h a t an independent o r g a n i z a t i o n reviewed and assessed the accuracy of the c o s t e s t i m a t e s . The accuracy of the estimates were, however, que s t i o n e d by both Yukon E l e c t r i c and the P u b l i c U t i l i t i e s Board d u r i n g the h e a r i n g on January 17, 197 3. C. Economic F a c t o r s One s e t of f a c t o r s t h a t c o n t r i b u t e d to the c o s t overrun c o n s i s t s of changes i n the n a t i o n a l economy. I n t e r e s t r a t e s f o r f i n a n c i n g the p r o j e c t rose from about 6% to 9.5% d u r i n g the c o n s t r u c t i o n p e r i o d , a c c o r d i n g to the 14 Dalby Report. - 112 -Labour c o s t s appear to have been an important f a c t o r . The NCPC Management r e p o r t mentions t h a t : Labour T h i s was a most obvious c u l p r i t i n n e a r l y every area of the works. Union j u r i s d i c t i o n , l a r g e r than a n t i c i p a t e d labour f o r c e s , e s c a l a t i o n of s a l a r i e s and wages a l l c o n t r i b u t e d to i n c r e a s e d c o s t s . 15 Other c o s t s a l s o i n c r e a s e d a t unprecedented r a t e s . As the Crippen r e p o r t s t a t e s : The year 1974 saw the worst c o s t e s c a l a t i o n e xperienced f o r decades, both d o m e s t i c a l l y and i n t e r n a t i o n a l l y . S t a t i s t i c s Canada shows the Hydro index up 16%, s t e e l p r i c e s up 46%, labour up 20%. Increases i n f r e i g h t and s u p p o r t i v e s e r v i c e s , together w i t h the h i g h volume of c o n s t r u c t i o n work, o f t e n r e s p o n s i b l e f o r low c o n t r a c t o r and s u p p l i e r i n t e r e s t w i t h r e s u l t i n g h i g h e r b i d s , r e s u l t e d i n most c o n s t r u c t i o n p r o j e c t s , and p a r t i c u l a r l y those i n i s o l a t e d n o r t h e r n l o c a t i o n s overrunning e s t i m a t e s c o n s i d e r a b l y . 16 However, no q u a n t i t a t i v e a n a l y s i s showing what p r o p o r t i o n of the c o s t overrun i s a t t r i b u t a b l e to unforeseen i n f l a t i o n was p r o v i d e d i n any of the three r e p o r t s w r i t t e n on the c o s t overrun. D. The Tunnel C o n t r a c t As s t a t e d i n the NCPC management r e p o r t , overruns i n the main t u n n e l c o n t r a c t compose a l a r g e p r o p o r t i o n of the t o t a l c o s t overrun f o r the p r o j e c t . The most s i g n i f i c a n t c o s t overrun i s the main tu n n e l c o n t r a c t which i n c r e a s e d from $4.2 m i l l i o n to $14.3 m i l l i o n . ...Doubling the labour f o r c e to s a t i s f y union requirements compounded by slow progress i n tunnel e x c a v a t i o n p l u s h i g h wage e s c a l a t i o n s are the p r i n c i p a l causes of the c o s t overrun i n t h i s c o n t r a c t . 17 - 113 -E. The C o n s t r u c t i o n Schedule The c o n s t r u c t i o n schedule appears to have been a major f a c t o r c o n t r i b u t i n g to the overrun., , When NCPC began c o n s t r u c t i o n i t was a n t i c i p a t e d t h a t the p r o j e c t would be completed i n time to meet the w i n t e r demands of 1974-5, a time p e r i o d of twenty months. T h i s twenty-month c o n s t r u c t i o n schedule was c o n s i d e r e d to be a "crash" c o n s t r u c t i o n program, and was adopted i n order to prevent the need to i n s t a l l a d d i t i o n a l d i e s e l g e n e r a t i o n f o r the w i n t e r of 1974-5, which would become s u r p l u s once the p r o j e c t was completed. The p r o j e c t took twenty-rsix months to complete, however, and d i e s e l generators had to be i n s t a l l e d and operated f o r the w i n t e r of 1974-5. The e x t r a c o s t r e s u l t i n g from the use of d i e s e l generators was $4 m i l l i o n . As Mr.Lowe, NCPC's General Manager, l a t e r r e p o r t e d to the NCPC Chairman: Another c o s t r e s u l t i n g from the delay was t h a t i n v o l v i n g the i n s t a l l a t i o n at Whitehorse of some 7500 kW of d i e s e l to meet the 1974/75 wint e r peak. The c a p i t a l c o s t of t h i s d i e s e l c a p a c i t y was $2 m i l l i o n and the a d d i t i o n a l c o s t of f u e l i n g and o p e r a t i n g peaking d i e s e l u n i t s f o r the e x t r a year was a f u r t h e r $2 m i l l i o n . ... I t i s noted elsewhere... t h a t the key f a c t o r i n the i n c r e a s e d c o s t i s the d e l a y i n implementation of the p r o j e c t from e a r l y 1972 t o mid-1973, along w i t h the attendant need to r u s h to completion so as to meet l o a d growth and minimize c o s t l y d i e s e l g e n e r a t i o n . 18 - 114 -I t i s perhaps questionable whether the $4 m i l l i o n i n d i e s e l generation expenses i s a greater amount than the cost of the crash construction program, which was unsuccessfully implemented .in order to save, ttjese expenses. The following entries i n NCPC management's and Crippen's reports describe how the crash schedule affected the cost of the project. The Report on Aishihik states: In order to maintain any sort of schedule a crash program was necessary on v i r t u a l l y every major aspect of the project. 19 F i n a n c i a l control and e f f i c i e n c y control at Aishihik was less than optimum due. i n large part to the i n i t i a l delay followed by panic s t a r t . L i t t l e or no time was allowed to assemble and s i t e t r a i n a well rounded f i e l d crew before hectic construction a c t i v i t y occurred. 20 The drive to meet the completion date v i r t u a l l y converted cost control into cost audit. 21 And Crippen Engineering's "Analysis of Cost Overrun" states: End of 1973, , , The most s i g n i f i c a n t factor a f f e c t i n g both schedule and cost at t h i s point was undoubtedly the delay i n i n i t i a t i o n of the project which had resulted i n an unduly accelerated design and contract preparation schedule with the necessity of fragmenting the contract packages; and a schedule so t i g h t that there was a poor chance of making up time l o s t on even one operation, such as the two months on the access shaft. The extra cost of overtime and other adjuncts of the r e s u l t i n g crash program were just beginning to show by the end of 1973. 22 - 115 -E n t e r i n g the year 1974, the c h i e f concern was to recover the time l o s t on ex c a v a t i n g the access s h a f t , powerhouse and t a i l r a c e t u n n e l , and so three s h i f t o p e r a t i o n was continued seven days a week. 23 E v i d e n t l y NCPC maintained the c r a s h schedule even a f t e r a number of important problems and delays o c c u r r e d . Not u n t i l the summer of 1974 d i d NCPC a p p a r e n t l y begin to q u e s t i o n whether i t c o u l d complete the p r o j e c t i n time. As s t a t e d i n the Dalby Report: NCPC management r e p o r t s to the Commission on October 10, 1974 t h a t a work stoppage from J u l y 22, 1974 to August 1, 1974 on the A i s h i h i k p r o j e c t "... caused new d e l a y s and on - t a r g e t completion date now seems u n l i k e l y " . 24 F. D e t a i l e d P r e p a r a t i o n s A c c o r d i n g t o the Crippen r e p o r t , d e t a i l e d e n g i n e e r i n g design and s p e c i f i c a t i o n w r i t i n g had not been completed when NCPC began c o n s t r u c t i o n of the p r o j e c t . As soon as the work ( s i c ) to proceed was given i n mid A p r i l 1973, d e t a i l e d d e s i g n , p r e p a r a t i o n of s p e c i f i c a t i o n s and c o n t r a c t documents proceeded on a c r a s h b a s i s . The work to be done was i n c r e a s e d by the n e c e s s i t y of fragmenting the work i n t o s m a l l packages, so t h a t these c o u l d be c a l l e d as soon as the d e s i g n had progressed f a r enough, without w a i t i n g f o r f u r t h e r d e s i g n work not y e t completed. 25 The twenty-month c o n s t r u c t i o n schedule appears to have been very o p t i m i s t i c i n view of the f a c t t h a t these p r e p a r a t o r y arrangements had not been completed p r i o r - 116 -to the s t a r t of c o n s t r u c t i o n . Completion of these arrangements p r i o r to the. Beginning of c o n s t r u c t i o n was c o n s i d e r e d e s s e n t i a l i f the p r o j e c t was to be completed w i t h i n the twenty-month time, p e r i o d . As the Crippen r e p o r t s t a t e s ; The o r i g i n a l schedule f o r the p r o j e c t w a s f o r 26 months from i n i t i a t i o n t o commissioning. When i t became apparent i n 1972 t h a t the p r o j e c t i n i t i a t i o n would be delayed by the r e g u l a t o r y process, t h i s schedule was reduced to a c r a s h program of 20 months i n l i g h t of the n e c e s s i t y of meeting the continued h i g h r a t e of l o a d growth. T h i s program c o u l d be achieved o n l y i f no major problems or d e l a y s o c c u r r e d , and i f s u f f i c i e n t d e t a i l e d d e s i g n and  s p e c i f i c a t i o n w r i t i n g had been done b e f o r e  i n i t i a t i o n . With, a f u r t h e r d e l a y of one. year i n o b t a i n i n g a l i c e n c e the 20 month schedule was r e t a i n e d and p r o j e c t i n i t i a t i o n was necessary by March 19-73, With a u t h o r i z a t i o n to proceed delayed a f u r t h e r month, o n l y 19 months were a v a i l a b l e to have the f i r s t u n i t commissioned b e f o r e Xmas of 1974 and p r e p a r a t i o n of designs and c o n t r a c t documents was l i t t l e advanced, e x c e p t i n g those f o r the t u r b i n e s and g e n e r a t o r s , (emphasis addedL 26 A c c o r d i n g to the NCPC management r e p o r t , t h e reason why d e t a i l e d p r e p a r a t i o n s had not been completed p r i o r t o the s t a r t of c o n s t r u c t i o n was t h a t the u n c e r t a i n t y surrounding the l i c e n c i n g process " d i c t a t e d " t h a t NCPC av o i d spending money on s u c h p r e p a r a t i o n s , Delays i n a c q u i r i n g the l a n d r e s e r v a t i o n combined w i t h the water l i c e n c e d e l a y s prevented the intended s c h e d u l i n g of the p r o j e c t . Note t h a t i f water l i c e n c e had been ob t a i n e d "on a p p l i c a t i o n " as contemporary laws p r o v i d e d , p r o j e c t e n g i n e e r i n g and f u r t h e r i n v e s t i g a t i o n would have been i n i t i a t e d a t a " f u l l speed ahead" - 117 -b a s i s . Instead, the l a c k of answers and i n d e c i s i o n d i c t a t e d a much slower approach to ensure t h a t e n g i n e e r i n g money was not wasted i n case a s u i t a b l e l i c e n c e was not forthcoming. Undoubtedly the l o s s of more than one year caused by these delays (which r e s u l t e d i n t i g h t e n e d schedules f o r d e s i g n and c o n t r a c t s p e c i f i c a t i o n / a w a r d processes and c o n s t r u c t i o n ) was the key f a c t o r i n the p r o j e c t ' s higher c o s t . 27 G. I n f l u e n c e o f Water L i c e n c e Delays Both the NCPC management and Crippen E n g i n e e r i n g r e p o r t s concluded t h a t the major f a c t o r c a using the overrun was the delay i n the i s s u ance of a water l i c e n c e . The r e p o r t prepared by NCPC management concludes t h a t : The s i n g l e most s i g n i f i c a n t f a c t o r c o n t r i b u t i n g to c o s t overrun i s undoubtedly the d e l a y i n i n i t i a t i o n , or simply d e l a y i n o b t a i n i n g a water l i c e n c e . T h i s s i n g l e f a c t o r i s a l s o the key f a c t o r i n t h a t the delay r e s u l t e d i n a s i t u a t i o n which brought about most of the o t h e r . . . f a c t o r s . F u r t h e r study would r e v e a l the weight of t h i s s i n g l e f a c t o r t o be w e l l over 60%. 28 The Crippen E n g i n e e r i n g r e p o r t s i m i l a r l y concludes t h a t : Delayed I n i t i a t i o n T h i s was the s i n g l e most important f a c t o r and was a d i r e c t r e s u l t of the d e l a y i n o b t a i n i n g a water l i c e n c e . I t was the key f a c t o r because i n t u r n i t r e s u l t e d i n the a p p l i c a t i o n of the other most s i g n i f i c a n t i n f l u e n c e s , i n c l u d i n g the d e l a y of c o n s t r u c t i o n i n t o the peak i n f l a t i o n p e r i o d of 1974/75, delay of f i n a n c i n g i n t o a p e r i o d of much high e r i n t e r e s t r a t e s , and the n e c e s s i t y of a c o s t l y c r a s h program to m a i n t a i n the completion date r e q u i r e d to meet the growing l o a d on the Whitehorse system. 29 - 118 -The a n a l y s i s used i n the NCPC management r e p o r t a p p l i e d as the base f i g u r e f o r c a l c u l a t i n g the c o s t overrun the estimate t h a t was prepared i n e a r l y 1972, which was when NCPC o r i g i n a l l y intended to s t a r t c o n s t r u c t i o n of the p r o j e c t . In attempting the d i s t r i b u t i o n of overruns, the f i r s t parameter t o be decid e d must be the p o i n t i n time a t which r e f e r e n c e s f o r both schedule and estimate have been e s t a b l i s h e d . For A i s h i h i k , t h i s " p o i n t i n time" i s e a r l y 1972, the N.C.P.C.'s scheduled date o f s t a r t of c o n s t r u c t i o n . The base estimate f o r t h i s " p o i n t i n time" i s $13.9 m i l l i o n f o r a 3 u n i t 33 MW i n s t a l l a t i o n , as con t a i n e d i n the A p r i l , 1972 e n g i n e e r i n g r e p o r t . 