The federal government has approved up to $60-million in spending to bring electricity transmission to the remote First Nations community of Pikangikum, where lack of reliable power is contributing to a social and mental-health crisis in the community.

Pikangikum is one of 22 remote Indigenous communities in northwestern Ontario that own a majority stake in Wataynikaneyap Power, a company that is pursuing a plan to upgrade and extend the electricity grid by 1,800 kilometres from Dryden to bring power to the region. The communities now rely on expensive, dirty and unreliable diesel generators.

Pikangikum, an Ojibway community of 2,800, has suffered from poverty and a history of suicides. Four young people have taken their own lives this summer, including two sisters.

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Among other factors, its leaders point to the lack of reliable energy on the reserve, where 80 per cent of houses are lacking water and sewer services that cannot be provided without access to power and where households often see their electricity turned off as a result of a lack of generating capacity.

The community – whose diesel generating station has been at capacity since 2010 – joined the Wataynikaneyap Power project last August.

"We're very happy – we're looking forward to that day when we hear the generators shut down and no longer have to see that black smoke coming off from the exhaust," Pikangikum Chief Dean Owen said in an interview from Thunder Bay, where the federal funding announcement was made on Thursday.

"We've been trying every day to keep the community going, based on the limited amount of [electricity] capacity we have … It certainty has an effect on the social issues we have at hand. Every hour or two hours, the power has to be turned off in one section of the community just to allow other families to cook, but kids want to be able to watch TV and do stuff that any other kids do."

He said the community has an economic development plan that depends on access to power.

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During the announcement on Thursday, Indigenous and Northern Affairs Minister Carolyn Bennett said the connection of Pikangikum to the electrical grid will foster efforts by governments and First Nations leaders in improving the quality of life there.

Of the 22 partners, Pikangikum is the closest to the grid, and the work to extend transmission there is the first step in the overall plan. Fortis Inc. – a transmission-industry giant – owns 49 per cent of Wataynikaneyap Power, which is raising money in bond markets to help finance the $1.3-billion project.

Its chief executive, Margaret Kenequanash, said the company is having discussions with the federal and provincial governments to determine what public financing will be available for the overall transmission project. Several of the communities are planning to develop renewable-energy projects in which they could sell surplus electricity back to the grid.

For the remote communities, the access to reliable and affordable electricity is fundamental to economic and social progress, including access to education, health services, safe drinking water, food supply and safety, Ms. Kenequanash said.

The announced connection "will help build and improve community development, infrastructure and housing that will provide stability in Pikangikum," she said. "I am thinking about the children, the Elders and the overall community and what this means to them."