How do you justify subsidies?

How do you justify subsidies? Open letter to David Morrison, CEO Yukon Energy, and the board of directors of Yukon Energy re diesel power generation: According to the Yukon Energy/Alexco purchase power agreement (PPA), now before the regulator, Alexco i

Open letter to David Morrison, CEO Yukon Energy, and the board of directors of Yukon Energy re diesel power generation:

According to the Yukon Energy/Alexco purchase power agreement (PPA), now before the regulator, Alexco is not responsible for burning extra diesel, nor the costs of this.

So, why is Yukon Energy proposing to sell Alexco 10.5-cent power that costs them 30 cents to produce?

Is this a sound business decision?

Who exactly will pay for this risky proposition?

If it is the other ratepayers who pay for diesel on the margin, then Yukoners will indeed directly subsidize the energy costs for Bell Keno.

If Yukon Energy absorbs this cost through the income earned from the sales of power to Bellekeno, then other ratepayers lose the benefit (i.e. lower rates) of having this large industrial customer online.

Or even if the Energy Corp. opts to receive less profits, it has less money to build new facilities into the future.

So it appears to be a lose/lose situation for Yukon ratepayers.

How will you remedy this?

The corporation’s spokesperson has publicly stated when construction of Mayo B is complete, this problem (burning of base load on the Mayo/Dawson grid) will be remedied.

Through common sense, this means that, for the most part, Mayo B is being built to service Alexco and future mines in that area.

During the purchase power agreement regulatory proceedings, Yukon Energy insisted the new mine hookup at Bellekeno was not the reason why we need Mayo B, and thus Alexco is not responsible for any of the capital costs for building this new facility.

So which story is it, Morrison? Why should Yukoners (taxpayer or ratepayer) subsidize a mining corporation from Outside?

Until you and your board of directors and the government, who put all of you behind your desks, can justify this radical behaviour of subsidized mining, how will you justify any proposed future energy increases to your firm Yukon customers?

Roger Rondeau

Utilities Consumers’ Group

Whitehorse

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