30 By u s i n g as the base f i g u r e the estimate prepared i n e a r l y 1972, the water l i c e n c e delays c o u l d be i n c l u d e d i n NCPC's a n a l y s i s . A l e t t e r sent t o Mr. J . Smith, Chairman of NCPC from Mr. Lowe, NCPC's General Manager on March 29, 197 6, s t a t e s t h a t t h e . c o s t e s t i m a t e s f o r the p r o j e c t were too low, but t h a t a s u b s t a n t i a l p r o p o r t i o n of the overrun s t i l l r e s u l t e d from delays i n o b t a i n i n g the water l i c e n c e , and t h a t NCPC customers should not have t o bear these c o s t s . ... the benchmark estimate f o r the 19 72 s t a r t i s $14 m i l l i o n . Based on a c t u a l b i d d i n g and unforeseen (now known) c o n d i t i o n s (mainly underground) and ge n e r a l e s c a l a t i o n d u r i n g the 1972 and 1973 p e r i o d , the $14 m i l l i o n estimate may have been too low by some $6 to $10 m i l l i o n . I am s a y i n g , t h e r e f o r e , t h a t the p r o j e c t would have c o s t - 119 -$2Q-$2.4 m i l l i o n i f i t had keen allowed to proceed as planned by NCPC, The p r o j e c t , however, was delayed over a year and c o s t some $40 m i l l i o n . I t i s my o p i n i o n t h a t t h e a d d i t i o n a l c o s t of t h e A i s h i h i k - p l a n t , a r i s i n g out of the d e l a y i n o b t a i n i n g a water licence., should be borne by those r e s p o n s i b l e f o r the. delay and not NCPC consumers, 31 On A p r i l 10, 1976, Mr, Smith wrote t o t h e M i n i s t e r , Judd Buchanan, and proposed t h a t the f e d e r a l government a s s i s t i n b e a r i n g the c o s t o f the Aishihik., s i n c e the f e d e r a l government was r e s p o n s i b l e f o r the water l i c e n c e d e l a y s , and not NCPC, The e l e c t r i c i t y consumer i n Yukon must s u r e l y be e n t i t l e d to some, a s s i s t a n c e in. .bearing t h i s burden of the hi g h e r c o s t r e s u l t i n g from de l a y i n o b t a i n i n g a water l i c e n c e . Your b e s t e f f o r t s on b e h a l f o f those users to secure some a l l e v i a t i o n of the c a p i t a l c o s t s of A i s h i h i k i s e a r n e s t l y sought, 32 To summarize, the chairman of the Commission f o r NCPC, NCPC management, and Crippen E n g i n e e r i n g , a l l argued t h a t the major cause of t h e c o s t overrun was the del a y i n the i s s u e of a water l i c e n c e , In order t o j u s t i f y t h i s argument, the- c o s t e s t i m a t e prepared f o r the o r i g i n a l l y intended s t a r t o f c o n s t r u c t i o n i n e a r l y 1972 was used as the benchmark f i g u r e , r a t h e r than the l a s t e stimate prepared p r i o r to the s t a r t o f c o n s t r u c t i o n . Using t h i s argument, NCPC then requested t h a t the f e d e r a l government p r o v i d e assistance, to NCPC to a l l e v i a t e the burden o f the c o s t overrun. - 120 -H. The Water Board's Reaction On J u l y 7, 197 6, Mr. B. Boyd, new Chairman of the Water Board, wrote to Mr. Buchanan and commented on the contents of Mr. Lowe's March 29, 1976 l e t t e r t o the NCPC Chairman, Mr. Smith. A copy of Mr. Lowe's l e t t e r i s contained i n the NCPC management's r e p o r t and r e f l e c t s the c o n c l u s i o n s of t h a t r e p o r t . Mr. Boyd e x p l a i n e d to the M i n i s t e r t h a t : There was o b v i o u s l y some de l a y i n the s t a r t of c o n s t r u c t i o n as a r e s u l t of the d e c i s i o n to proceed by way of the new Northern Inland Waters A c t , but i t i s d i f f i c u l t to understand why N.C.P.C. was not prepared f o r these requirements c o n s i d e r i n g the Chairman of the Northern Canada Power Commission was the Deputy M i n i s t e r of the Department. Going beyond the d i r e c t involvement of the Water Board, i t i s i n t e r e s t i n g to note t h a t i n Mr. Lowe's l e t t e r t o Mr. Smith dated March 29, 1976, "the main reason f o r the i n c r e a s e d c o s t i s the d e l a y i n i n i t i a t i o n of the p r o j e c t due to the delay i n issuance of the water l i c e n c e " . However, the p r o j e c t estimate i n March 1973, immediately p r i o r t o the i s s u e of the water l i c e n c e was $16,475 m i l l i o n as per a t t a c h e d page 8.01 of the N.C.P.C. r e p o r t . Nine months later-, which was e i g h t months a f t e r the l i c e n c e was i s s u e d and s i x months a f t e r the award of the main c o n t r a c t , a new estimate showing o n l y $17.8 m i l l i o n was prepared. I t i s a l s o of i n t e r e s t to note t h a t the c o n s t r u c t i o n schedule envisaged a time span of f i f t e e n months from the date of awarding the main c o n t r a c t (C9-04) to commissioning of the f i r s t u n i t , where i n f a c t , i t took twenty-fou r months to complete t h i s work. S u r e l y t h i s d e l a y and the a s s o c i a t e d c o s t s cannot be a t t r i b u t e d to d e l a y i n i s s u i n g the water l i c e n c e . ... - 121 -I t i s f a i r to say t h a t N.C.P.C. d i d i n c u r c o s t s on A i s h i h i k as a r e s u l t of d e l a y s , however, the Water Board requirements were not unusual or unwarranted. Mr. Lowe's statement "that the p r o j e c t would have c o s t $20-24 m i l l i o n i f i t had been allowed to proceed as planned by N.C.P.C." i s not s u b s t a n t i a t e d . 33 A r e p l y t o Mr. Boyd's l e t t e r was p r o v i d e d by the new M i n i s t e r , Warren Allmand, on September 29, 1976: T h i s i s i n r e p l y to your l e t t e r of J u l y 7 to the Honourable Judd Buchanan and p r e v i o u s l y acknowledged, about the c o s t overruns of the A i s h i h i k P r o j e c t . Your comments were thorough, and w i l l be most h e l p f u l t o us i n our review. I t would appear t h a t no s i n g l e f a c t o r can be i d e n t i f i e d as c a u s i n g the overruns, but t h a t i t was a s e r i e s of events. I have not r e l e a s e d your r e p o r t to the N.C.P.C, nor w i l l I do so without your consent. I would say, however, t h a t there does not seem t o be any compelling reason, to•• disseminate t h i s ; i n f o r m a t i o n any f u r t h e r . 34 I. The Dalby Report The Dalby Report was w r i t t e n a t the request of the M i n i s t e r , Judd Buchanan, and was commissioned by the Chairman of NCPC, James Smith, who prepared the terms of r e f e r e n c e . The main f i n d i n g s of the Report a r e : 1) We found no evidence of gross n e g l i g e n c e , wrongdoing or misconduct on the p a r t of NCPC's management. 2) The f a c t o r s c o n t r i b u t i n g t o the h i g h e r than estimated c o s t f o r A i s h i h i k a r e : a) The o r i g i n a l c o s t e s t i m a t e , which was based on p r e l i m i n a r y e n g i n e e r i n g , was too low. - 122 -b)_ Delay i n s t a r t i n g c o n s t r u c t i o n due to the. d e l a y s a s s o c i a t e d w i t h the i s s u i n g o f a "water l i c e n c e " . c) An abnormal r a t e of i n f l a t i o n . d) A c t u a l i n t e r e s t r a t e s being h i g h e r than, a n t i c i p a t e d — estimate based on 6% i n t e r e s t whereas a c t u a l i n t e r e s t was . 9 . 5 % . Poor c o n t r a c t o r performance under c e r t a i n c o n t r a c t s . D e f i c i e n c i e s i n p l a n n i n g , p r e p a r a t i o n of tender documents and c o s t c o n t r o l . More r i g i d environmental requirements than a n t i c i p a t e d . Cost o f l a b o u r , due to poor labour p r o d u c t i v i t y and labour union's success i n o b t a i n i n g l a r g e wage i n c r e a s e s and i n t r o d u c i n g c o s t l y changes to work r u l e s . The r e - r o u t i n g of the t r a n s m i s s i o n l i n e f o r e c o l o g i c a l reasons. I n t e r e s t d u r i n g c o n s t r u c t i o n , which i s i n f l u e n c e d by a l l of the above, being much high e r than a n t i c i p a t e d . NCPC management h e l d back on commitments f o r d e t a i l e d e n g i n e e r i n g to h o l d down c o s t s i n the event t h a t a s u i t a b l e l i c e n c e c o u l d not be o b t a i n e d . When the permit was f i n a l l y i s s u e d the company was p r o j e c t e d i n t o a very t i g h t s c h e d u l i n g f o r d e t a i l e d e n g i n e e r i n g , p r e p a r a t i o n of c o n t r a c t s p e c i f i c a t i o n s , awarding c o n t r a c t s and s t a r t i n g c o n s t r u c t i o n . An u n f o r t u n a t e d e c i s i o n which added s i g n i f i c a n t l y to the c o s t of the p r o j e c t . 3 5 I t appears t h a t the f i n d i n g s of the Dalby Report i m p l i c i t l y accept the argument presented i n the NCPC management and Crippen E n g i n e e r i n g r e p o r t s t h a t d e l a y s i n the issuance of the water l i c e n c e caused some p r o p o r t i o n of the overrun. F i n d i n g "2)b)" i n d i c a t e s acceptance of t h i s argument, although i t i s c i t e d as a " c o n t r i b u t i n g " , r a t h e r than a c a u s a l f a c t o r , and no weight i s g i v e n to i t s i n f l u e n c e . U n f o r t u n a t e l y , - 123 -the Dalby r e p o r t never mentions whether the base f i g u r e to be used to c a l c u l a t e the overrun should be the estimate formulated i n e a r l y 1972 or the estimate at the s t a r t o f c o n s t r u c t i o n . On the b a s i s o f the f i n d i n g s of the Dalby Report, the M i n i s t e r , Judd Buchanan, s t a t e d t h a t a p u b l i c i n q u i r y i n t o NCPC's h a n d l i n g of the p r o j e c t would not be 36 necessary, I I I . SUMMARY AND CONCLUSIONS There appears t o be l i t t l e doubt t h a t NCPC's attempt to f o l l o w the cr a s h c o n s t r u c t i o n program, when d e t a i l e d p r e p a r a t i o n s f o r c o n s t r u c t i o n o f the p r o j e c t had not ye t been completed, added s i g n i f i c a n t l y t o the c o s t of the p r o j e c t . NCPC's r a t i o n a l e f o r c r e a t i n g such a s i t u a t i o n was t h a t the water l i c e n c i n g process c r e a t e d s u f f i c i e n t u n c e r t a i n t y t h a t expenditures on d e t a i l e d p r e p a r a t i o n s should have been avoided. NCPC ap p a r e n t l y b e l i e v e d t h a t t h e r e was a h i g h p r o b a b i l i t y t h a t a s u i t a b l e l i c e n c e c o u l d not be obtained and t h a t the p r o j e c t , t h e r e f o r e , might not be b u i l t , even though i t had no a l t e r n a t e plans i n case a s u i t a b l e l i c e n c e was not obt a i n e d except to use d i e s e l g e n e r a t i o n . - 124 -Once the d e c i s i o n t o c o n s t r u c t the p r o j e c t was made, NCPC co n s i d e r e d i t necessary to adopt a c r a s h c o n s t r u c t i o n schedule i n order to a v o i d having to i n s t a l l and operate d i e s e l generators d u r i n g the wi n t e r o f 1974-5. The c r a s h program was u n s u c c e s s f u l i n meeting t h i s o b j e c t i v e , and i t was s t i l l necessary to i n s t a l l and operate the d i e s e l g e n e r a t o r s , which c o s t o n l y $4 m i l l i o n . The p e r c e i v e d o p p o r t u n i t y to prevent t h i s expenditure a p p a r e n t l y j u s t i f i e d the adoption of a c r a s h c o n s t r u c t i o n program, which i t s e l f added s i g n i f i c a n t l y to the c o s t of the p r o j e c t . The p r o b a b i l i t y t h a t the p r o j e c t c o u l d be completed i n twenty months a l s o appears t o have been r a t h e r s m a l l , s i n c e d e t a i l e d design and s p e c i f i c a t i o n w r i t i n g had not been completed p r i o r to the s t a r t of c o n s t r u c t i o n . I t would appear t h a t the e x p l a n a t i o n s t h a t have been pr o v i d e d f o r the reasons behind the c o s t overrun are m i s l e a d i n g , because each of the thr e e r e p o r t s t h a t were w r i t t e n to account f o r , and e x p l a i n the causes of the overrun do not premise t h e i r f i n d i n g s on the use of the l a s t c o s t estimate prepared b e f o r e the s t a r t of c o n s t r u c t i o n . Instead, the f i g u r e prepared f o r the ' o r i g i n a l l y intended' s t a r t of c o n s t r u c t i o n i n e a r l y 1972 was e i t h e r i m p l i c i t l y or e x p l i c i t l y used. As a r e s u l t , the de l a y s i n the issuance of a water l i c e n c e c o u l d be i n c l u d e d i n the analyses presented i n these r e p o r t s . - 125 -T h i s type of a n a l y s i s might be a c c e p t a b l e i f no f u r t h e r c o s t estimates were prepared. However, a l l de l a y s i n the issuance o f the l i c e n c e had o c c u r r e d when NCPC began c o n s t r u c t i o n of the p r o j e c t , and at t h a t time the p r o j e c t was estimated t o c o s t $16.75 m i l l i o n . I f the water l i c e n c e d e l a y s a f f e c t e d the c o s t o f the p r o j e c t , then t h i s should have been accounted f o r i n the p r e p a r a t i o n o f the $16.75 m i l l i o n e s t i m a t e , and a l l subsequent est i m a t e s . Since the f i n a l c o s t of the p r o j e c t was s u b s t a n t i a l l y i n excess o f a l l of the c o s t estimates t h a t were prepared f o r the p r o j e c t , i t may be concluded t h a t these c o s t estimates were not adequately formulated, 37 and t h a t NCPC should be h e l d accountable f o r them. - 126 -CHAPTER SIX  REFERENCES AND NOTES 1. A i s h i h i k water l i c e n c e , L i c e n c e number Y3L5-0001, P a r t B. 2. L. Brandon to J . Lowe, 27 J u l y 1973, p.1,2. 3. L. Brandon to D. Hunt, 2 5 March 1974, p.3. 4. Northern N a t u r a l Resources and Environmental Branch, Department of Indian A f f a i r s and Northern Development, "Case Summary, The R a i s i n g of A i s h i h i k Lake i n Excess of Water Use L i c e n c e Y3L5-0001 May-September, 1975", undated, p.2. 5. I b i d . , p.10. 6. Department of the Environment, F i s h e r i e s and Marine S e r v i c e , Northern Operations Branch, " P r e s e n t a t i o n to the Yukon T e r r i t o r i a l Water Board I n q u i r y i n t o the A i s h i h i k H y d r o e l e c t r i c P r o j e c t " , i n A i s h i h i k T r a n s c r i p t , 28 August 1975, E x h i b i t #7, p.3. 7. Synergy West L t d . , " A i s h i h i k V i l l a g e Impact A n a l y s i s " , i n A i s h i h i k T r a n s c r i p t , E x h i b i t #5, p.15. 8. Crippen E n g i n e e r i n g L t d . , to F. Mooney, 22 August 1975, i n "Case Summary", p.15. 9. Northern N a t u r a l Resources and Environment Branch, "Case Summary", p.3. 10. I t should be noted t h a t a new g e n e r a t i o n f a c i l i t y such as the A i s h i h i k was needed, and t h a t some i n c r e a s e i n power r a t e s would have been an i n e v i t a b l e impact of any new p r o j e c t . 11. NCPC, Report on A i s h i h i k , March 1976. Crippen E n g i n e e r i n g L t d . , " A i s h i h i k Power Development, A n a l y s i s of Cost Overrun", March 1976. 