Inuvik wind project heads to court over claim huge sums are owed

Some of the firms who worked on the road to Inuvik’s new wind turbine are heading to NWT Supreme Court, alleging they are owed millions.

In a convoluted case, companies involved in the litigation are pointing fingers at each other – and at the territorial government, through the company NT Energy, which the GNWT wholly owns.

One subcontractor, Northland Builders, alleges in court filings that it is owed just over $1 million in unpaid work and hundreds of thousands of dollars more in other costs incurred.

Central to the dispute is the GNWT’s decision, through NT Energy, to take main contractor Onec Construction off the job of building the wind project’s access road in early 2023.

Doug Prendergast, a spokesperson for the NWT Power Corporation and sister company NT Energy, told Cabin Radio that decision had been made “due to non-performance.”

Since that took place, subcontractor Northland says it hasn’t been properly paid by Onec for work leading up to that point. Onec, in turn, says NT Energy is holding back almost $5 million owed to Onec.

Exactly what happened isn’t clear, despite many pages of legal submissions from both Onec and Northland.

Onec took the case to court in April, arguing that NT Energy failed to pay it on time, didn’t provide suitable drawings or “critical information” needed for work on the project, and “failed to cooperate” regarding issues of performance.

One flashpoint appears to have occurred in October 2022, when Onec says it reported that a quarry being used for material was nearing exhaustion. Onec alleges no action was taken by NT Energy to resolve that concern. Northland, in its own statement, asserts an “issue” arose between Onec and NT Energy over the quarry that caused a significant work delay and extra costs.

Onec subsequently alleges multiple subcontractors “purported to terminate or refused to perform their subcontracts” after Northland ended its work on the project in early 2023, and suggests Northland “induced” other subcontractors to break their contracts. Northland strongly denied any such allegation in a response filed with the same court two weeks ago.

NT Energy had no response lodged in the court record as of last week. “It’s before the legal system, so my powers are very limited,” minister responsible Diane Archie said in the territory’s legislature as fellow Inuvik MLA Lesa Semmler called for action to be taken. Onec did not respond to a request for comment.

Lawsuits ‘are not an answer’

Semmler wants to know when the subcontractors will be paid, saying she has “raised issue after issue” with the wind turbine project despite its recent completion being praised by ministers.

“The contractors in my community and in my region are wanting to be paid. This is a federally funded project, so when is this minister going to … figure out when they’re going to get paid?” Semmler said in the legislature on Thursday last week.

“Those small businesses that run in my community, they are putting food on the people’s table and roofs over their head. They can’t be out a million, you know?”

Archie said the payments need to come from Onec as the contractor, not the NWT government.

Prendergast, elaborating, told Cabin Radio: “NT Energy was not a party to contracts between Onec and its subcontractors, so any outstanding invoices need to be resolved between those parties. NT Energy is hopeful that the legal proceedings will advance expeditiously.”

In the House, the minister said a labour and material bond – a form of insurance, used to guarantee subcontractors are paid for the work and material they supply – was in place to protect against financial loss. But Northland reports in its court filing that it has been denied access to sums from that bond by the insurer.

The case continues, though court documents suggest no obvious timeline for any resolution.

“I want to know how this minister’s going to fix this – and sending my small businesses to go and find a lawyer to fight things in court is not an answer,” Semmler said on Thursday.

“They need to be paid, and I want this minister to make sure and commit in the House that she will rectify this before our term is up.”

A territorial election takes place next month. Ministers have, in practice, a matter of days to get anything meaningful done.

Archie said the legal situation meant the issue was largely beyond her powers.

“As a result of this project, we’ve had challenges,” she admitted. “In the future, should we have major infrastructure projects, we can look at some of our lessons learned.”

‘This shouldn’t be celebrated’

The Inuvik High Point wind project, to give the initiative its full name, was the subject of a ceremony in August to celebrate its “near-completion.”

The 80-metre turbine is more than a year delayed and its budget has near-doubled along the way, rising from $40 million to $70 million or more.

Yellowknife North MLA Rylund Johnson poured scorn on that cost in a statement last week.

“That was a 3.5-megawatt project for $70 million. People down south are building wind projects at $2 million a megawatt. We’re 10 times what we’re building in the south. This shouldn’t be celebrated,” he told the legislature.

“This was one of the most, if not the most expensive wind project ever. I get it is expensive in the North, and I get it’s hard to build. But with that project doubling in cost, the business case is very questionable.”

The turbine is expected to put a major dent in Inuvik’s diesel consumption. The territorial government has said it is expected to reduce diesel consumption by three million litres – more than half of the diesel Inuvik ordinarily uses for electricity each year.

Johnson said the $70-million price tag may mean, even with that annual diesel saving, the project fails to pay for itself.

“We need to level with people,” he said, “that perhaps a lot of the renewables we want to build just aren’t there in the cost for the North yet.”

Archie saw it differently.

In a statement made prior to Johnson’s remarks, she said the turbine would be “critical to helping us meet our objectives of reducing emissions from electricity generation in diesel communities by 25 percent.”

The project “will continue to provide positive benefits to the Beaufort Delta region over the coming decades,” she declared.