Sept 15: MNW in conversation with Ian McDonald, Chairman, KRIS Renewable Energy:
After living so close to the Burgess 1 Generating Station in Bala for 40 years, Moon River resident Ian McDonald decided he might as well bid to run it. Now he will. McDonald is one of four businessmen owning equal shares in KRIS Renewable Energy, the company selected by the Township of Muskoka Lakes through a competitive bid process to operate the Township’s hydro plant and dam on Bala’s Mill Stream. The other principals in KRIS Renewable Energy include: Kerry Knoll, also a Moon River property owner; KRIS President and CEO Robert Levesque and Sylvain Cyr. Both Levesque and Cyr are with Csc Electrique Inc. of Saint-Jerome, Quebec. KRIS is an acronym representing the first letter of each shareholder’s first name.
How Burgess 1 came up for lease
After Algonquin Power decided to end its $1,000-a-month lease arrangement with the Township (the lease was to end July 2011), it recommended Csc take over. In March 2011, Levesque outlined Csc’s proposal to Township Council, adding he would like to see efficiency at the existing plant increased from 50% to 85% (which would also increase profits). Council later decided it should hold its own formal Request for Proposal (RFP) process opening the opportunity up to more potential operators. That RFP was issued in February 2012. In August, Mayor Alice Murphy announced a new company that included local investors — as well as Csc — as the successful bidder. Recently, Township confirmed the new company to be KRIS Renewable Energy and Muskoka News Watch interviewed KRIS Chairman McDonald today about the new venture, what changes might occur at the plant and about his own business background.
Q&A with KRIS Renewable Energy’s Ian McDonald
Q: What relation does KRIS Renewable Energy have to the company that Algonquin Power recommended? Is it a subsidiary or completely new company?
A: “KRIS is a new start up. My longtime partner Kerry Knoll and I have extensive experience in the mining business. The two other principals (Cyr and Levesque) will do the design and manufacturing for the plant.”
Q: What connection do you and your partners have to Muskoka?
A: “I’ve been in Muskoka since 1972 [McDonald is the son of Vivienne McDonald who ran the antique store next to the Bala Bay Inn for several years] and my home is just downstream from the plant. I’ve been looking at that plant since my mother had our house. I also bought the bush lot right beside it so I own property on both sides of the plant (one property on the River Street side and the other at the end of Portage Street).
Kerry, my business partner, has come up to Bala to visit me for a long time and he bought his own cottage on Moon River five years ago.
The Csc partners work on a consulting basis. We’re making all decisions together, but they’re the engineers on the project. They make small micro turbines and will do the design for the Burgess plant.”
Q: Is there any further opportunity for local investors to get involved?
A: “Not really. It’s not very big. It’s not a pie – it’s a cupcake, so you can’t cut it too big.” (Note: the plant is expected to generate 320 KW).
Q: How much work needs to be done to get the Burgess plant running again?
“We won’t run it with the old turbines. The original turbines are 95 years old so we’ll put in two new ones. These are low head turbines that don’t have a lot of backpressure. After all, there’s not much water. We expect to generate two cubic metres a second [for each turbine].”
Q: How long do you estimate your construction period to be?
“The old turbines will come out over the winter and the new ones will be manufactured over the winter. We expect installation could happen in a few weeks but we don’t want to install them while ice is there, so we’re anticipating a start up possibly in April or May. We’ll hire the present local operator, Bob Healey, who also lives on the river.”
“We’ll do a responsible job and as long as we do the job properly this project will be seamless for everyone. After all, you can’t use the power locally, and it doesn’t generate enough to do that anyway.”
Q: How much do you expect to invest to get it to start up condition?
A: “About one million [dollars]. That’s what our budget anticipates but nothing is ever exact, nothing is.”
Q: What lease arrangement have you agreed to with the Township? Is it similar to the previous agreement? In that deal, Algonquin paid $1,000 a month to lease Burgess, and if more power and revenues were generated, it was to pay a portion more to the Township each month.
A: “The Township will receive 10 per cent of our revenue or $1,500 per month — whatever is higher based on the renevenues/power generated. You have to understand that we’re not finalized with Ontario Hydro for our rate. That will take another three months.”
Q: The Township building housing the plant isn’t in great shape. Do you have plans to improve it or is that up to the Township?
A: “We’re going to put a new roof on it so it will look better. The retaining wall that goes around it is right on the rock. The township does own the building but we’re doing the roof, etc.. We have a long lease and we’ll own the turbines we put in but the Township has the first right to buy those back.”
Q: Is there a plan to deal with the trash and build up at the intake that has often happened at this plant (This question follows up on a story posted in July about what the mess at the intake not being dealt with — it’s been an ongoing problem and of course, prior to your selection as the operator).
A: “You know, we thought that would be easy to fix. But once we went in to clean it out, there was another mess just four hours later. We’re going to try and do a better job and stay on top of it.”
Q: What experience do you bring to the project?
A: “Kerry and I have been partners in private mining companies for 30 years and we started our first public company in 1987. Some of those mining companies have been taken over (gold mining company Glencairn Gold became B2 Gold and Wheaton River became Goldcorp, for example. Another company that we’re no longer with is Thompson Creek, which mines molybdenum. Thompson Creek was the largest privately owned mining company in the U.S. We also operate Canada Lithium, the 6th largest lithium mine in the world and are Co-Chairmen and Directors of Stonegate Agricom Ltd. Stonegate is developing a phosphate mine in Idaho. The little Burgess dam is our one hydro asset.
Q: Where will the KRIS head office be?
We’ll operate it out of our offices at 401 Bay Street, Toronto. And we’ll be working at getting a web site up.
MNW Note: The Burgess 1 Generating Station has reportedly not generated any hydroelectric power since July 2011 and the Township has lost revenue from the plant for at least nine months. We wish the new operators well and hope for a speedy and environmentally safe return to operation in early 2013.