12. R. N. Dalby & A s s o c i a t e s , H y d r o - E l e c t r i c Development, A i s h i h i k Yukon, S t r u t t Lake NWT., and Northern Canada  Power Commission, (Dalby Report), A p r i l 1976. 13. Mr. Dalby was at the time an e n g i n e e r i n g c o n s u l t a n t w i t h e x t e n s i v e u t i l i t y i n d u s t r y e x p e r i e n c e , former s e n i o r v i c e p r e s i d e n t of the Canadian U t i l i t i e s L t d . , and p r e s e n t c h a n c e l l o r of the U n i v e r s i t y of A l b e r t a . 14. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.3. I t i s not s t a t e d what p r o p o r t i o n of NCPC's borrowings were made at what r a t e . - 127 -15. NCPC, Report on A i s h i h i k , p.8-0. 16. Crippen E n g i n e e r i n g L t d . , " A n a l y s i s o f Cost Overrun", C o n c l u s i o n s , p.2. 17. NCPC, Report on A i s h i h i k , S e c t i o n 8, p.2. 18. J . Lowe to J . Smith, Chairman, NCPC, 2 9 March 1976, i n Report on A i s h i h i k . 19. NCPC, Report on A i s h i h i k , S e c t i o n 4, p.5. 20. Ibid.., S e c t i o n 7, p . l . 21. I b i d . 22. Crippen E n g i n e e r i n g L t d . , " A n a l y s i s of Cost Overrun", Appendix 1. 23. I b i d . 24. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.15. 25. Crippen E n g i n e e r i n g L t d . , " A n a l y s i s of Cost Overrun", p.5. 26. I b i d . 27. NCPC, Report on A i s h i h i k , S e c t i o n 4, I n t r o d u c t i o n . Delays i n r e c e i v i n g a land r e s e r v a t i o n appear to be i n l a r g e p a r t a t t r i b u t a b l e to the o f f i c e o f the Commissioner of the Yukon, Mr. J . Smith. NCPC, Report on A i s h i h i k , r e f s . 4.02, 4.03, 4.04. 28. NCPC, Report on A i s h i h i k , S e c t i o n 9, p.2. 29. Crippen E n g i n e e r i n g L t d . , C o n c l u s i o n s , p.2. 30. NCPC, Report on A i s h i h i k , S e c t i o n 9, p . l . 31. J . Lowe to J . Smith, 29 March 1976, i n Report on A i s h i h i k . 32. J . Smith to J . Buchanan, M i n i s t e r o f Indian and Northern A f f a i r s , 10 A p r i l 1976. 33. B. Boyd, Chairman, Yukon T e r r i t o r y Water Board, to Hon. J . Buchanan, 7 J u l y 1976. 34. W. Almand, M i n i s t e r of Indian and Northern A f f a i r s , to B. Boyd, 2 9 September 197 6. 35. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.3,4. - 128 -36. Department of Indian and Northern A f f a i r s , "NCPC Report Released" (press r e l e a s e ) , 22 A p r i l 1976. 37. The c o s t overrun f o r the A i s h i h i k p r o j e c t , t o p l a c e i t i n broader context, i s not without precedent among p r o j e c t s c o n s t r u c t e d i n the n o r t h d u r i n g the same time p e r i o d . A tr e n d appears t o have developed i n the accuracy of q u a n t i t a t i v e estimates p r o v i d e d by p r o j e c t proponents which reduces the a b i l i t y f o r r e s p o n s i b l e agencies and the p u b l i c i n ge n e r a l to make informed d e c i s i o n s . R e c a l l t h a t d u r i n g the May 1972 h e a r i n g , the c o s t estimate given by NCPC was f o r $12 m i l l i o n , and i t was s t a t e d t h a t the p r o j e c t would not r e q u i r e an i n c r e a s e i n e l e c t r i c a l r a t e s . As J u s t i c e Berger p o i n t s out: "In t r y i n g to p r e d i c t the impact of l a r g e - s c a l e f r o n t i e r p r o j e c t s , we should be r e a l i s t i c about the c o s t estimates t h a t the companies p r e s e n t . L a r g e - s c a l e f r o n t i e r p r o j e c t s u s u a l l y c o s t much more than was i n i t i a l l y e stimated. We have seen the estimated c o s t o f the James Bay p r o j e c t i n c r e a s e t h r e e - f o l d , from $6 b i l l i o n i n 1971 to $16 b i l l i o n i n 1976. In 1970, the estimated c o s t o f the t r a n s - A l a s k a p i p e l i n e was $900 m i l l i o n ; today, w i t h the p r o j e c t near completion, i t i s apparent t h a t the c o s t w i l l be approximately $8 b i l l i o n . The A l a s k a P i p e l i n e S e r v i c e Company o r i g i n a l l y a dvised the St a t e o f A l a s k a t h a t i t would r e q u i r e some 6,000 to 8,000 workers to b u i l d the p i p e l i n e . In f a c t , d u r i n g both the 1975 and 1976 c o n s t r u c t i o n seasons, 24,000 workers were employed on i t . We have seen the estimated c o s t of the A r c t i c Gas p r o j e c t r i s e from 5.6 b i l l i o n i n March 1974 to approximately $8 b i l l i o n today. T h i s estimate i s not, of course, the c o s t o f the whole p i p e l i n e , but o n l y of the p a r t o f i t t h a t w i l l run through Canada. The F o o t h i l l s p i p e l i n e n o r t h of 60 has undergone a s i m i l a r i n c r e a s e , from an estimated $1.71 b i l l i o n , when i t was f i r s t proposed i n 1974, to over $3 b i l l i o n i n 1977. A r c t i c Gas w i l l be a s k i n g the Government of Canada and the Government of the Un i t e d S t a t e s t o guarantee repayment of t h e i r borrowings, f o r c o s t overruns, and F o o t h i l l s w i l l seek a s i m i l a r guarantee." ( J u s t i c e T'. R. Berger, Report of the Mackenzie V a l l e y P i p e l i n e I n q u i r y , 1977, V o l . 1 , p.88). - 129 -CHAPTER SEVEN FINAL STUDIES AND THE THIRD HEARING - AUGUST, 1975 I. INTRODUCTION The course of the h i s t o r y of the A i s h i h i k p r o j e c t takes two somewhat separate paths a f t e r the water l i c e n c e was granted t o permit c o n s t r u c t i o n i n e a r l y 1973. One path i n v o l v e s the c o n s t r u c t i o n and commissioning of the p r o j e c t , and how the c o s t overruns were d e a l t w i t h , w h i l e the othe r c o n s i s t s o f the process t h a t was undertaken to amend the water l i c e n c e . NCPC d i d f i n a l l y p r o v i d e a systems study and a d d i t i o n a l i n f o r m a t i o n on the environmental e f f e c t s of changing the c o n d i t i o n s of the water l i c e n c e . The f i n d i n g s of these s t u d i e s were s u f f i c i e n t to r e c e i v e a water l i c e n c e t h a t would permit NCPC to use a 12.5 f o o t storage range and reduced flow r e l e a s e s over P t t e r F a l l s . The l i c e n c e was i s s u e d , but NCPC had not y e t taken advantage of the i n c r e a s e d a l l o w a b l e storage range. This chapter d e s c r i b e s the important events t h a t took p l a c e d u r i n g the t h i r d h e a r i n g , and the s t u d i e s t h a t were undertaken by NCPC's c o n s u l t a n t s t o support i t s request f o r an amended l i c e n c e . - 130 -I I . THE THIRD HEARING The t h i r d h e a r i n g took p l a c e on August 28 and 29, and September 17, 1975. Mr. Brandon was no longer Chairman of the Water Board, and was r e p l a c e d by Mr. B. Boyd. Most of the r e s t of the members of the Board had a l s o been changed s i n c e the pre v i o u s h e a r i n g . Major b r i e f s were made on b e h a l f of l o c a l N a t i v e o r g a n i z a t i o n s and by r e p r e s e n t a t i v e s of the F i s h e r i e s and Marine S e r v i c e . P r o c e d u r a l d i f f i c u l t i e s o c c u r r e d f r e q u e n t l y d u r i n g the h e a r i n g , and an atmosphere of c o n f r o n t a t i o n and f r u s t r a t i o n appear t o have c h a r a c t e r i z e d the proceedings. At the o u t s e t of the h e a r i n g , a r e p r e s e n t a t i v e of the F i s h e r i e s and Marine S e r v i c e o b j e c t e d t o the proceedings on the grounds t h a t the Water Board had not permitted a r e c e n t r e p o r t compiled by the S e r v i c e to be t a b l e d . The h e a r i n g continued, and s i n c e the r e p o r t had al r e a d y become a v a i l a b l e t o the p u b l i c , the Board l a t e r agreed t h a t i t be t a b l e d . The reason why the r e p o r t was not i i n i t i a l l y accepted i s t h a t i t s contents were not assured o f being i n accordance w i t h f e d e r a l government p o l i c y . The Department of the Environment and the Department of Indian and Northern A f f a i r s had, ap p a r e n t l y , agreed a t a s e n i o r l e v e l t h a t a l l p r e s e n t a t i o n s at - 131 -Water Board hearings c o n s i s t o n l y of the f o l l o w i n g : 1. The s t u d i e s or p r e s e n t a t i o n s should be s c i e n t i f i c , o b j e c t i v e , f a c t u a l analyses p e r t i n e n t t o the a p p l i c a t i o n . 2. The s t u d i e s or p r e s e n t a t i o n s should be t a b l e d w i t h the Water Board p r i o r to the h e a r i n g and p u b l i c l y r e l e a s e d . The author or other c o n t r i b u t o r s may then respond to qu e s t i o n s , but should not present the study or other m a t e r i a l i n the form of a b r i e f a t a p u b l i c h e a r i n g . Comments made must be c o n s i s t e n t w i t h f e d e r a l government p o l i c y and the p e r s o n a l o p i n i o n s of the author or other c o n t r i b u t o r should be avoided. 2 Mr. Boyd e x p l a i n e d t h a t : We have r e p e a t e d l y requested assurance t h a t t h i s document r e p r e s e n t s the position of the Department of the Environment as opposed to the p e r s o n a l views of the authors, but such assurance has not been forthcoming. 3 I t i s s u r p r i s i n g t h a t a p o l i c y agreement of t h i s nature would have been made and t h a t i t would have been accepted by the Board, s i n c e by r e f u s i n g to hear a r e p r e s e n t a t i o n the Board's d e c i s i o n c o u l d be appealed under s e c t i o n 21 of the N.I.W.A. Mr. Boyd's app a r e n t l y w i l l i n g compliance with t h i s p o l i c y agreement c o n t r a s t s w i t h Mr. Brandon's strong and immediate r e f u s a l to accept any of the g u i d e l i n e s the A s s i s t a n t Deputy M i n i s t e r attempted to p l a c e on the Water Board p r i o r t o the f i r s t h e a r i n g . The F i s h e r i e s S e r v i c e r e p o r t t h a t was t a b l e d a t the h e a r i n g was very c r i t i c a l of the q u a l i t y of i n f o r m a t i o n - 132 -contained i n the Pearse Bowden "Compendium Report" of May, 1975 and the Crippen Engineering/Pearse Bowden r e p o r t of June, 1975, which were presented to the Water Board by NCPC t o support i t s a p p l i c a t i o n f o r an amended l i c e n c e . In the o p i n i o n of the authors of the F i s h e r i e s S e r v i c e r e p o r t , NCPC's c o n s u l t a n t s took " c o n s i d e r a b l e l i b e r t i e s i n the i n t e r p r e t a t i o n of c e r t a i n b i o l o g i c a l 4 and e n g i n e e r i n g data". Information p r o v i d e d by NCPC's c o n s u l t a n t s on the v a l u e of the f i s h e r y , i t s use, the degree of s i l t a t i o n caused by f l o o d i n g and i t s e f f e c t on the f i s h p o p u l a t i o n s , and the nature of the lake i t s e l f , was questioned i n the F i s h e r i e s r e p o r t . The main reason behind the c r i t i c i s m s o f f e r e d i n the r e p o r t involves the view expressed by NCPC t h a t t h e r e was no economic j u s t i f i c a t i o n f o r the environmental safeguards 5 recommended by the F i s h e r i e s S e r v i c e . Mr. W. J . Schouwenburg, one of the authors of the r e p o r t , s t a t e d t h a t : ... i t i s c l e a r from the c o n s u l t a n t ' s r e p o r t s prepared on b e h a l f of NCPC t h a t NCPC i s u n w i l l i n g to p r o v i d e s u f f i c i e n t flow r e l e a s e s from A i s h i h i k Lake to maintain f i s h p r o d u c t i o n and i s u n w i l l i n g to expend res o u r c e s to maintain the environmental and a e s t h e t i c q u a l i t i e s of A i s h i h i k Lake. 6 L o c a l N a t i v e o r g a n i z a t i o n s came w e l l - p r e p a r e d t o the h e a r i n g . A d e t a i l e d b r i e f was submitted by the Champagne/ A i s h i h i k Band, sponsored by the Yukon Native Brotherhood - 133 -and the C o u n c i l f o r Yukon Indians. The c o n s u l t i n g f i r m Synergy West of Ca l g a r y was commissioned to conduct an impact a n a l y s i s of the p r o j e c t on A i s h i h i k V i l l a g e , and Mr. Lueck, a Whitehorse lawyer who pla y e d a very a c t i v e r o l e i n the h e a r i n g , a l s o attended to r e p r e s e n t N a t i v e i n t e r e s t s . I I I . INFORMATION PROVIDED FOR THE HEARING A. The Systems Study The f i r s t systems study, termed "Phase I " , was completed i n November, 1974. The study was based on a simple computer program and was not, a p p a r e n t l y , c o n s i d e r e d by 7 the Board t o be s u f f i c i e n t l y comprehensive. The "Phase study was t h e r e f o r e undertaken, and i t was completed i n May, 1975. T h i s study was used to j u s t i f y NCPC's request f o r a l a r g e r storage range and reduced flow r e l e a s e s , which was granted by the Water Board f o l l o w i n g the August September 1975 h e a r i n g s . Crippen E n g i n e e r i n g conducted both s t u d i e s . In order t o overview the procedures, methods, c r i t e r i a and g e n e r a l approach adopted by Crippen E n g i n e e r i n g i n undertaking the systems study, the Water Board h i r e d Acres C o n s u l t i n g S e r v i c e s of Vancouver. The Water Board intended t h a t Acres would be able to c o n f i r m the a c c e p t a b i l i t y o f the economic e v a l u a t i o n s made by the Q systems study of changes i n the water l i c e n c e . - 134 -The Water Board's c o n s u l t a n t was i n agreement w i t h the methodology and c o n c l u s i o n s of the systems study. In a r e p o r t prepared f o r the Water Board i n August, 1975, Acres s t a t e d t h a t : Having examined the methodology and b a s i c c r i t e r i a adopted by NCPC's c o n s u l t a n t , we b e l i e v e t h a t t h e i r a n a l y s i s p r o v i d e s a r e a l i s t i c assessment of the v a l u e of the A i s h i h i k water. 