Transmission line led deep into court

At first glance, it looks like a game — hot potato, pass it on. But the legal wranglings between Yukon Energy and some of its contractors are…

At first glance, it looks like a game — hot potato, pass it on.

But the legal wranglings between Yukon Energy and some of its contractors are more complex.

 The Crown corporation is in danger of being sued, according to documents filed in court recently.

Chant Construction Limited, the company Yukon Energy hired to design and build its Mayo-to-Dawson power line, has filed a claim against the Crown corporation.

Yukon Energy gave Chant some faulty information in its reports, the claim states.

However, some of the information came from a report written by BC Hydro, Yukon Energy says.

As a result, the territory’s energy company has filed a claim of its own against BC Hydro, asking it to share the blame if they end up in court.

The chain of events that led to the dispute began on the eve of the new millennium.

In December 1999, Yukon Energy hired BC Hydro to do some initial engineering work and prepare a cost estimate for construction of the Mayo-to-Dawson transmission line.

The power line was completed in 2003. It supplies Dawson, Keno City and other nearby communities with electricity from the Mayo hydro plant.

That plant had been producing surplus energy since the United Keno Hill Mine turned off its drills in 1989.

BC Hydro finished the report in September 2000, and it was subsequently used as the basis for bids on power-line contracts.

In spring 2001, Yukon Energy hired Chant Construction to design and build the transmission line.

Chant, which has offices in Ontario and BC, specializes in design and construction for power companies.

Construction of the Mayo-to-Dawson power line was plagued by technical problems according to Chant’s claim.

For example, soil and permafrost conditions were different in reality from how they had been described, documents state.

Also, a significant part of the route the power line was supposed to follow fell outside the area for which Yukon Energy held a licence of occupation, the claim states.

Such alleged inconsistencies are what prompted the construction company to file a claim against Yukon Energy, and Yukon Energy to file a claim against BC Hydro.

While it may seem straightforward, the situation has some subtler points.

For one, none of the three companies have moved forward on their claims in court.

They are still trying to settle their dispute within the bounds of their contracts.

Also, Yukon Energy says it has no intention of suing BC Hydro.

The claim is merely a protective measure in a united fight against Chant, according to David Morrison, president and CEO of Yukon Energy.

The power company doesn’t accept Chant’s allegations, he said in a recent interview.

There is a reason why the territory’s energy company needed a safety net, though.

BC Hydro did not sign an agreement to extend the time period during which Yukon Energy could file a claim against it.

“We have gone to each of the subcontractors and asked them to give us a postponement agreement, which is an agreement that basically allows us to get rid of the time limitations surrounding these claim issues,” Morrison explained.

“Your ability to go back to someone has an expiry.”

With this deadline approaching, Yukon Energy had not received a signed agreement from BC Hydro.

So, it filed a claim.

“In order to protect our position we had to file a claim . . . . If you filed a claim then the courts will recognize you coming forward at a later date,” said Morrison.

BC Hydro says it wouldn’t sign the agreement because Yukon Energy and Chant are still in discussions.

“The dispute resolution between Yukon (Energy) and Chant Construction is not complete,” said Elisha Moreno, media relations manager for BC Hydro.

“That’s not something you would sign until all that rigmarole was finalized,” Moreno said.

The two companies have spoken and Yukon Energy lawyers told BC Hydro they were not planning to act on the claim now, she added.

“We understand that Yukon (Energy) doesn’t intend to take any further action with the lawsuit at this point,” she said from her Vancouver office.

“So at this point it’s a wait-and-see for us.”

Morrison confirmed that Yukon Energy is hoping to beat Chant’s claim and is not currently planning to sue BC Hydro.

“We’re all working on the same side of the issue, defending the claim against Chant,” he said.

These potential court cases are only the latest debacle stemming from the construction of the 232-kilometre transmission line.

In February, the federal Office of the Auditor General released a scathing report outlining problems in how construction of the transmission line was handled.

Calling the project “poorly managed” the report stated it was crippled by long delays, cashed in at more than $7-millon over budget and that many contracts were awarded without competition or explanation.

Currently, Yukon Energy has a posting on its website addressing the report.

“While we agree with the auditor general’s conclusions that there were numerous difficulties with the project, we have already taken steps to address those issues. We recently changed our capital project processes,” the website says.

“In spite of past difficulties, the line is a good project that is expected to save Yukoners about $20 million over 40 years.”

No one from Chant Construction was available for an interview.