Last year, the power purchase agreement between Yukon Energy Corporation and Sherwood Copper seemed a bad idea. Today, there’s no doubt.

Last year, the power purchase agreement between Yukon Energy Corporation and Sherwood Copper seemed a bad idea.

Today, there’s no doubt. Yukoners were fleeced.

Sherwood’s Minto mine, a darling of the current government, is guaranteed hydroelectric power at 10 cents a kilowatt hour (with a possible inflation increase after a year) until 2012.

A year ago, that rate seemed ridiculously low.

Today, well… it looks like ratepayers were robbed.

It’s very likely that everybody except the Minto mine will pay more for power in a few months.

Why are residential rates rising?

There is a shortage of hydro power on the grid.


The Minto mine is using it.

As a result, the utility will probably have to burn diesel.

In fact, the power supply is so tight right now that Willard Phelps, who oversees the Energy Corp., has told residential customers they shouldn’t use electrical heat in their homes.

And, by increasing the cost to people who use more than 1,000 kilowatt hours, he’s essentially forcing people to burn oil, propane or wood.

So, though Whitehorse has a guaranteed supply of benign hydro power flowing past its doors every day, people are encouraged to use hydrocarbon-producing fuel.

Make sense?

This wasn’t supposed to happen.

In the runup to the power purchase agreement, Yukon Energy pitched the power-purchase agreement as a way of making money off hydro power that was “surplus” to the territory’s needs.

Clearly, that wasn’t the case.

So what was at play?

Buying hydro from the expanded grid benefitted Sherwood shareholders, lowering the cost of operating the Minto mine by $3 million a year, or more.

As a result of the deal, the Vancouver-based company will make more money.

In exchange, Sherwood paid $7.2 million towards Yukon Energy’s expanded hydro grid, which was estimated to cost $27.8 million. And it promised to buy $3 million of power a year.

So the utility has spent a lot of money expanding the grid, which largely benefits the mine, and is charging ratepayers for that capital project.

That is driving up the rates charged to Yukon electrical consumers.

The mine has taken up all the surplus hydro power, and is receiving it at a discounted rate.

However, the utility benefits from a guaranteed $3-million sale a year.

Unfortunately, it’s not clear how that benefits ratepayers.

In its recent application to the Yukon Utilities Board, Yukon Energy suggests less than half this money will be applied to reduce the cost to other ratepayers, according to the watchdog Yukon Utilities Group.

So, once again, the benefits are not what the average ratepayer expected.

Bottom line, one mine has significantly cut its operating costs.

The rest of the territory’s power users are paying the lion’s share to provide that access.

They will also have to cover the cost of the diesel fuel that will be burned this year.

Those air-polluting diesel generators are located near Riverdale and Faro, not Minto.

Those who have installed electrical heat, to tap the surplus hydro Yukon Energy talked about last year, will be penalized for using it.

Residential customers will have to buy oil — the same fuel Sherwood Copper was happy to ditch because it was so expensive.

And, as mentioned, Yukon Energy will probably have to burn diesel to meet demand. Why? Because the mine is now drawing the utility’s surplus hydro capacity.

A Sherwood release said the Yukon will benefit from employment and royalties.

But the mine was operating without hydro power. So the territory would have received those benefits anyway.

Now the power-purchase agreement is signed, the territory’s ratepayers are stuck with it until at least 2012.

Sherwood Copper and its shareholders are profiting.

The rest of us?

Well, we’re subsidizing those profits.

Just Posted

Lorraine Kuhn is seen with one of the many volleyball teams she coached. (Photo submitted by Sport Yukon)
The Yukon Sports Hall of Fame inducts the late Lorraine Kuhn

Lorraine Kuhn became the newest member of the Yukon Sports Hall of Fame for her work in growing volleyball amongst other sports

File Photo
A Yukon judge approved dangerous offender status for a man guilty of a string of assaults in 2020.
Yukon judge sentences dangerous offender to indefinite prison term

Herman Peter Thorn, 51, was given the sentence for 2020 assaults, history of violence

Crystal Schick/ Yukon News A former residential school in the Kaska Dena community of Lower Post will be demolished on June 21. Crystal Schick/ Yukon News
Lower Post residential school demolition postponed

On June 21, the old residential school in Lower Post will be demolished and new ground on a multi-cultural centre will be broken

Chief Medical Officer of Health Dr. Brendan Hanley announced 29 new COVID-19 cases on June 19 and community transmission among unvaccinated individuals. (Yukon News file)
Yukon logs record-high 29 new COVID-19 cases

F.H. Collins prom attendees and some Porter Creek Grade 9 students are instructed to self-isolate as community transmission sweeps through unvaccinated populations

Willow Brewster, a paramedic helping in the COVID-19 drive-thru testing centre, holds a swab used for the COVID-19 test moments before using it on Nov. 24. The Yukon government is reopening the drive-thru option on June 18. (Crystal Schick/Yukon News)
Drive-up COVID-19 testing opening June 18 in Whitehorse

The drive-up testing will be open from 6:30 p.m. to 9:30 p.m. everyday and increase testing capacity by 33 spots

Whitehorse City Hall (Yukon News file)
City news, briefly

A look at decisions made by Whitehorse city council at its June 14 meeting

Murray Arsenault sits in the drivers seat of his 1975 Bricklin SV1 in Whitehorse on June 16. (Stephanie Waddell/Yukon News)
Bringing the 1975 Bricklin north

Murray Arsenault remembers his dad’s Bricklin, while now driving his own

A presumptive COVID case was found at Seabridge Gold’s 3 Aces project. (file photo)
Presumptive COVID-19 case reported at mine in southeast Yukon

A rapid antigen rest found a presumptive COVID case on an incoming individual arriving at the 3Aces project

Jonathan Antoine/Cabin Radio
Flooding in Fort Simpson on May 8.
Fort Simpson asked for military help. Two people showed up.

FORT SIMPSON—Residents of a flooded Northwest Territories village expected a helping hand… Continue reading

A woman was rescued from the Pioneer Ridge Trail in Alaska on June 16. (Photo courtesy/AllTrails)
Alaska hiker chased off trail by bears flags down help

ANCHORAGE (AP)—An Alaska hiker who reported needing help following bear encounters on… Continue reading

Two participants cross the finish line at the City of Whitehorse Kids Triathlon on June 12 with Mayor Dan Curtis on hand to present medals. (Stephanie Waddell/Yukon News)
2021 Kids’ Triathlon draws 76 young athletes

Youth ages five to 14 swim, run and bike their way to finish line

NDP MP Mumilaaq Qaqqaq rises in the House of Commons, in Ottawa on May 13, 2021. THE CANADIAN PRESS/Adrian Wyld
‘Unacceptable’ that Inuk MP felt unsafe in House of Commons, Miller says

OTTAWA—It’s a “sad reflection” on Canada that an Inuk MP feels she’s… Continue reading

Lily Witten performs her Canadian Nationals beam routine on June 14. John Tonin/Yukon News
Three Yukon gymnasts break 20-year Nationals absence

Bianca Berko-Malvasio, Maude Molgat and Lily Witten competed at the Canadian Nationals – the first time in 20 years the Yukon’s been represented at the meet

Most Read