9 1. E v a l u a t i o n of B e n e f i t s The method used to e v a l u a t e the b e n e f i t s o f the p r o p o s a l t o i n c r e a s e the storage range and reduce the flows over O t t e r F a l l s i s d e s c r i b e d as f o l l o w s : ,.. power b e n e f i t s were ev a l u a t e d on the b a s i s of p r e s e n t worth d o l l a r savings a t t a i n a b l e through deferment i n terms of complete years of the next r e q u i r e d hydro-e l e c t r i c development, or stage t h e r e o f , r e s u l t i n g from i n c r e a s e d storage on A i s h i h i k Lake and reduced flows over O t t e r F a l l s and through the r i v e r reach upstream of Canyon Lake. 10 E v a l u a t i o n of the l o s s e s to the power system due to r e s t r i c t i o n s on the A i s h i h i k p l a n t o p e r a t i o n were t h e r e f o r e based on the c o s t r e s u l t i n g from e a r l i e r commencement of f u t u r e hydro p l a n t s , l a b e l l e d i n the study p l a n t s "X" and "Z". A c o s t would be i n c u r r e d by an e a r l i e r c o n s t r u c t i o n o f new hydro p l a n t s t o the degree t h a t the r a t e o f i n t e r e s t exceeds the r a t e o f i n f l a t i o n over the p e r i o d of a n a l y s i s . - 135 -The Phase I I study mentioned t h a t : The e v a l u a t i o n was conducted on the b a s i s of ... assumed c a p i t a l and o p e r a t i n g c o s t s ; and i n t e r e s t , d i s c o u n t , and i n f l a t i o n r a t e s . . . The s e l e c t i o n of these f a c t o r s was p a r t i c u l a r l y d i f f i c u l t a t a time when the i n f l a t i o n r a t e i s of the same order as the i n t e r e s t r a t e and both are changing r a p i d l y . I t might appear t h a t a c a p i t a l expenditure delayed a year c o u l d r e s u l t i n no s a v i n g , s i n c e the year's c a r r y i n g charges c o u l d be e q u a l l e d by the i n c r e a s e i n c o s t due to a year's i n f l a t i o n . Over any s u b s t a n t i a l p e r i o d o f time, t h i s cannot be the case, s i n c e the i n t e r e s t r a t e w i l l a d j u s t to p r o v i d e a r e t u r n over i n f l a t i o n , and the e a r l i e r requirement of a d d i t i o n a l g e n e r a t i n g c a p a c i t y w i l l i n c u r s u b s t a n t i a l system c o s t s which must be r e f l e c t e d i n the r a t e s f o r e l e c t r i c i t y . 11 Using an assumed magnitude of d i f f e r e n c e between the r a t e of i n t e r e s t and the r a t e o f i n f l a t i o n over the s i x t e e n - y e a r study p e r i o d , the systems study determined t h a t i n c r e a s i n g the storage range and r e d u c i n g flows over O t t e r F a l l s would serve t o d e f e r the need t o i n s t a l l new g e n e r a t i n g p l a n t s , thus r e s u l t i n g i n c a p i t a l s a v i n g s . 2. Assumptions A l a r g e number of assumptions had to be made to c a r r y out the Phase I I study. Some of these i n c l u d e : The f o l l o w i n g r a t e s would be maintained over the si x t e e n - y e a r p e r i o d of a n a l y s i s : General I n f l a t i o n 5% per annum Hydro C a p i t a l I n f l a t i o n 6% I n t e r e s t Rate 9% Hydro F i x e d and Operating Charges 11% Discount Rate 9% 12 per annum - 136 -The study did not explain why these p a r t i c u l a r rates were selected. It also did not provide an evaluation using d i f f e r e n t sets of i n t e r e s t and i n f l a t i o n rates. A small change i n these assumed rates of i n t e r e s t and i n f l a t i o n would have a s i g n i f i c a n t e f f e c t on the economic evaluations made by the systems study of c a p i t a l savings r e s u l t i n g from plant postponements. The study assumed that NCPC would be successful in bringing plants "X" and "Z" on l i n e just when required, that plant "X" would be located at Five Fingers Rapids on the Yukon River, and plant "Z" would be located at the Upper Canyon s i t e on the Frances River, and that they would cost $138.5 13 m i l l i o n and $159.5 m i l l i o n respectively. "(19.75. $)_ A change i n any one of these assumptions would also have a s i g n i f i c a n t e f f e c t on the outcome of the analysis. I t was assumed that the system demands would grow continually at a more or -less uniform rate, and that the most important use of the storage range would be to help "smooth out" otherwise abrupt changes i n the system's generating c a p a b i l i t y r e s u l t i n g from the commissioning of each new plant. - 137 -The v a l u e of the storage range was t h e r e f o r e l a r g e l y d e r i v e d from i t s a b i l i t y to help c o o r d i n a t e the "uniform" r a t e s of l o a d growth with the "abrupt" i n c r e m e n t a l a d d i t i o n s t o the g e n e r a t i o n system. As e x p l a i n e d i n the Phase.II study: ... the most important use of such r e s e r v e s -p a r t i c u l a r l y i n a system w i t h a growing l o a d demand - may be t h a t of s t o r i n g energy w h i l e excess g e n e r a t i n g c a p a c i t y i s a v a i l a b l e and drawing upon i t l a t e r to postpone expenditures on the next hydro p l a n t . The l o a d demand tends  to grow c o n t i n u a l l y a t a more or l e s s uniform  r a t e ; whereas the c a p a c i t y of the g e n e r a t i n g  system to supply the l o a d i s i n c r e a s e d i n  abrupt steps as new p l a n t s are added. 14 (emphasis added) The study does not i n d i c a t e what e f f e c t the development of s e v e r a l new mines w i t h i n a s h o r t p e r i o d of time, or a s i n g l e l a r g e mine would have on the value of the storage range of A i s h i h i k i n being able to postpone a d d i t i o n s to the system. The study does, however, mention t h a t "a major i n d u s t r i a l or m i n e r a l p r o c e s s i n g l o a d would s i g n i f i c a n t l y change the p i c t u r e on the s m a l l Whitehorse 15 system". 3. Study F i n d i n g s The Phase I I study concluded t h a t s i g n i f i c a n t economic b e n e f i t s would r e s u l t from i n c r e a s i n g the storage range and reducing the flows over O t t e r F a l l s . - 138 -The l o s s e s due- to storage r e s t r i c t i o n s are. f u l l y as g r e a t as i n d i c a t e d i n the Phase. I study and i n approximate f i g u r e s are as below: Storage Range 6 f t 10. f t 12,5 f t 17 .,5 f t •< >~ < « =>• System Loss $14,5 m i l l i o n $5 m i l l i o n $5,5 m i l l i o n T o t a l Loss; $25 m i l l i o n i n the 16-year study p e r i o d . T h i s t o t a l l o s s i s the r e s u l t of an average, e a r l i e r requirement f o r P l a n t 'X' by 3 1/2 years and P l a n t 'Z' by 1 1/2 y e a r s . . . The. power l o s s e s due to i n c r e a s e d r e q u i r e d minimum flows over O t t e r F a l l s are approximately as below; Minimum Summer Flow -. n n c - i n n n c _ ' . . „ ,, 100 cfs^m 60.0 c f s-m 1000 cfs-m Over O t t e r F a l l s System Loss $3 m i l l i o n $3,5 m i l l i o n T o t a l Loss; $6,5 m i l l i o n i n the 16_^year study period."*"^ I t i s not mentioned how much: accuracy c o u l d be a t t a c h e d to these f i n d i n g s . 4. P r e s e n t a t i o n of Study F i n d i n g s On the. b a s i s of the f i n d i n g s of the. Phase I I study, NCPC's Regional Manager s t a t e d d u r i n g the t h i r d h e a r i n g t h a t : .,. a d d i t i o n a l revenue, with a present worth, of about 28 m i l l i o n d o l l a r s would have to be o b t a i n e d from i n d i v i d u a l and c o r p o r a t e Yukon consumers over the next s i x t e e n years- and a d d i t i o n a l c o s t s would continue beyond t h a t time as long as the water r e s t r i c t i o n s are made. 17 Another NCPC o f f i c i a l s t a t e d d u r i n g the h e a r i n g t h a t the present l i c e n c e r e s t r i c t i o n s i n e f f e c t doubled the c o s t of power produced from the p r o j e c t : Here are the s o b e r i n g f a c t s . The busbar c o s t at A i s h i h i k p l a n t w i l l , w ith the e x i s t i n g l i c e n c e , be about 6 cents per k i l o w a t t hour. The busbar c o s t of A i s h i h i k p l a n t w i t h the amended l i c e n c e as o u t l i n e d i n our a p p l i c a t i o n w i l l be about 3 cents per k i l o w a t t hour. 18 - 139 -Despite the l a r g e number of d i f f i c u l t assumptions and p r e d i c t i o n s made i n the systems study, NCPC o f f i c i a l s appear to have presented the f i n d i n g s o f the study i n a manner t h a t purported a gr e a t d e a l of accuracy. B. Assessment of Environmental Costs In May 1975, Pearse Bowden completed "Environmental I m p l i c a t i o n s of A i s h i h i k R i v e r Power Development, A 19 Compendium Report". The f i n d i n g s o f t h i s r e p o r t i n c l u d e d a q u a n t i f i e d assessment of the environmental c o s t s t h a t would r e s u l t from an i n c r e a s e d storage range and decreased flows over O t t e r F a l l s . The purpose of p r o v i d i n g t h i s assessment of environmental c o s t s was so t h a t they c o u l d be "compared w i t h the va l u e of power p r o d u c t i o n i n determining the optimum use of A i s h i h i k 20 water". As the r e p o r t e x p l a i n e d : I t i s r a t i o n a l t o continue use of the A i s h i h i k system and i n c r e a s e the d i v e r s i o n of water f o r power p r o d u c t i o n o n l y i f the va l u e of the energy o b t a i n e d from doing so i s i n excess of the c o s t s o f o b t a i n i n g i t . An a n a l y s i s of how environmental c o s t s i n c r e a s e as the degree to which the system i s used f o r power g e n e r a t i o n i n c r e a s e s has been undertaken, to a s s i s t i n d e c i d i n g on the optimum use of A i s h i h i k water. 21 I t was intended, then, t h a t the a n a l y s i s would i d e n t i f y and e v a l u a t e a l l o f the important c o s t s i n v o l v e d w i t h the implemention of the proposed water l i c e n c e . - 140 -The r e s u l t s of Pearse Bowden's assessments of environmental c o s t s were compared with the r e s u l t s of the Phase I I study i n another r e p o r t , "Review of Power System and Environmental S t u d i e s and Recommended Water L i c e n c e A p p l i c a t i o n " , which was j o i n t l y authored by Pearse Bowden and Crippen E n g i n e e r i n g . The b e n e f i t s t h a t would accrue from the l i c e n c e a p p l i c a t i o n , as determined from the Phase I I study, f a r exceeded the v a r i o u s environmental c o s t s t h a t were c a l c u l a t e d by Pearse Bowden. For i n s t a n c e , i t was found by the Phase I I study t h a t a 17.5 f o o t storage range would r e s u l t i n about $25 m i l l i o n i n power b e n e f i t s , whereas the t o t a l q u a n t i f i e d c o s t t h a t would r e s u l t from u s i n g 22 t h i s storage range would be o n l y $531,000. T h i s t o t a l q u a n t i f i e d c o s t c o n s i s t e d of an assessment of the c o s t o f c l e a r i n g the l a k e s h o r e , r e p a i r c o s t s f o r the A i s h i h i k V i l l a g e , e r o s i o n p r o t e c t i o n f a c i l i t i e s , and the v a l u e of f i s h e r y and w i l d l i f e l o s s e s . The r e p o r t d i d r e c o g n i z e t h a t some allowance had to be made f o r n o n - q u a n t i f i e d c o s t s a s s o c i a t e d w i t h i n c r e a s i n g the storage range. Estimated c o s t s were t h e r e f o r e a r b i t r a r i l y doubled. T h i s approach was c o n s i d e r e d to more than adequately account f o r n o n - q u a n t i f i e d c o s t s . As the r e p o r t e x p l a i n s : - 141 -Since the main component of the estimated storage c o s t s i s f o r e r o s i o n p r e v e n t i v e work and p r o t e c t i o n o f A i s h i h i k V i l l a g e , which can be estimated reasonably a c c u r a t e l y , the e f f e c t o f d o u b l i n g a l l c o s t s i n t h i s manner i s r e a l l y t o expand the c o s t s estimated f o r f i s h e r i e s and w i l d l i f e by a f a c t o r of about 12. 23 I t was a l s o s t a t e d i n the "Compendium Report" t h a t non-q u a n t i f i e d a e s t h e t i c e f f e c t s were not of importance: ... while the estimates do not i n c l u d e n o n - q u a n t i f i e d a e s t h e t i c impacts, i t i s not b e l i e v e d t h a t these would add s i g n i f i c a n t l y to the values estimated. 24 NCPC's c o n s u l t a n t s determined t h a t the p o p u l a t i o n of the Yukon T e r r i t o r y would, from an a e s t h e t i c p o i n t of view, be r e l a t i v e l y i n d i f f e r e n t as to whether or not A i s h i h i k Lake was r a i s e d above the h i s t o r i c high l e v e l . The e v a l u a t i o n of environmental c o s t s p r o v i d e d by NCPC's c o n s u l t a n t s appears o n l y to have r e c o g n i z e d those v a l u e s t h a t c o u l d be r e a d i l y q u a n t i f i e d i n economic terms. For example, the t o t a l value of the beaver and muskrat p o p u l a t i o n s was c a l c u l a t e d on the b a s i s o f economic r e t u r n s f o r t r a p p i n g , 25 and was determined to be $1,000. The value of the s u b s i s t e n c e f i s h e r y was c a l c u l a t e d i n the f o l l o w i n g manner: In terms of the f i s h f ed to dogs, approximately f i v e thousand pounds, replacement dog food c o u l d e a s i l y be d e l i v e r e d to the v i l l a g e f o r 25c per pound. The value of the f i s h used as dog food would thus be $1,250. To r e p l a c e the f i s h taken f o r human consumption would probably c o s t more i n the order o f $1.00 per pound, i n d i c a t i n g a t o t a l value o f $1,500. - 1 4 2 -The t o t a l annual value o f the s u b s i s t e n c e f i s h e r y i n terms of i t s replacement c o s t , i s thus about $ 2 , 7 5 0 . With a d i s c o u n t r a t e of nine per cent the presen t c a p i t a l i z e d value over the 1 6 year p e r i o d i s $ 2 3 , 0 0 0 . 2 6 The r e p o r t a l s o mentions t h a t : I t i s re c o g n i z e d t h a t the r i g h t to f i s h has i n i t s e l f a value t o the Indian people which transcends the replacement c o s t of the a c t u a l f i s h e x t r a c t e d over any p e r i o d o f time. 27 T h i s a d d i t i o n a l value was giv e n no f u r t h e r c o n s i d e r a t i o n , however. Thus, f o r the purpose of determining the optimum use of water, the value of the A i s h i h i k system f i s h e r y to the Indian people was c a l c u l a t e d i n terms of the c o s t of replacement f o o d s t u f f s . I t i s i n t e r e s t i n g to note t h a t , w h i l e the r e p o r t prepared by Pearse Bowden determined t h a t the t o t a l l o s s e s to the f i s h e r y would have a value o f $ 4 0 , 0 0 0 i f a 1 7 . 