Fort McMurray mayor 'optimistic' despite calls to scrap $370M power project

Fort McMurray's political and business leaders say they aren't worried about calls to scrap a$370 million electrical transmission project in the area.

The Alberta Electrical System Operator (AESO) is recommendingthe province reverse its approval of the Northwest of Fort McMurray Area Transmission System.

AESO said in an interview with CBC News Friday it no longer forecasts any need for the project in the oilsands region.

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AESO is a not-for-profit organization that plans and operates Alberta's power grid. The Alberta Utilities Commission (AUC) is the provincial regulator thatapproves or rejects applications to expand the system. The AUC acts like a court and keeps organizations like AESO in check.

Mayor: Don't read too much into it

In the wake of AESO'splanto terminate the multimillion-dollar oilsands project, Wood Buffalo Mayor Don Scott downplayed fears the news is another sign the region is in decline.

"I am still feeling really optimistic about the region and I am looking at the price of oil lately and it has been rising," Scott said. "At the same time, I've seen organizations adjust to what has been described as the new normal.

"So this is an adjustment that would make sense with the times."

Scott said that although AESO wants to cancel the project, if things pick up in the futurehe's confident the project would move ahead.

Bryce Kumka, president of the FortMcMurrayChamber of Commerce,said the oilsands region should not view the cancellation as a bad thing, as increasing the electrical grid's capacity without additional need would be costly.

"I think it is a prudent decision to make," Kumka said. "If the project was to go forward without the end users in place, it would actually cause increased costs for the remaining ratepayers."

Cancelled oilsands projects

Tara de Weerd, AESO's public affairs manager, said the recommendation to scrap the project came after an assessment showed six oilsands projects have been cancelled in the region since the project was approved in 2012.

Back then, the region was seeingexplosive growth fuelled by high oil prices.

"AESO needs to be nimble and make sure we are doing what's in the best interest of Albertans," de Weerd said. "We are always monitoring demand to make sure ratepayers' money is being spent at the right time and in the right way."

The provincial regulator received AESO's recommendation in December.

AUC spokespersonGeoff Scotton said he expects the regulator will issue a notice next week asking interested parties to comment over a three week period. Following that, the regulator could make a decision or choose to examine the project further.

Phase oneof the the Northwest of Fort McMurray Area Transmission System was completed in 2015 and saw the construction of a substation at Birchwood Creek for just under $30 million.

Phase two, the unconstructed $370 million portion, will not proceed if AESO's recommendation is followed.

Follow David Thurton, CBC'sFort McMurraycorrespondent, onFacebook,Twitterand email him atdavid.thurton@cbc.ca