Heads should roll

David Morrison, the president of Yukon Energy Corp., should resign. Here's why.

David Morrison, the president of Yukon Energy Corp., should resign.

Here’s why.

In October 2007, the estimated cost of building the 172-kilometre-long Carmacks to Pelly Crossing transmission line was $27.8 million.

At that price, “The economics are still there to proceed,” said Morrison at the time.

Today, finishing the project is going to cost more than $68 million.

How are the economics of the project looking now? Few people are crunching the numbers publicly, but we’d suggest they are no longer economical.

The project is currently $40 million over budget. And Yukoners are going pay through the nose for it.

It’s a lot like hiring a contractor to build you a house. He tells you it will cost $270,000. By the time it’s done, you’re on the hook for $680,000. How do you respond?

Do you pay the contractor a bonus? Or do you take him to court?

These are relevant questions, because that power line is owned by ratepayers. And that’s us.

The utility’s Mayo-Dawson transmission line project was another disaster.

It was 232 kilometres long, and was supposed to cost $21.7 million. When the dust settled, it cost more than $35 million and was a political nightmare for Pat Duncan’s Liberal party.

That project was cited extensively as an example of how Duncan’s team could not manage construction projects.

This project was going to be different. Or so ratepayers were assured.

Instead, it’s far worse.

This latest utility imbroglio is about 50 kilometres shorter. It is now almost twice as expensive.

Initially, the project, after government and business contributions, wasn’t going to cost ratepayers much.

Today, it looks as if ratepayers are going to have to cough up a substantial amount of money.

So far, Ottawa reportedly kicked in $18 million (unexpectedly), the Minto mine paid $7.2 million for its leg and the Yukon Development Corp. and Yukon government have chipped in $17 million.

And it’s only half done.

They have to come up with another $25.8 million.

So they’re working budget voodoo, trying to borrow money from the First Nation of Na-Cho Nyak Dun and taking money from YTG and YDC coffers to offset the damage.

But it’s all public money. Anyway you cut it, the territory’s citizens will pay.

Also, it needs to be mentioned the government and utility have fast-tracked the Mayo B project to capitalize on stimulus money. Mayo B is currently estimated at $160 million.

But the utility has not shown it is capable of handling even a modest power line project. So how is the public to have confidence in its ability to handle this, the largest capital project in recent memory?

If this project were to go off the rails in a similar fashion - which is entirely likely in a fast-tracked, far larger project – the final bill would come in at a whopping $390.4 million. Against that, Ottawa’s $72 million stimulus grant looks pretty piddly.

Where would the rest of the money come from? You have one guess.

Are you willing to pay?

Ratepayers should be rattled by the cost of this transmission line. They should be questioning the utility’s ability to estimate the cost of, and manage, large capital projects.

The responsibility falls on the guy at the helm.

That’s Morrison.

In light of this power line debacle, he should resign.

And the utility must immediately assure ratepayers its estimate of cost of Mayo B is better than a best guess.

We cannot afford a third mistake. (Richard Mostyn)

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