5 f o o t 2 8 storage range was used, the F i s h e r i e s and Marine S e r v i c e spent i n the order o f $ 2 5 0 , 0 0 0 to assess the f i s h e r i e s 29 i m p l i c a t i o n s a r i s i n g from the p r o j e c t . I t i s a l s o i n t e r e s t i n g to note t h a t the f o l l o w i n g statement was made by an NCPC o f f i c i a l d u r i n g the t h i r d h e a r i n g , i n response to a q u e s t i o n concerning the c o s t o f power produced from the p r o j e c t : - 143 -... to g i v e a p r e c i s e answer i s not p o s s i b l e i n t h a t the p r o j e c t i s not y e t completed and a l l the environmental c o s t s and c l a i m s f o r damages have not y e t been f i n a l i z e d . 30 There appears t o be some i n c o n s i s t e n c y between the f a c t t h a t NCPC o f f i c i a l s f e l t t h a t they c o u l d not y e t determine the c o s t o f the p r o j e c t because "environmental c o s t s and c l a i m s f o r damages" had not y e t been r e c e i v e d , w h i l e at the same time NCPC's c o n s u l t a n t s had completed a r e p o r t which pr o v i d e d t o t a l q u a n t i f i e d c o s t s f o r i n c r e a s i n g the storage range. T h i s i n c o n s i s t e n c y i s even more s t r i k i n g i n view of the f a c t t h a t i n order to s u b s t a n t i a l l y change the f i n a l c o s t of the p r o j e c t , these c o s t s would have to be i n the order of s e v e r a l m i l l i o n d o l l a r s , even though there had not been any s u b s t a n t i a l f l o o d i n g . The h i s t o r i c h i g h had o n l y been exceeded by 1.5 f e e t d u r i n g the c o n s t r u c t i o n p e r i o d . Yet, the t o t a l q u a n t i f i e d c o s t f o r m a i n t a i n i n g the l e v e l a t 2.5 f e e t above the h i s t o r i c high was determined i n Pearse Bowden's "Compendium Report",to be o n l y $316,000. The NCPC o f f i c i a l s had some j u s t i f i c a t i o n f o r a n t i c i p a t i n g t h a t damage claims c o u l d s i g n i f i c a n t l y a f f e c t the c o s t of the p r o j e c t . On June 16, 1976, the Yukon Na t i v e Brotherhood f i l e d a c l a i m f o r $4,850,000 f o r damage done to the A i s h i h i k V i l l a g e r e s u l t i n g from the maintenance - 144 -of water l e v e l s above the n a t u r a l l e v e l s and the i l l e g a l 31 i n c r e a s e s d u r i n g the c o n s t r u c t i o n p e r i o d . The Pearse Bowden r e p o r t d i d not d e a l w i t h t h i s type of q u e s t i o n , and q u a n t i f i e d c o s t s r e s u l t i n g from damages to A i s h i h i k V i l l a g e o n l y i n terms of the c o s t of undertaking c e r t a i n remedial measures. IV. SUMMARY The r e s u l t s o f the s t u d i e s undertaken by NCPC's c o n s u l t a n t s were found adequate by the Water Board f o r the purpose o f i s s u i n g an amended water l i c e n c e . These s t u d i e s i n d i c a t e d t h a t the b e n e f i t s t h a t would r e s u l t from an i n c r e a s e d storage range and reduced flows over O t t e r F a l l s would g r e a t l y exceed the environmental c o s t s t h a t would be caused by these changes. I f any degree of r e l i a b i l i t y can be p l a c e d i n the f i n d i n g s of these s t u d i e s , then NCPC c l e a r l y should be making use of the 12.5 f o o t storage range. Close to $25 m i l l i o n (.1975 $) would have been gained, a c c o r d i n g to the f i n d i n g s of these s t u d i e s , i f the 12.5 f o o t storage range was used a f t e r NCPC r e c e i v e d a l i c e n c e to do so i n the f a l l of 1975. NCPC has not y e t taken advantage of t h i s a u t h o r i z a t i o n , d e s p i t e what appears to be a c o n s i d e r a b l e economic s a c r i f i c e . - 145 -The reason why NCPC has not made use of the 12.5 f o o t storage range appears t o be because of a concern about what the r e a c t i o n of the Native Indian o r g a n i z a t i o n s might be. I t would be i n t e r e s t i n g to know whether t h i s course has been chosen f r e e l y by NCPC or whether NCPC i s responding to i n s t r u c t i o n s from the M i n i s t e r of Indian A f f a i r s and Northern Development. - 146 -CHAPTER SEVEN  REFERENCES AND NOTES 1. W.J. Shouwenburg, F i s h e r i e s and Marine S e r v i c e , Northern Operations Branch, A i s h i h i k T r a n s c r i p t , 28 August, 1975, p. 11. 2. B. Boyd, Chairman, Yukon T e r r i t o r y Water Board, A i s h i h i k T r a n s c r i p t , 28 August, 1975, p. 74. Although Mr. Boyd understood t h a t the Department of the Environment and the Department of Indian and Northern A f f a i r s had entered i n t o an agreement, there i s no r e c o r d t h a t such an agreement was f o r m a l l y made. 3. I b i d . , p. 75. 4. Department of the Environment, F i s h e r i e s and Marine S e r v i c e , Northern Operations Branch, " P r e s e n t a t i o n t o the Yukon T e r r i t o r i a l Water Board I n q u i r y i n t o the A i s h i h i k H y d r o e l e c t r i c P r o j e c t " , i n A i s h i h i k  T r a n s c r i p t , 28 August, 1975, E x h i b i t #7, p. 2. 5. I b i d . 6. Ibid.,, p. 19. 7. Crippen E n g i n e e r i n g L t d . , " A i s h i h i k R i v e r Power Development, A i s h i h i k - Whitehorse System Study Phase II Report, 2 May, 1975, p. 1-1. 8. Acres C o n s u l t i n g S e r v i c e s L t d . , "Review of Submission M a t e r i a l P e r t a i n i n g to the A i s h i h i k H y d r o - E l e c t r i c P r o j e c t NCPC A p p l i c a t i o n For Amendment of Water Use L i c e n c e " , August, 1975, p. 1. 9. I b i d . , p. 7. 10. I b i d . , p. 4. 11. Crippen E n g i n e e r i n g L t d . , "Phase I I Report", p. 4-1. 12. I b i d . , Appendix I I , p. v i . 13. I b i d . , Appendix I I , p. v. 14. I b i d . , Appendix I I I , p. i i . The assumption of uniform load growth r a t e s seems i n c o s i s t e n t with the f o l l o w i n g assessment made by the NCPC|;s General Manager of the expected lo a d growth i n the Whitehorse system made d u r i n g the May 1972 h e a r i n g : - 147 -"I would l i k e t o p o i n t out two f a c t o r s which u n d e r l i n e the complexity of l o a d f o r e c a s t i n g f o r the Whitehorse system. These a r e : a. The m i n e r a l o r i e n t e d nature of the economy with i t s i n h e r e n t dependence on world m i n e r a l p r i c i n g . Moreover, d i r e c t and i n d i r e c t consumption by the mine connected to the system c o n s t i t u t e s roughly 70% of the t o t a l energy g e n e r a t i o n from t h i s system. b. The r e l a t i v e l y s m a l l s i z e of the system as w e l l as i t s i s o l a t i o n from any other system means t h a t new loads and l a r g e i n c r e m e n t a l b l o c k s has a h i g h percentage e f f e c t on l o a d growth" John Lowe, General Manager, NCPC, A i s h i h i k General  Hearing T r a n s c r i p t , 24 May, 1972. 15. Crippen E n g i n e e r i n g L t d . , "Phase I I Report", Appendix I I , p . i . 16. I b i d . , p.5-1. 17. F. Mooney, Regional Manager, NCPC, A i s h i h i k T r a n s c r i p t , 28 August, 1975, p.3. 18. D. Steen, P l a n n i n g Department, NCPC, A i s h i h i k T r a n s c r i p t , p.88. 19. Pearse Bowden Economic C o n s u l t a n t s , "Environmental I m p l i c a t i o n s of A i s h i h i k Power Development, A Compendium Report", May, 197 5. 20. Crippen E n g i n e e r i n g L t d . , and Pearse Bowden Economic C o n s u l t a n t s , " A i s h i h i k Power Development, Review of Power System and Environmental S t u d i e s and Recommended Water L i c e n c e A p p l i c a t i o n " , June, 1975, p.2-1. 21. Pearse Bowden Economic C o n s u l t a n t s , "Compendium Report", May, 1975, p.57. 22. I b i d . , p.58. 23. Crippen E n g i n e e r i n g L t d . , and Pearse Bowden Economic C o n s u l t a n t s , "Review of Power System", p.3-6. 24. Pearse Bowden Economic C o n s u l t a n t s , May, 1975, p.44-45. "Compendium Report", - 148 -25. I b i d . , p.43. 26. I b i d . , p.42. 27. I b i d . 28. I b i d . 29. W. F. S i n c l a i r , F i s h e r i e s and Marine S e r v i c e , " P r e s e n t a t i o n to the Yukon T e r r i t o r i a l Water Board", i n A i s h i h i k  T r a n s c r i p t , 28 August, 1975, E x h i b i t #7, p.4. 30. D. Steen, A i s h i h i k T r a n s c r i p t , 28 August, 1975, p.88. Another NCPC o f f i c i a l , Mr. Watkiss, a l s o mentioned d u r i n g the h e a r i n g t h a t the c o s t of the p r o j e c t c o u l d not be determined a t t h a t time because damage cl a i m s had not yet.been r e c e i v e d : "The c o s t of the p r o j e c t cannot be f i n a l l y determined u n t i l we know what we are going to do on the p r o j e c t . We've r e c e i v e d no claims from the Indians y e t d e s p i t e seven months of w a i t i n g . There are suggestions t h a t c l a i m s are going to be very g r e a t . " A i s h i h i k T r a n s c r i p t , p.85. 31. Interview, David Joe, Yukon Native Brotherhood, August, 197 8. - 149 -PART THREE  CHAPTER EIGHT CONCLUSIONS AND RECOMMENDATIONS I. INTRODUCTION I t i s e v i d e n t t h a t a number of problems were encountered d u r i n g the course o f the h i s t o r y of the A i s h i h i k p r o j e c t . These problems may be br o a d l y c a t e g o r i z e d i n t o those t h a t were experienced d u r i n g the d e c i s i o n p r o c e s s , and those t h a t a f f e c t e d the p r o j e c t ' s outcome. T h i s chapter w i l l review the d e c i s i o n process and i d e n t i f y the major f a c t o r s t h a t c o n t r i b u t e d t o the development of problems concerning both the d e c i s i o n process and the outcome of the p r o j e c t . More s p e c i f i c e x p l a n a t i o n s w i l l a l s o be pro v i d e d f o r why the problems t h a t a f f e c t e d the outcome of the p r o j e c t o c c u r r e d . F i n a l l y , a b r i e f s e t o f recommendations w i l l be given. I I . REVIEW OF THE DECISION PROCESS A number of events took p l a c e d u r i n g the p l a n n i n g and development of the A i s h i h i k p r o j e c t which i n d i c a t e t h a t the d e c i s i o n process d i d not proceed smoothly, e f f i c i e n t l y , and i n a manner t h a t was s a t i s f a c t o r y to a l l p a r t i c i p a n t s . F o l l o w i n g NCPC's f i r s t a p p l i c a t i o n f o r a water l i c e n c e on August 31, 1971, i t was informed by s e n i o r DIAND - 150 -o f f i c i a l s t h a t an e n t i r e l y new procedure would be used to process the water l i c e n c e a p p l i c a t i o n . I t does not appear t h a t NCPC expected t h a t t h i s change would occur. Despite advice given by the Chairman of the Water Board as e a r l y as November, 1971 t h a t an environmental impact statement would need to be prepared and t h a t work on the p r e p a r a t i o n o f one should have begun a t t h a t time, NCPC d i d not h i r e a c o n s u l t a n t to undertake the p r e p a r a t i o n o f such a statement u n t i l March, 1972. The p r e l i m i n a r y environmental impact statement which was s u p p l i e d t o the Water Board f o r the May, 1972 h e a r i n g was found to be inadequate f o r the purpose of i s s u i n g a water l i c e n c e . The May, 197 2 h e a r i n g was not h e l d as a l i c e n c e h e a r i n g , c o n t r a r y to the e x p e c t a t i o n s of a l l p a r t i c i p a n t s i n the d e c i s i o n p r o c e s s . On the same day t h a t the h e a r i n g was to be h e l d , the Water Board decided t h a t i t would not be p o s s i b l e to i s s u e a l i c e n c e at t h a t time because the Regulations f o r the N.I.W.A. had not been promulgated. Immediately a f t e r the h e a r i n g the Water Board informed NCPC t h a t more i n f o r m a t i o n about the environmental e f f e c t s of the p r o j e c t would have to be s u p p l i e d before a l i c e n c e c o u l d be i s s u e d . NCPC d i d not i n i t i a t e f u r t h e r b i o l o g i c a l and b o t a n i c a l surveys u n t i l a f t e r the Regulations had - 151 -a c t u a l l y been promulgated, which was i n September, 1972, f o u r months a f t e r the h e a r i n g . A h e a r i n g c o u l d have been h e l d immediately a f t e r the R e g u l a t i o n s were promulgated and the Water Board c o u l d have recommended on the issuance of a water l i c e n c e a t t h a t time. Due to NCPC's own d e l a y s i n the completion of the necessary s t u d i e s , the next h e a r i n g was not h e l d u n t i l January, 197 3. NCPC changed the terms o f i t s a p p l i c a t i o n between the May, 1972 and January, 1973 h e a r i n g s , and i n d i c a t e d t h a t the economic v i a b i l i t y of the p r o j e c t depended on the Water Board g r a n t i n g i t s new requests f o r an i n c r e a s e d storage range on A i s h i h i k Lake and reduced compensation flows over O t t e r F a l l s . F o l l o w i n g the January, 1973 h e a r i n g , the Water Board decided t o i s s u e a water l i c e n c e to permit c o n s t r u c t i o n of the p r o j e c t . The Water Board d i d not grant NCPC's new r e q u e s t s , however, s i n c e i t determined t h a t i n s u f f i c i e n t i n f o r m a t i o n had been s u p p l i e d to support these changes. Ac c o r d i n g to s t u d i e s made by the Water Board's c o n s u l t a n t , the economic v i a b i l i t y of the p r o j e c t would not be s e v e r e l y a f f e c t e d by the r e s t r i c t i o n s imposed i n the l i c e n c e . NCPC d i d not decide to accept the water l i c e n c e and d i d not undertake the d e t a i l e d d e s i g n of the p r o j e c t u n t i l A p r i l , 1973. Although NCPC d i d not have any a l t e r n a t i v e p l a n s , i t f e l t t h a t the c o n d i t i o n s of the water l i c e n c e were so severe t h a t the p r o j e c t should