Premier Dennis Fentie must spell out, in detail, his plans for the future of the Yukon Energy Corp.
Events of the past two weeks have seriously damaged public confidence in his government’s ability to manage the assets of its Crown-owned corporation.
And Fentie is solely responsible.
The utility is currently planning Mayo B, its largest capital project in recent history. The $160-million megaproject involves stringing hydro lines and building a powerhouse near the existing Mayo dam.
The project was supposed to be easy. That’s why it was chosen.
Ottawa was told the project was “shovel-ready” and, as a result, it kicked in $71 million from its stimulus fund.
But despite Ottawa’s financial largesse, the project is still short a lot of cash.
Enter Fentie.
He’s the consummate wheeler-dealer, a politician who sees a problem, cuts a deal to fix it and moves on to the next one.
Unfortunately, he rarely considers the long-term consequences of his actions.
We’ve seen this before, for example, to smooth the way for a mining project, he promised the Kaska Nation resource-sharing rights over its traditional territory in the absence of a formal land claim.
That came perilously close to undermining the existing land claim agreements. And the ill-considered traditional territory giveaway led the Carcross-Tagish First Nation to initially reject its land claim deal, the first such defeat in the territory’s history.
Now, with Mayo B, Fentie’s wheeling and dealing again.
Fentie doesn’t want to blow the territory’s accumulated surplus on the power project, so he’s taken it upon himself to scare up investors, cutting the corporation’s board out of the loop.
Fentie’s honed in on two, a consortium of First Nations and the Alberta-based multinational ATCO.
There are profound problems with this fix.
First, Yukon Energy has no other partners and is the largest asset owned by the government.
Introducing more investors radically changes the financial structure of the existing corporation.
For example, will the investors get a stake in the corporation’s existing assets? And if not, how do you figure out the new investors’ rate of return given Mayo B will consolidate the entire Yukon hydro grid?
These are big questions, they aren’t easy to solve. It’s all going to take some heavy negotiating. Which makes it a curious approach for a stimulus project that Ottawa demands be built quickly.
Next, Mayo B is expensive power. It isn’t being built because it’s the best choice, it’s being built because it’s the easiest and quickest project on the books.
When done, the project will produce power for 20 cents a kilowatt hour—about eight cents more than most people are currently paying. And that makes a difficult pitch to investors looking for a place to park their money.
And that raises still more questions. Like, for example, what’s being offered investors to sweeten the deal?
Third, Fentie’s talks with ATCO are troubling.
The private firm owns power lines and retails power to consumers, buying it from Crown-owned Yukon Energy.
The government is going to rationalize these operations, said Fentie.
But he’s refused to explain what this means.
In fact, he’s kept the corporation’s board in the dark about his plans.
The board considered this meddling in its affairs, and that forced chair Willard Phelps and three board members to resign in protest last week.
In leaving, Phelps questioned Fentie’s competence to negotiate a complicated deal with aboriginal governments.
That’s a valid concern.
Fentie’s relationship with the territory’s aboriginal people is, at best, strained.
Thursday, aboriginal leaders demanded Fentie live up to his obligations and commitments to First Nations. They delivered the message at a news conference held during the Western Premiers’ Conference in Dawson City on Thursday (see story page 2).
That pointed message suggests aboriginal leaders lack confidence in Fentie’s government. And that backs up Phelps’ assertion Fentie isn’t the right guy to pin down First Nation investment in Mayo B.
Second, Phelps asserts Fentie’s rationalization plan is just a euphemism for privatization.
Again, the premier’s secretive approach has only heightened fears the utility is being privatized.
The utility’s employees, including executives, are so concerned they have signed their names to a letter to the editor (page 10) demanding Fentie lift the veil of secrecy surrounding his plans for the utility.
Like Phelps, they believe Fentie is privatizing the utility.
And, they say, it’s a terrible idea. Privatizing it will simply send local money to Alberta, reducing investment in the territory and costing local jobs, they say.
Privatization isn’t in the cards, soothed Fentie.
But he has offered no details to explain his actions, which have seriously damaged the publicly owned utility.
So what are we left with?
While planning the costliest hydro-expansion project in recent memory, the territory’s utility has no functioning board and its employees are in open revolt, challenging Fentie to back off.
It’s a colossal mess. One that Fentie alone has created through his penchant for secrecy and wheeling and dealing.
There are significant questions about the direction Yukon Energy is going.
If, indeed, Fentie has a plan it’s far beyond time he lays it out, clearly. And publicly. (Richard Mostyn)