A major northwestern Ontario power transmission project is a step closer to reality.

Hydro One and its First Nation partners held a groundbreaking ceremony Friday morning for the $1.2-billion Waasigan Transmission Line. When complete it will connect the Lakehead Transformer Station in Shuniah to Dryden.

"It strengthens the backbone of the bulk electricity system that runs from this point west throughout the province," said Hydro One president and CEO David Lebeter. "If you want to build new manufacturing and open up mines or forestry plants or even new communities, you need to have enough capacity on the transmission system."

"Right now, the transmission system here is getting full. This creates that buffer, that headroom to bring new economic activity."

The project will be built in two phases.

"It starts here in Shuniah and moves along to Atikokan," said Sonny Karunakaran, Hydro One's vice-president of Strategic Projects and Partnerships. "We're going to commence construction on that before the end of this year."

"And then phase two of the project will take it from Atikokan up to Dryden," he said. "The project is scheduled to be completed by the end of 2027."

The project is a 50-50 partnership between Hydro One and nine First Nation communities.

Those include Lac Des Mille Lakes First Nation, and eight First Nations represented by Gwayakocchigewin Limited Partnership: Eagle Lake First Nation, Fort William First Nation, Gakijiwanong Anishinaabe Nation, Lac Seul First Nation, Nigigoonsiminikaaning First Nation, Ojibway Nation of Saugeen, Seine River First Nation, and Wabigoon Lake Ojibway Nation.

The communities have agreements in place to invest a 50-per-cent equity stake in the transmission line component of Waasigan, Hydro One said.

Rob Ferguson, mayor of Atikokan, said he had high hopes for the line spurring economic development.

"One of the issues we've had is we're kind of stranded," he said. "Any power that was generated or anything would be stranded in Atikokan. They couldn't get it out."

"But with the Waasigan power line, they're able to export power," he said. "They talk about bringing power into Atikokan, but power runs both ways."

"We're having developers look at us and, and maybe we can do something, which would be great for the community."