perhaps not be c o n s t r u c t e d at a l l . As a r e s u l t , i t chose not to make the necessary expenditures on d e t a i l e d d e s i g n and oth e r p r e p a r a t i o n s f o r c o n s t r u c t i o n u n t i l i t decided t o begin c o n s t r u c t i o n on the p r o j e c t . NCPC a l s o decided t o adopt a c r a s h c o n s t r u c t i o n schedule i n order to prevent the n e c e s s i t y o f i n s t a l l i n g and o p e r a t i n g d i e s e l generators d u r i n g the wint e r of 1974-75. Th i s c r a s h program was implemented d e s p i t e the f a c t t h a t the d e t a i l e d p r e p a r a t i o n s f o r c o n s t r u c t i o n had not been completed. The c r a s h schedule was a l s o u n s u c c e s s f u l i n meeting i t s o b j e c t i v e , and the a d d i t i o n a l c o s t of i n s t a l l i n g and o p e r a t i n g d i e s e l generators d u r i n g the wint e r of 1974-75 was $4 m i l l i o n . I t i s l i k e l y t h a t the d e c i s i o n to adopt the c r a s h schedule be f o r e d e t a i l e d p r e p a r a t i o n s f o r the c o n s t r u c t i o n of the p r o j e c t had been completed r e s u l t e d i n a s i g n i f i c a n t i n c r e a s e i n the f i n a l c o s t of the p r o j e c t . The p r o j e c t was estimated to c o s t $17 m i l l i o n a t the s t a r t o f c o n s t r u c t i o n , and f i n a l l y c o s t $39 m i l l i o n . - 153 -The d e c i s i o n process i s marked, then, by a c o n f u s i n g and g e n e r a l l y u n s a t i s f a c t o r y water l i c e n c i n g process and an i n e f f i c i e n t and c o s t l y c o n s t r u c t i o n phase. I I I . FACTORS AFFECTING THE DECISION PROCESS AND OUTCOME A. S t r u c t u r e o f the D e c i s i o n System There are two d i f f e r e n t c h a r a c t e r i s t i c s of the d e c i s i o n system which a f f e c t e d the progress o f the decision-making process and the outcome of the p r o j e c t . The f i r s t concerns the a l l o c a t i o n of f u n c t i o n s and r e s p o n s i b i l i t i e s t h a t were taken d u r i n g the course of p l a n n i n g and development of the p r o j e c t , and the second concerns the nature of the r e l a t i o n s h i p between the Water Board, NCPC and DIAND. 1. The A l l o c a t i o n o f R e s p o n s i b i l i t y C e r t a i n r e s p o n s i b i l i t i e s were assumed by each of the major a c t o r s i n the d e c i s i o n process f o r the A i s h i h i k p r o j e c t . The a c t u a l d i v i s i o n of r e s p o n s i b i l i t i e s appears to have been an important element t h a t c o n t r i b u t e d t o many of the problems t h a t arose d u r i n g the p r o j e c t ' s h i s t o r y , s i n c e i t a l l o c a t e d a l a r g e p r o p o r t i o n o f the a c t i v i t i e s e s s e n t i a l t o the p l a n n i n g and development of the p r o j e c t e x c l u s i v e l y to NCPC. NCPC had the r e s p o n s i b i l i t y of undertaking the f o l l o w i n g t a s k s : e s t i m a t i o n of demand, s e l e c t i o n of the p r o j e c t , design of the p r o j e c t , s u p p l y i n g t h e necessary i n f o r m a t i o n to support i t s a p p l i c a t i o n f o r a water l i c e n c e , f o r m u l a t i n g c o s t e s t i m a t e s , and implementing the p r o j e c t . A l l of the stages o f p l a n n i n g and development o f the p r o j e c t came under the purview of NCPC and, as shown below, no other agency became i n v o l v e d i n many of these t a s k s . In order to accomplish t h i s range of r e s p o n s i b i l i t i e s , NCPC r e l i e d e x t e n s i v e l y on i t s c o n s u l t a n t s . The Water Board was charged w i t h the r e s p o n s i b i l i t y of implementing the N.I,W.A., and t h e r e f o r e had t o deci d e whether NCPC's p r o p o s a l r e p r e s e n t e d the optimum use of the water r e s o u r c e s , and to a c q u i r e from NCPC the necessary i n f o r m a t i o n to make t h i s d e c i s i o n . The M i n i s t e r s who were i n p l a c e between 1971 and 1976 were u l t i m a t e l y r e s p o n s i b l e f o r a l l o f NCPC's a c t i o n s , and f o r the acceptance or r e j e c t i o n o f the Water Board's recommendations. The d i r e c t r o l e p l a y e d by these M i n i s t e r s c o n s i s t e d o f making s p e c i f i c d e c i s i o n s , which i n c l u d e : the d e c i s i o n t o use the N.I.W.A. i n September, 1971, the d e c i s i o n s to accept a l l of the Water Board's recommendations, the d e c i s i o n to request an independent r e p o r t on the co s t overrun, and the d e c i s i o n not to ho l d a p u b l i c i n q u i r y i n t o NCPC's h a n d l i n g of the p r o j e c t . - 155 -By v i r t u e of the p o s i t i o n s they h e l d , c e r t a i n s e n i o r DIAND o f f i c i a l s may have pla y e d important r o l e s i n the p r o j e c t ' s h i s t o r y , although there are few r e c o r d s a v a i l a b l e t h a t these i n d i v i d u a l s s i g n i f i c a n t l y a f f e c t e d the progress of the d e c i s i o n process and the outcome of the p r o j e c t . The most noteworthy c h a r a c t e r i s t i c of the a l l o c a t i o n of r e s p o n s i b i l i t i e s i s t h a t no a c t o r s e x t e r n a l to NCPC and i t s c o n s u l t a n t s i n f l u e n c e d many of the most important d e c i s i o n s t h a t were made d u r i n g the p l a n n i n g and development of the p r o j e c t . The absence of such c o u n t e r v a i l i n g i n f l u e n c e s may have l i m i t e d NCPC's i n c e n t i v e to thoroughly i n v e s t i g a t e a l t e r n a t i v e s , to p r o v i d e more ac c u r a t e c o s t e s t i m a t e s , and to schedule the implementation of the p r o j e c t more c a r e f u l l y than i t d i d . Thus, the problems a s s o c i a t e d w i t h each of these f u n c t i o n s may be p a r t i a l l y ^ a t t r i b u t a b l e to t h i s p o s s i b l e weakness i n the d e c i s i o n system. I t i s concluded t h a t the p a r t i c i p a t i o n o f a d d i t i o n a l o r g a n i z a t i o n s i n these stages i n the p l a n n i n g and development of the p r o j e c t may have l e d to a more s a t i s f a c t o r y outcome. Although there were no s t r o n g c o u n t e r v a i l i n g i n f l u e n c e s t h a t a f f e c t e d some of NCPC's a c t i o n s , the Water Board and i n t e r v e n o r s at the Water Board's hearings may s t i l l have had a s u b s t a n t i a l i n f l u e n c e on the course of the h i s t o r y of the p r o j e c t and i t s f i n a l outcomes. - 156 -F i r s t , the i n t e r v e n t i o n of Mr. R u s s e l l Anthony a t the May, 1972 h e a r i n g appears to be the f a c t o r t h a t caused the Water Board to decide t h a t i t c o u l d not i s s u e a water l i c e n c e at t h a t time. T h i s s i n g l e i n t e r v e n t i o n may have been r e s p o n s i b l e f o r d e l a y i n g the issuance o f the l i c e n c e , although the Board might s t i l l have decided t h a t the i n f o r m a t i o n s u p p l i e d by NCPC was inadequate f o r the purpose o f d e c i d i n g upon a water l i c e n c e . N e v e r t h e l e s s , t h i s i n t e r v e n t i o n was s u f f i c i e n t to cause a de l a y i n the issuance of a water l i c e n c e , and gave the Water Board the o p p o r t u n i t y to request more i n f o r m a t i o n without making i t d i r e c t l y r e s p o n s i b l e f o r d e l a y i n g the l i c e n c i n g p r o c e s s . As a r e s u l t o f t h i s d e l a y , NCPC was able t o gather more i n f o r m a t i o n . T h i s a d d i t i o n a l i n f o r m a t i o n caused NCPC to s u b s t a n t i a l l y change the c o n d i t i o n s o f i t s water l i c e n c e a p p l i c a t i o n : The de l a y r e s u l t i n g from Mr. Anthony's i n t e r v e n t i o n c o u l d t h e r e f o r e have l e d to the c o n c e p t u a l i z a t i o n of a b e t t e r p l a n f o r the p r o j e c t . Second, the c r i t i c i s m s of the adequacy of i n f o r m a t i o n p r o v i d e d by NCPC concerning the environmental e f f e c t s of the. p r o j e c t which, were l e v e l l e d by a number of p a r t i c i p a n t s a t the Water Board's hearings may have helped to support the Water Board i n r e q u i r i n g t h a t the l i c e n c e adhere to environmental c o n s t r a i n t s . - 157 -The W a t e r B o a r d a n d i t s p r o c e d u r e s r e s u l t e d i n m o r e t h o r o u g h c o n s i d e r a t i o n o f t h e p r o p o s e d p r o j e c t t h a n m i g h t o t h e r w i s e h a v e b e e n t h e c a s e . The w a t e r l i c e n c i n g p r o c e s s d i d n o t , h o w e v e r , h a v e a s i g n i f i c a n t e f f e c t o n t h e s e l e c t i o n o f t h e p r o j e c t , o n some o f t h e k e y f e a t u r e s o f t h e p r o j e c t d e s i g n , o n t h e r e l i a b i l i t y o f c o s t e s t i m a t e s , a n d d i d n o t d i r e c t l y a f f e c t how t h e p r o j e c t was i m p l e m e n t e d . 2 . I n t e r - O r g a n i z a t i o n a l R e l a t i o n s h i p s A n o t h e r f a c t o r t h a t may h a v e p r e v e n t e d t h e d e c i s i o n - m a k i n g p r o c e s s f r o m p r o g r e s s i n g m o r e s m o o t h l y i s t h a t b o t h NCPC a n d t h e W a t e r B o a r d r e p o r t t o t h e same M i n i s t e r . T h i s a r r a n g e m e n t may h a v e h i n d e r e d t h e d e c i s i o n - m a k i n g p r o c e s s b y p r o v i d i n g NCPC w i t h a g r e a t e r o p p o r t u n i t y t o q u e s t i o n w h e t h e r i t was n e c e s s a r y t o f u l f i l l a l l o f t h e o b l i g a t i o n s a n d r e s p o n s i b i l i t i e s o f a n a p p l i c a n t f o r a w a t e r l i c e n c e u n d e r t h e N . I . W . A . , a n d i t d i r e c t l y q u e s t i o n e d t h i s n e e d o n s e v e r a l o c c a s i o n s . P e r h a p s i f t h e W a t e r B o a r d a n d NCPC d i d n o t r e p o r t t o t h e same M i n i s t e r , t h e n N C P C ' s a c t i o n s w o u l d h a v e t a k e n m o r e c a r e f u l l y i n t o a c c o u n t t h e a u t h o r i t y o f t h e W a t e r B o a r d . I f NCPC was a p r i v a t e company a n d n o t a C r o w n c o r p o r a t i o n , i t i s p e r h a p s e v e n m o r e l i k e l y t h a t - i t w o u l d h a v e a p p r o a c h e d t h e w a t e r l i c e n c i n g p r o c e s s w i t h m o r e c a r e . - 158 -B. D i f f e r e n c e s i n O b j e c t i v e s and P e r c e p t i o n s I t i s ev i d e n t t h a t major d i f f e r e n c e s i n o b j e c t i v e s and pe r c e p t i o n s between NCPC and the Water Board i n h i b i t e d the smooth progress o f the d e c i s i o n process, The most important o p e r a t i o n a l o b j e c t i v e t h a t NCPC pursued over most of the course of the A i s h i h i k p r o j e c t , b e g i n n i n g i n i t s i n i t i a l p l a n n i n g stages, was to develop the A i s h i h i k s i t e . As a r e s u l t , another o f NCPC's o b j e c t i v e s was to r e c e i v e a s u i t a b l e l i c e n c e t h a t would permit c o n s t r u c t i o n of the p r o j e c t t o proceed without any unnecessary d e l a y s . The o b j e c t i v e s of the Water Board were not as s t r a i g h t f o r w a r d . S e c t i o n 9 of the N.I.W.A. s t a t e s t h a t : The o b j e c t s o f the boards are to pr o v i d e f o r the co n s e r v a t i o n development and u t i l i z a t i o n o f the water reso u r c e s of the Yukon T e r r i t o r y and the Northwest T e r r i t o r i e s i n a manner t h a t w i l l p r o v i d e the optimum b e n e f i t therefrom f o r a l l Canadians and f o r the f u t u r e r e s i d e n t s o f the Yukon T e r r i t o r y and the Northwest T e r r i t o r i e s i n p a r t i c u l a r . 1 The o b j e c t i v e s pursued by the Water Board were t h e r e f o r e a f u n c t i o n of i t s judgements as to what c o n s t i t u t e d the optimum use o f the water r e s o u r c e s o f the Ea s t A i s h i h i k R i v e r . Another of the Water Board's o b j e c t i v e s was to ensure t h a t i t f u l f i l l e d the p r o v i s i o n s and d u t i e s o u t l i n e d i n the N.I.W.A. as f u l l y as p o s s i b l e , and t h a t i t was s u c c e s s f u l i n e s t a b l i s h i n g i t s e l f as an e f f e c t i v e water management agency. Consequently, i t intended t h a t - 159 -NCPC w o u l d h a v e t o m e e t a l l o f i t s r e q u e s t s f o r i n f o r m a t i o n a b o u t t h e e f f e c t s o f t h e p r o j e c t b e f o r e a w a t e r l i c e n c e was t o b e i s s u e d . NCPC d e c i d e d t h a t t h e A i s h i h i k p r o j e c t s h o u l d b e i m p l e m e n t e d w e l l b e f o r e i t s u p p l i e d s u f f i c i e n t i n f o r m a t i o n t o t h e W a t e r B o a r d t o h a v e a w a t e r l i c e n c e i s s u e d . I t a p p e a r s t h a t b e c a u s e NCPC h a d a l r e a d y made t h i s d e c i s i o n , i t p e r c e i v e d t h a t t h e W a t e r B o a r d ' s r e q u e s t s f o r m o r e i n f o r m a t i o n , a n d t h e B o a r d ' s r e s p e c t f o r t h e p r o c e d u r a l r e q u i r e m e n t s e s t a b l i s h e d u n d e r t h e N . I . W . A . , a m o u n t e d t o a n u n n e c e s s a r y e n c u m b r a n c e . The f o l l o w i n g s t a t e m e n t made i n t h e NCPC m a n a g e m e n t ' s R e p o r t o n A i s h i h i k , may b e i n d i c a t i v e o f N C P C ' s a t t i t u d e t o w a r d s t h e i n f l u e n c e o f t h e W a t e r B o a r d : The w a t e r l i c e n c i n g p r o c e s s s t i l l r e m a i n s o n e o f t h e m o s t u n p r e d i c t a b l e a n d c h a l l e n g i n g o b s t a c l e s i n t h e way o f p r o g r e s s i v e p l a n n i n g a n d i m p l e m e n t a t i o n o f f u t u r e ( a n d c u r r e n t ) p r o j e c t s n e c e s s a r y f o r t h e o r d e r l y a n d e c o n o m i c a l d e v e l o p m e n t o f p o w e r r e s o u r c e s i n t h e T e r r i t o r y . 