Community Power Investment Model
The Community Power Investment Model describes a province-wide "Community Power Cooperative" (CPC) that allows community power to thrive in Manitoba. The model and the CPC provide key benefits as described below.The latest version of the model and the associated brochure are available here (last updated May 9, 2010):
What is Community Power?
- Community power is a way to make an investment with favourable returns, while supporting our local communities and helping the environment
- Ownership control is retained by the community investors and the project operates with a high level of transparency
- The project provides a risk-averse and fair rate of return
- The project enjoys broad participation from individuals of varying incomes
Why Community Power?
$2.5 billion leaves Manitoba every year to pay for non-renewable energy imports, such as petroleum products to run our vehicles and natural gas to heat our homes. Based on Manitoba’s population, this represents $2,200 for every man, woman and child in the province. We need to acquire these $2,200 dollars per person by selling Manitoba-made commodities and services, such as agricultural products. As the price of non-renewable energy imports increases relative to our Manitoba-made exports, we will find it increasingly difficult to maintain the standard of living to which we’ve become accustomed.The deployment of community power helps keep rural Manitoba healthy in three ways: (a) it directly increases investment in Manitoba communities, (b) it connects Manitoba communities to our overall energy use, and (c) it allows greater amounts of lucrative hydro power to be sold to the export market.
We propose creating a Manitoba Community Power Cooperative (CPC) that allows residents of Manitoba to directly invest in renewable energy projects and receive a financial return on that investment. The CPC is designed to facilitate rural development throughout the province.
Key Benefits of the CPC
The key benefits of the CPC are as follows:- Investors can be any resident of Manitoba (preference will be given to rural Manitobans where possible)
- Investment dollars never leave the province (thus maximizing financial returns directly to Manitoba residents)
- Investors can sell their shares in the project at any time (through the use of a unique corporate sponsorship mechanism)
- Transparency is a fundamental aspect of the model (thus ensuring strong checks and balances)
- The price for the sale of electricity to Manitoba Hydro will be based on a specific rate of return (e.g. 12%) (thus maximizing flexibility in the terms associated with any specific project)
- Inflation risk is built in to the power purchase agreement with Manitoba Hydro (rates of return are locked to 11.5% above the Bank of Canada interest rate, so if the Bank of Canada interest rate is 0.5%, then the rate of return is 12%; if the Bank of Canada interest rate subsequently rises to 5%, then the rate of return rises to 16.5%, thus preserving the overall viability of the investment)
- A portion of the returns are assigned directly to communities, not just to individual investors (which directly strengthens rural communities throughout Manitoba)
Start Small
The program starts with deployment of a single 3-5 megawatt (MW) wind project whose location is to be determined through transparent discussions between interested communities and Manitoba Hydro.Grow the Program Based on Success
After the initial project is deployed, the program will be reviewed for effectiveness. The program will continue to grow as long as the government, Manitoba Hydro and communities see value to the program.Strengthen Our Rural Communities
Manitoba’s Community Power Cooperative will allow residents of Manitoba to directly invest in Manitoba’s energy future while at the same time maximizing the export potential of Manitoba Hydro’s hydro power.By keeping Manitoba residents’ energy dollars in the province, we add to our local prosperity and we create a more secure energy future for our children.
History
The model was presented to the CEO of Manitoba Hydro on February 15, 2008, to the Minnesota Department of Commerce on February 21, 2008, to the Manitoba STEM (Science, Technology, Energy and Mines) Director of Energy Economic Development on March 28, 2008, at the World Wind Energy Conference in Kingston, Ontario June 25, 2008, to the Manitoba Minister of STEM on July 22, 2008, to the Manitoba Minister of Agriculture on December 9, 2008, to the Executive Director of the First People's Economic Growth Fund on December 15, 2008, at Manitoba's Ag Days in Brandon on January 21, 2009, at the Association of Manitoba Municipalities Annual Meeting on April 15, 2009, and at Manitoba's Capturing Opportunities Forum in Brandon on April 23, 2009. The model was also presented at numerous meetings with RMs (Rural Municipalities) in Southwestern Manitoba in 2008 and 2009. The model was refined after each presentation, and brochures were created in January, 2009 to assist in describing the model to communities throughout Manitoba.The Province of Manitoba and Manitoba Hydro have a unique opportunity to positively address the challenges created by today’s environmental and rural economic needs through the adoption of community-owned renewable energy projects. EEC proposes that the Manitoba CPIF model become the preferred vehicle for implementing and sustaining community ownership in renewable energy projects in Manitoba. This CPIF model is also a tool to increase rural economic development in Manitoba. EEC seeks to work with the Provincial Government, Manitoba Hydro, community power advocates, economic development advocates and First Nations to successfully deploy this CPIF model to achieve a collaborative approach to wind power that strengthens our rural communities.
The Model Elements
The centerpiece of the model is the use of a limited partnership between the local community power organization (LCPO) and the CPC, in which the CPC is organized as a share capital cooperative.The general partner (the CPC) in the limited partnership model provides the specialization that’s required for successful deployment and ongoing maintenance of the technical and financial aspects of the project. This includes providing and managing the required technical expertise for the project as well as ongoing investor management activities that allows a large number of small investors to efficiently participate in the project.
The limited partner (the LCPO) in the limited partnership model engages community members through personal contacts in order to facilitate and encourage community members to directly invest in renewable energy projects and receive returns on that investment. In this manner, the model encourages community members toward mutual benefit and common cause, thereby facilitating widespread rural economic development.
