‘We were not expecting it for another 30 years’: $400 million water plant expansion for PowerCo could sink municipal finances

The Elgin Area Water Supply System says $400M in upgrades are needed to expand and service PowerCo and the communities it serves. Bryan Bicknell explains.

Civic leaders who oversee a major water supply system in our region are experiencing a case of sticker shock this week.

They’ve just learned that providing the water needs of the new PowerCo plant in St. Thomas will cost about $400 million in water system upgrades.

It’s a water bill no one anticipated, said Andrew Henry, Director of Regional Water for the Lake Huron & Elgin Area Water Supply Systems.

“We would need to double the capacity of the plant, and that’s about a 400 million dollar investment that we just didn’t plan for. We were not expecting it for another 30 years,” Henry said.

The Board of Management for the Elgin Area Water Supply System has written letters expressing its financial concerns to provincial Economic Development Minister Vic Fedeli and Environment, Conservation and Parks Minister Todd McCarthy.

According to Henry, the latest water use forecast for the plant is 20 million litres per day, up from the initial forecast of 13 million in 2023.

The letter stated, “a recently completed Master Plan for the regional water system estimates that the full cost of the plant expansion to meet the needs of all the communities served by the system, including Yarmouth Yards, is in the order of $400 million.”

Henry said PowerCo’s needs would represent about 20 per cent of the existing capacity. “And while we could supply PowerCo in the very short term, the other industries that are coming shortly thereafter, we’re going to be struggling to make sure that we have enough water for them,” he explained.

Elgin Water Board Chair, Pete Barbour, who also serves as the Deputy Mayor of Aylmer, says its only source of revenue is from the water rate it charges to member municipalities, which would likely end up taking out long term debt.

“For a smaller municipality to take on significant debt, may impact their ability to do other projects - to do roads, sewers, buy a firetruck,” Barbour explained.

Right now, London is the largest of eight municipalities to take water from the Elgin plant, using up about 50 per cent. But that could soon change with the addition of PowerCo and other industries, said Barbour.

“Theoretically, they (London) could be saddled with a 200 million dollar debt. Should PowerCo go ahead with their expectations of water consumption, that 50 per cent could conceivably be shifted to St. Thomas,” he said.

PowerCo issued a statement to CTV News in response to the water system concerns being raised. It said, in part:

There were no further details on exactly what that means, but Barbour says help from industry is not unprecedented.

“Many years ago, when the Ford plant was being constructed, Ford actually helped, monetarily, with water needs at that time,” said Barbour.

Minister of Economic Development, Job Creation and Trade Vic Fedeli’s office replied after this story’s deadline with following statement:

“Just last month, PowerCo marked another major milestone with the pouring of concrete at their $7 billion battery plant in St. Thomas. They are currently undergoing a hiring blitz, as they look to fill up to 3,000 new, good-paying jobs in the St. Thomas region.

As the project moves ahead, our government will continue working with surrounding municipalities and the Elgin Area Water Supply System Board of Management to ensure local water and wastewater capacity needs are met."