2 T h i s s t a t e m e n t , i n a d d i t i o n t o a n u m b e r o f o t h e r s t a t e m e n t s a n d a c t i o n s made b y NCPC d u r i n g t h e h i s t o r y o f t h e p r o j e c t , i n d i c a t e s t h a t NCPC p e r c e i v e d o f t h e W a t e r B o a r d a s a n a d v e r s a r y . S u c h a n a t t i t u d e c e r t a i n l y w o u l d h a v e h i n d e r e d t h e p r o g r e s s o f t h e d e c i s i o n p r o c e s s . r- 160 r-C. Experience w i t h the D e c i s i o n Process An e n t i r e l y new water l i c e n c i n g process was f o l l o w e d f o r the A i s h i h i k p r o j e c t . The A i s h i h i k p r o j e c t was a l s o the f i r s t h y d r o e l e c t r i c p r o j e c t o f comparable s i z e b u i l t by NCPC f o r many y e a r s . Lack of experience with the water l i c e n c i n g process and w i t h the design and c o n s t r u c t i o n of a hydro f a c i l i t y such as the A s i h i h i k was probably an important cause o f many of the problems t h a t were encountered d u r i n g the h i s t o r y o f the p r o j e c t . Although some i n d i v i d u a l s i n v o l v e d i n the d e c i s i o n process may have expected t h a t the A i s h i h i k water l i c e n c e was l i k e l y t o be i s s u e d a c c o r d i n g t o the .pro v i s i o n s of the N.I.W.A., i t i s apparent t h a t very few of these p a r t i c i p a n t s had any experience i n d e a l i n g w i t h t h i s new type of pr o c e s s . Inexperience w i t h the implementation o f the N.I,W.A. l e d to misunderstandings of c e r t a i n p r o c e d u r a l requirements, and to c o n f l i c t i n g p e r c e p t i o n s of the r o l e and purpose o f the Water Board. Some of the main problems encountered d u r i n g the d e c i s i o n process f o r the water l i c e n c e i n c l u d e : The apparent f a i l u r e of a l l p a r t i c i p a n t s to r e a l i z e t h a t i t was not p o s s i b l e t o i s s u e a water l i c e n c e under s e c t i o n 15(2) of the N.I.W.A. without the Reg u l a t i o n s having been promulgated. - 161 -NCPC's r e l u c t a n c e to supply adequate i n f o r m a t i o n to the Water Board. Given the M i n i s t e r ' s acceptance of the Water Board's recommendations, i t was i n NCPC's best i n t e r e s t t o pr o v i d e a l l o f the i n f o r m a t i o n r e q u i r e d by the Water Board as promptly as p o s s i b l e . F a i l u r e to do so r e s u l t e d i n de l a y s i n the issuance o f a water l i c e n c e , and i n the issuance of a l i c e n c e which d i d not grant a l l of NCPC's r e q u e s t s . NCPC a l s o d i r e c t l y questioned the n e c e s s i t y o f p r o v i d i n g the Water Board w i t h the i n f o r m a t i o n i t requested, d e s p i t e the d i r e c t i o n g i v e n by the M i n i s t e r t o do so, and d e s p i t e the f a c t t h a t the Water Board's a u t h o r i t y t o r e q u i r e any i n f o r m a t i o n i t deems necessary i s very c l e a r l y s t a t e d i n the N.I.W.A. T h i s a c t i o n i n d i c a t e s t h a t NCPC decision-makers d i d not have a very good understanding of the extent of the Water Board's j u r i s d i c t i o n . The f a c t t h a t s e n i o r DIAND o f f i c i a l s d i d not pr o v i d e NCPC wi t h g r e a t e r d i r e c t i o n i n the process may a l s o i n d i c a t e a l a c k o f experience on the p a r t o f these i n d i v i d u a l s . I t appears reasonable to assume t h a t i f persons such as Mr. D. Hunt, who was a member of the Commission f o r NCPC and A s s i s t a n t Deputy M i n i s t e r f o r Northern Development, and Mr. B. Robinson, who was Chairman of the Commission and Deputy M i n i s t e r of DIAND, were co g n i z a n t o f the l i k e l y r e s u l t s of NCPC's a c t i o n s with r e s p e c t to the water l i c e n c i n g p r o c e s s , they would have i n s t r u c t e d NCPC to undertake the necessary surveys and s t u d i e s promptly, and to r e s p e c t a l l o f the p r o c e d u r a l requirements i n a p p l y i n g f o r a water l i c e n c e . NCPC's a c t i o n s do not, however, appear to have been s c r u t i n i z e d by these i n d i v i d u a l s . Had the v a r i o u s p a r t i c i p a n t s had g r e a t e r experience w i t h the water l i c e n c i n g process, the e n t i r e d e c i s i o n process f o r the A i s h i h i k p r o j e c t would probably have progressed much more smoothly than i t d i d . In t h i s r e g ard i t must be s t r e s s e d t h a t the A i s h i h i k water l i c e n c e process was not o n l y the f i r s t one ever made under the N.I.W.A., but the l i c e n c i n g process a l s o took p l a c e d u r i n g an e a r l y stage i n the development of environmental assessments and review proceedings i n Canada i n g e n e r a l . I t i s t h e r e f o r e not s u r p r i s i n g t h a t the major a c t o r s appear to have had very l i t t l e experience w i t h the type o f process p r e s c r i b e d by the N.I.W.A. At the same time t h a t NCPC was d e a l i n g w i t h t h i s new water l i c e n c i n g p r o c e s s , i t was a l s o r e s p o n s i b l e f o r the e n g i n e e r i n g design and c o n s t r u c t i o n o f the p r o j e c t . In c o n t r a s t w i t h most p u b l i c power u t i l i t i e s , NCPC was not accustomed t o an on-going process of d e s i g n i n g and c o n s t r u c t i n g hydro p r o j e c t s . The A i s h i h i k p r o j e c t was the f i r s t o f i t s s i z e b u i l t by NCPC s i n c e the Whitehorse Rapids p l a n t was i n s t a l l e d i n the 1950's. NCPC's l a c k o f experience w i t h the d e s i g n and c o n s t r u c t i o n of p r o j e c t s such as the A i s h i h i k may t h e r e f o r e have had s i g n i f i c a n t adverse e f f e c t s on the outcome of the p r o j e c t . As a r e s u l t of a l a c k of experience i n t h i s area, f o r i n s t a n c e , NCPC decision-makers may have p e r c e i v e d t h a t the task o f d e s i g n i n g and c o n s t r u c t i n g the p r o j e c t was going t o be much simpl e r than i t a c t u a l l y was, and t h a t i t c o u l d a f f o r d to r e l y very h e a v i l y on i t s c o n s u l t a n t s t o de s i g n the p r o j e c t and to manage i t s c o n s t r u c t i o n . Greater experience may, on the other hand, have encouraged NCPC to i n v e s t i g a t e a l t e r n a t i v e s i n g r e a t e r d e t a i l , prepare c o s t estimates f o r the p r o j e c t more c a r e f u l l y , have the d e t a i l e d p r e p a r a t i o n s f o r c o n s t r u c t i o n of the p r o j e c t completed p r i o r t o c o n s t r u c t i o n , and to av o i d the c r a s h c o n s t r u c t i o n schedule. D. Lack of Resources In a d d i t i o n to l a c k i n g experience i n the p l a n n i n g and development of h y d r o e l e c t r i c p r o j e c t s , NCPC a l s o l a c k e d other t e c h n i c a l and p r o f e s s i o n a l r e s o u r c e s . NCPC d i d not have a lawyer, h y d r o l o g i s t or g e o l o g i s t , and i t may have b e n e f i t t e d g r e a t l y from having people w i t h these backgrounds on i t s s t a f f . Because i t l a c k e d such r e s o u r c e s , NCPC was completely dependent upon i t s c o n s u l t a n t s f o r important elements i n the p l a n n i n g and de s i g n of the p r o j e c t . The s m a l l p r o f e s s i o n a l and t e c h n i c a l s t a f f NCPC had r a i s e s a s e r i o u s q u e s t i o n about the c a p a c i t y i t had to p l a n , d e s i g n and c o n s t r u c t the p r o j e c t . - 164 -IV. PROBLEMS AFFECTING THE OUTCOME The f o l l o w i n g problems had s i g n i f i c a n t e f f e c t s on the outcome of the p r o j e c t : Inaccurate c o s t estimates were formulated. NCPC made c e r t a i n d e c i s i o n s which independently added to the c o s t o f the p r o j e c t . NCPC d i d not undertake any thorough i n v e s t i g a t i o n of a l t e r n a t i v e s . The reasons behind why each of these problems o c c u r r e d are, f o r the most p a r t , very d i f f i c u l t t o a s c e r t a i n , s i n c e an adequate body of i n f o r m a t i o n on the reasons why each of these problems developed i s not a v a i l a b l e . I t must t h e r e f o r e be s t r e s s e d t h a t the f o l l o w i n g s et of e x p l a n a t i o n s can on l y be t e n t a t i v e . A. Cost Estimates The f a c t t h a t i n a c c u r a t e c o s t estimates were formulated may have been the r e s u l t of the f o l l o w i n g f a c t o r s : Over-optimism on the p a r t of NCPC decision-makers about the l i k e l y c o s t o f the p r o j e c t . The f o l l o w i n g statement made by Mr. Steen o f NCPC to Mr. Lowe, NCPC's General Manager, on October 23, 1972 on the s u b j e c t o f the l a t e s t c o s t estimate p r o v i d e s an example of the presence of t h i s f a c t o r : Since the estimate f o r the t r a n s m i s s i o n l i n e i n t o the g r i d from the A i s h i h i k s i t e i s $1.5 m i l l i o n , we co u l d be l o o k i n g a t a t o t a l c a p i t a l c o s t o f $17.7 m i l l i o n - i f Duguid's estimate i s r i g h t . I f e e l we should be ab l e to cut t h i s down by c e r t a i n e n g i n e e r i n g and a d m i n i s t r a t i v e t a c t i . e . we've got Mooney on our s i d e ! 3 Crippen E n g i n e e r i n g was p l a c e d i n a s i t u a t i o n which gave i t an i n c e n t i v e to produce estimates t h a t would he l p assure approval o f the p r o j e c t , s i n c e i t was to be r e s p o n s i b l e f o r de s i g n s t u d i e s and management of c o n s t r u c t i o n . The response t o such an i n c e n t i v e can be q u i t e unconscious; t h e r e i s no evidence t h a t Crippen i n t e n t i o n a l l y minimized estimates of c o s t s to assure approval o f the p r o j e c t . Inadequate c o n s i d e r a t i o n g i v e n to the e f f e c t o f the cr a s h c o n s t r u c t i o n schedule, and to the e f f e c t of the l a c k of d e t a i l e d p r e p a r a t i o n s being made p r i o r t o the s t a r t o f c o n s t r u c t i o n i n the f o r m u l a t i o n o f c o s t e s t i m a t e s . The d e c i s i o n t o h o l d back on d e t a i l e d p r e p a r a t i o n s and the d e c i s i o n t o adopt a c r a s h c o n s t r u c t i o n schedule were both made d u r i n g the s p r i n g o f 1973. Evidence o f t h i s l a c k o f c o n s i d e r a t i o n i s t h e r e f o r e g i v e n by the f a c t t h a t i n October, 1972 the estimated c o s t of the p r o j e c t was $16.2 m i l l i o n , and i n December, 1973 the estimated c o s t was s t i l l o n l y $17.82 m i l l i o n -both e x c l u d i n g the c o s t o f the t r a n s m i s s i o n l i n e . I f these d e c i s i o n s had a s i g n i f i c a n t e f f e c t on the c o s t of the p r o j e c t , then t h i s e f f e c t i s not r e f l e c t e d i n - 166 -the c o s t estimates t h a t were prepared subsequent to the time t h a t these d e c i s i o n s were made. B. hack of D e t a i l e d P r e p a r a t i o n s The reasons behind NCPC's d e c i s i o n t o a v o i d making expenditures on d e t a i l e d d e s i g n , p r e p a r a t i o n of c o n t r a c t s p e c i f i c a t i o n s , t e n d e r i n g c o n t r a c t s and other d e t a i l e d p r e p a r a t i o n s are very d i f f i c u l t to a s c e r t a i n . The NCPC management's r e p o r t e x p l a i n s t h a t : "... the l a c k o f answers and i n d e c i s i o n s d i c t a t e d a much slower approach t o ensure t h a t e n g i n e e r i n g money was not wasted i n case a s u i t a b l e 4 l i c e n c e was not forthcoming". The Dalby Report p r o v i d e s a s i m i l a r e x p l a n a t i o n f o r t h i s d e c i s i o n . ^ This e x p l a n a t i o n i s very d i f f i c u l t to accept, however, s i n c e NCPC d i d not have any a l t e r n a t i v e plans t o u t i l i z e i n case a " s u i t a b l e " l i c e n c e was not ob t a i n e d , except to use d i e s e l g e n e r a t i o n . In a d d i t i o n , i t i s apparent t h a t the l i c e n c e t h a t the Water Board d i d i s s u e - the c o n d i t i o n s o f which prompted NCPC to avoid undertaking d e t a i l e d p r e p a r a t i o n s f o r c o n s t r u c t i o n - d i d not s e v e r e l y a f f e c t the g e n e r a t i o n c a p a b i l i t y o f the p r o j e c t i n the s h o r t term. The Water Board a l s o i n d i c a t e d i n very c l e a r terms t h a t these c o n d i t i o n s c o u l d be removed once NCPC pr o v i d e d the necessary i n f o r m a t i o n t o support i t s r e q u e s t s . I t i s concluded t h a t NCPG d i d not have s u f f i c i e n t reason to av o i d these p r e p a r a t i o n s , which were so important t o ens u r i n g a smooth c o n s t r u c t i o n schedule. There are two p o s s i b l e but p a r t i a l e x p l a n a t i o n s f o r why t h i s d e c i s i o n t o h o l d back on d e t a i l e d p r e p a r a t i o n s was made. The f i r s t concerns the p o s s i b i l i t y t h a t NCPC may have c o n s i d e r e d t h a t i n comparison t o the amount of expenditures i t was accustomed t o making, the c o s t s of d e t a i l e d d e s i g n and other p r e p a r a t i o n s were very h i g h . The sense of p r o p o r t i o n c o u l d have motivated NCPC d e c i s i o n -makers to c o n s i d e r t h a t these expenditures should o n l y be made once i t was a b s o l u t e l y necessary. The second p o s s i b l e e x p l a n a t i o n i s t h a t . t h e avoidance of these expenditures may have been the r e s u l t o f an emotional r e a c t i o n on the p a r t of NCPC decision-makers. The issuance of a r e s t r i c t e d water l i c e n c e may have been p e r c e i v e d as the l a s t of a long s e r i e s o f f r u s t r a t i o n s , disappointments and unnecessary encumbrances r e s u l t i n g from the presence of the Water Board. NCPC decision-makers may not have r e a c t e d i n a manner t h a t was e n t i r e l y r a t i o n a l and o b j e c t i v e . C. The Crash C o n s t r u c t i o n Schedule NCPC's j u s t i f i c a t i o n f o r i t s d e c i s i o n to adopt a c r a s h schedule i s t h a t i t would reduce the c o s t o f e l e c t r i c i t y - 168 -by p r e v e n t i n g the need t o i n s t a l l and operate d i e s e l generators f o r the wint e r of 1974-75. I t was ap p a r e n t l y b e l i e v e d t h a t the a d d i t i o n a l c o s t s r e s u l t i n g from the cr a s h c o n s t r u c t i o n schedule would not be as g r e a t as the c o s t o f the e x t r a use of d i e s e l g e n e r a t o r s , and t h a t there was a st r o n g p o s s i b i l i t y t h a t the c r a s h c o n s t r u c t i o n schedule would be s u c c e s s f u l i n meeting i t s o b j e c t i v e . The c r a s h c o n s t r u c t i o n schedule was not s u c c e s s f u l i n meeting i t s o b j e c t i v e , however, and although no q u a n t i t a t i v e -i n f o r m a t i o n i s a v a i l a b l e , i t i s l i k e l y t h a t the c o s t of implementing t h i s program was s u b s t a n t i a l l y g r e a t e r than the $4 m i l l i o n i t s t i l l c o s t to use e x t r a d i e s e l g e n e r a t o r s . In a d d i t i o n , the f a c t t h a t there was a st r o n g p o s s i b i l i t y t h a t the p r o j e c t c o u l d not be completed b e f o r e the w i n t e r o f 1974-75 was appa r e n t l y a s c e r t a i n a b l e . The r i s k s i n v o l v e d i n t h i s d e c i s i o n appear t o have c o n s i d e r a b l y outweighed any p o s s i b l e b e n e f i t . Why, then, would NCPC have deci d e d to embark on t h i s c r a s h c o n s t r u c t i o n schedule? One p o s s i b l e e x p l a n a t i o n f o r t h i s d e c i s i o n concerns the pr e v i o u s experience of NCPC decision-makers. P r i o r to the c o n s t r u c t i o n o f the A i s h i h i k p r o j e c t , the c o s t o f i n s t a l l i n g and o p e r a t i n g d i e s e l generators was by f a r the most expensive component o f NCPC 1s t o t a l o p e r a t i o n s . - 169 -The NCPC decision-makers may t h e r e f o r e have p e r c e i v e d t h a t these c o s t s would continue to be the most important of NCPC's expen d i t u r e s , and t h a t any e f f o r t t o prevent the use of d i e s e l generators would a u t o m a t i c a l l y serve t o reduce the c o s t of s u p p l y i n g e l e c t r i c i t y . The p e r c e i v e d r e l a t i v e importance o f d i e s e l g e n e r a t i o n c o s t s may a l s o have been strengthened by the absence of accu r a t e c o s t estimates f o r the A i s h i h i k p r o j e c t . I t would have been very d i f f i c u l t to make an informed d e c i s i o n about the b e s t c o n s t r u c t i o n schedule t o f o l l o w i f a c c u r a t e i n f o r m a t i o n about the c o s t o f the p r o j e c t i t s e l f was not a v a i l a b l e . The l i k e l y c o s t s r e s u l t i n g from the implementation of the c r a s h program would have been reduced i n p r o p o r t i o n to the degree to which the c o s t of the p r o j e c t was underestimated. F i n a l l y , the l a c k of e x t e n s i v e experience on the p a r t of NCPC decision-makers w i t h the c o n s t r u c t i o n of h y d r o e l e c t r i c p r o j e c t s c o n t r a s t s with the f a m i l i a r i t y they had w i t h the c o s t of i n s t a l l i n g and o p e r a t i n g d i e s e l g e n e r a t o r s . The NCPC decision-makers may have taken more s t r o n g l y i n t o account those f a c t o r s with which they had most experience and f a m i l i a r i t y . As a r e s u l t , the p r e v e n t i o n of known c o s t s a s s o c i a t e d with d i e s e l g e n e r a t i o n may have been c o n s i d e r e d more h e a v i l y than thecosts 1" t o be a s s o c i a t e d w i t h a c r a s h c o n s t r u c t i o n schedule. - 170 -D. I n v e s t i g a t i o n of A l t e r n a t i v e s I t i s very d i f f i c u l t t o e x p l a i n why NCPC d i d not undertake any d e t a i l e d i n v e s t i g a t i o n s of a l t e r n a t i v e g e n e r a t i o n schemes. E x p l a n a t i o n f o r t h i s d e c i s i o n i s p a r t i c u l a r l y d i f f i c u l t c o n s i d e r i n g the f a c t t h a t very l i t t l e was known about the A i s h i h i k s i t e when NCPC f i r s t a p p l i e d f o r a water l i c e n c e t o develop the s i t e on August 31, 1971. Between June, 1971, when NCPC made i t s f i r s t f i e l d i n v e s t i g a t i o n o f the A i s h i h i k s i t e , and A p r i l , 1973, when NCPC began c o n s t r u c t i o n of the p r o j e c t , t h e r e i s no r e c o r d t h a t any f i e l d i n v e s t i g a t i o n s of a l t e r n a t i v e p r o j e c t s were undertaken. I t i s s u r p r i s i n g t h a t NCPC s e l e c t e d the A i s h i h i k s i t e so r e a d i l y . The l a c k o f i n v e s t i g a t i o n of a l t e r n a t i v e s may have r e s u l t e d i n the development of a p r o j e c t t h a t i s i n f e r i o r to some oth e r a l t e r n a t i v e , and i t w i l l i n e v i t a b l y c a l l t o q u e s t i o n the v e r a c i t y of NCPC's own judgements. The b e s t a v a i l a b l e e x p l a n a t i o n i s not one t h a t i s c h a r i t a b l e to NCPC decision-makers, but i t i s p o s s i b l e t h a t NCPC d i d not f u l l y r e c o g n i z e the importance o f i n v e s t i g a t i n g a l t e r n a t i v e s t o the A i s h i h i k . Once NCPC determined t h a t a new g e n e r a t i o n f a c i l i t y was needed, and once i t had e s t a b l i s h e d t h a t the A i s h i h i k appeared to be a v i a b l e s i t e , i t may have c o n s i d e r e d t h a t the c o s t s i n v o l v e d i n the i n v e s t i g a t i o n o f a l t e r n a t i v e s were g r e a t e r than the l i k e l y - 171 -b e n e f i t s to be d e r i v e d from such i n v e s t i g a t i o n s . NCPC may have p e r c e i v e d t h a t i t was so u n l i k e l y t h a t a s u p e r i o r a l t e r n a t i v e to the A i s h i h i k c o u l d be found t h a t the i n v e s t i g a t i o n o f a l t e r n a t i v e s would probably be a wasted e f f o r t . In a d d i t i o n , by s e l e c t i n g the A i s h i h i k s i t e so r e a d i l y , the e n t i r e process of the p l a n n i n g and development of the next a d d i t i o n to the ge n e r a t i o n system was g r e a t l y s i m p l i f i e d and expedited. NCPC decision-makers may a l s o have c o n s i d e r e d t h i s to be an important b e n e f i t . NCPC's p e r c e p t i o n s of l i k e l y b e n e f i t s and c o s t s may, then, have g r e a t l y i n h i b i t e d i t s m o t i v a t i o n t o i n v e s t i g a t e a l t e r n a t i v e s . V. RECOMMENDATIONS Some time has ela p s e d between the completion of the A i s h i h i k p r o j e c t and the time o f w r i t i n g f o r t h i s study. I t i s t h e r e f o r e not p o s s i b l e to make d e t a i l e d recommendations w i t h r e s p e c t t o h y d r o e l e c t r i c power p l a n n i n g i n the Yukon, owing to changes t h a t may have a l r e a d y taken p l a c e . Recommendations concerning the water l i c e n c i n g process are a l s o not necessary, s i n c e the primary reason why so many problems were encountered d u r i n g the water l i c e n c i n g process f o r the A i s h i h i k p r o j e c t i s t h a t a l l p a r t i c i p a n t s l a c k e d experience i n d e a l i n g with i t . Greater experience i s the most important means by which t h i s process may be improved. - 172 -However, i n view of the problems t h a t were encountered d u r i n g the h i s t o r y of the A i s h i h i k p r o j e c t , some ge n e r a l recommendations can be made w i t h r e s p e c t t o the s e l e c t i o n , d e s i g n and implementation of f u t u r e water power p r o j e c t s i n the Yukon. These a r e : 1. C o n s u l t i n g f i r m s employed to undertake f e a s i b i l i t y s t u d i e s f o r a p r o j e c t should be i n e l i g i b l e f o r c o n t r a c t s to undertake d e t a i l e d d e s i g n s t u d i e s and to h e l p manage c o n s t r u c t i o n o f the p r o j e c t . 2. An independent panel of experts should be e s t a b l i s h e d to advise the M i n i s t e r and the p u b l i c on: a. whether r e l e v a n t a l t e r n a t i v e s are being c o n s i d e r e d , and b. the adequacy and r e l i a b i l i t y o f s t u d i e s being undertaken on the c o s t of the p r o j e c t , i t s b e n e f i t s and i t s socio-economic and environmental e f f e c t s . T h i s panel should be gi v e n adequate funding t o h i r e c o n s u l t a n t s , but should m a i ntain o n l y an a d v i s o r y c a p a c i t y . 3. NCPC should prepare a r e p o r t f o r the M i n i s t e r on i t s s h o r t , medium and long term p l a n s f o r e l e c t r i c power development i n the Yukon, based on a d e t a i l e d i n v e n t o r y of a l l r e l e v a n t a l t e r n a t i v e sources of e l e c t r i c power ge n e r a t i o n . - 173 -CHAPTER EIGHT  REFERENCES AND NOTES 1. Northern Inland Waters Act, S e c t i o n 9. 2. NCPC, Report on A i s h i h i k , p.4-0. 3. D. Steen to J . Lowe, 23 October 1972, i n Report on A i s h i h i k . 4. NCPC, Report on A i s h i h i k , p.4-0. 5. R. N. Dalby & A s s o c i a t e s , Dalby Report, p.4. - 174 -BIBLIOGRAPHY Acres C o n s u l t i n g S e r v i c e s L i m i t e d , August 1975, "Review of Submission M a t e r i a l P e r t a i n i n g t o the A i s h i h i k H y d r o - E l e c t r i c P r o j e c t , NCPC A p p l i c a t i o n f o r Amendment of Water Use L i c e n c e " . " A i s h i h i k Supplement", 3 September 1975, Yukon News. Allmand, W., 29 September 1976, l e t t e r to B. Boyd. Anthony, R., 28 September, i n t e r v i e w . Berger, T., 1977, Northern F r o n t i e r Northern Homeland, the Report o f the Mackenzie V a l l e y P i p e l i n e I n q u i r y , Ottawa: Supply and S e r v i c e s Canada. Bowden, G., 23 November 197 8, l e t t e r to author. 17 A p r i l 1975., l e t t e r to author. 26 J u l y 1978:, i n t e r v i e w . 20 A p r i l 1979, i n t e r v i e w . Boyd, B., 7 J u l y 1976, l e t t e r to J . Buchanan. Brandon, L. 19 November 5 June 1972, 12 June 1972 6 September 18 September 4 December 1 28 December 26 May 1972, 27 J u l y 1973 5 January 19 1 February 1 12 February 25 March 197 19 A p r i l 197 1971, l e t t e r to F. Mooney. l e t t e r t o B. Yates. , l e t t e r to D. Hunt. 1972, l e t t e r t o F. Mooney. 1972, l e t t e r t o B. T r e v o r . 972, l e t t e r to J . Lowe. 1972, l e t t e r to J . S. Nelson. l e t t e r t o Hon. J . C h r e t i e n . , l e t t e r to J . Lowe. 73, l e t t e r t o B. Trevor 973, l e t t e r t o Hon. J . C h r e t i e n , 1974, l e t t e r to J . Lowe. 4, l e t t e r to D. Hunt. 9, l e t t e r to I. Fox. Byram, K., 3 September 1978, i n t e r v i e w . Canadian W i l d l i f e S e r v i c e , 15 January 1973, "A Report on B o t a n i c a l and B i o l o g i c a l Surveys - A i s h i h i k R i v e r Power Development, Yukon T e r r i t o r y " . Choate, R. , 17 A p r i l 19,73, l e t t e r to L. Brandon. C h r e t i e n , J, 14 J u l y 1972, l e t t e r to L. Brandon. 14 J u l y 1972, l e t t e r to B. Robinson. 25 J u l y 1972, l e t t e r t o B. Robinson. 17 A p r i l 1973, l e t t e r to L. Brandon. 17 A p r i l 1973, l e t t e r to E. Smith. - 175 -Dalby, R. N. , 6 A p r i l 1976, l e t t e r to J . Smith. Department of Indian A f f a i r s and Northern Development, "NCPC Report Released" (Press R e l e a s e ) , 22 A p r i l 1976. Dickson, L., 9 January 1973, l e t t e r to L. Brandon. Duguid, D., 27 J u l y 1978, i n t e r v i e w . 20 A p r i l 1979, i n t e r v i e w . G. E. Crippen & A s s o c i a t e s , A p r i l 1972, " A i s h i h i k R i v e r Power Development E n g i n e e r i n g Report". _, October 1972, A i s h i h i k R i v e r Power Development I n t e r i m Supplementary Report". , November 1973, "The Value of a Dependable Water Supply to the A i s h i h i k P r o j e c t and the Future Yukon T e r r i t o r y Power System". , November 1974,"Aishihik R i v e r Power Development A i s h i h i k - Whitehorse Systems Study Phase I " . , May 1975, " A i s h i h i k R i v e r Power Development A i s h i h i k - Whitehorse System Study Phase I I Report". , March 1976, " A i s h i h i k Power Development A n a l y s i s of Cost Overrun". G. E. Crippen A s s o c i a t e s , and Pearse Bowden Economic C o n s u l t a n t s , June 1975, "Review of Power System and Environmental S t u d i e s and Recommended Water L i c e n c e A p p l i c a t i o n " . H o l l i n g s h e a d , B., 2 August 1972, l e t t e r t o F. Mooney. Hunt, D., 5 December 1972, l e t t e r to J . Lowe. 15 May 1972, l e t t e r to L. Brandon. Joe, D., 30 August 1978, i n t e r v i e w . Jones, A.H., 28 October 1971, "Water North of 60: A v a i l a b i l i t y , Uses and Management". Kuiper, E., February 1973, "Report, A i s h i h i k R i v e r Power Development". Lightbody, W., 14 February 1973, l e t t e r to L. Brandon. Long, J . , 8 February 1978, "Notes on Development of Hydro-E l e c t r i c P o t e n t i a l s North of 60°". , 8 August 1978, i n t e r v i e w . - 176 -L o w e , J . , 1 3 J u n e 1 9 7 2 , l e t t e r t o B . R o b i n s o n . 1 6 J u n e 1 9 7 2 , l e t t e r t o B . R o b i n s o n . 6 D e c e m b e r 1 9 7 2 , l e t t e r t o L . B r a n d o n . 1 2 S e p t e m b e r 1 9 7 5 , l e t t e r t o J . S e a b o r n . L u e c k , A . , A u g u s t 1 9 7 8 , i n t e r v i e w . M c C a n d l e s s , R . , A u g u s t 1 9 7 8 , i n t e r v i e w . M c K i n n o n , K . , 3 S e p t e m b e r 1 9 7 8 , i n t e r v i e w . M c L e o d , W . , 1 9 7 7 , W a t e r M a n a g e m e n t i n t h e C a n a d i a n N o r t h , O t t a w a : C a n a d i a n A r c t i c R e s o u r c e s C o m m i t t e e . M o o n e y , F . , 2 5 A u g u s t 1 9 7 2 , l e t t e r t o L . B r a n d o n . 2 8 A u g u s t 1 9 7 2 , l e t t e r t o L . B r a n d o n . 2 9 J a n u a r y 1 9 7 4 , l e t t e r t o L . B r a n d o n . , A u g u s t 1 9 7 8 , i n t e r v i e w . M o r i n , A . , 22 J a n u a r y 1973, l e t t e r t o L. B r a n d o n . M o r r i s o n , D . , A u g u s t 1978, i n t e r v i e w . N C P C , 1969, A n n u a l R e p o r t . , D e c e m b e r 1974, " T h e D e v e l o p m e n t o f P o w e r i n t h e Y u k o n " . , March 1976, Report on A i s h i h i k . , March 1977, 2 9'th Annual Review. Northern.. 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