It has been exasperating to witness the past four months of bizarre manoeuvering over at the Yukon Energy Corp.
In the past, YEC/YDC has been viewed as a little toy box for each government to put their stamp on the energy future of the territory. I know this, because I was a YEC/YDC board member from 1996-2002. But the current government has pretty well taken the governance of the Crown corporation to a whole new level of low.
It must have been a poisonous situation for the four YEC/YDC board members to resign back in June.
YEC/YDC board members represent a cross-section of Yukon society and the board’s oversight and governance is supposed to ensure that well-balanced decisions are made.
I am the first to admit that it is a complicated board to be on, with so much learning required about the very complex world of regulated electrical production, and a seemingly endless amount of reading. Mayo B is the single largest capital project YEC has ever undertaken, by more than three times, and they apparently don’t even have a full board of directors.
I’d be feeling mighty stressed knowing that that huge project is sitting on the books. Without a full board, it must be a challenge to represent the full scope of interests and needs of the Yukon shareholder.
I was alarmed by the comment made by YEC president David Morrison in the October 5th Yukon News.
Mayo B is “the only option that we had that would get us the federal money and that’s why we are doing it,” he said.
This does not sound like a good reason to put YEC $70 million into debt (YEC’s share of the project costs, half the total).
I think Yukoners, the sole shareholders of YEC, think spending $70 million to get five Megawatts of power is not a good business decision. As a comparison, it’ll only cost $8 million to get another seven megawatts out of Aishihik with the installation of the third turbine.
Where is this $70 million going to come from?
YEC lacks the ability to explore a cheaper design/build option.
The last major capital project that YEC undertook, the Mayo-Dawson transmission line, was a puny $26-million project that ballooned to (still small compared to the $140-million Mayo B) $36 million.
That project was audited by auditor general Sheila Fraser in February 2005. Amongst the many findings in the report, the auditor general slams YEC for lacking the experience and expertise to carry out a project of the nature and magnitude of Mayo-Dawson.
So YEC will pretty well have to go with a big contract building firm to get Mayo B done.
To find the money to pay them, YEC will have to be creative, probably offering part ownership of the project.
Thus, backdoor privatization for an overpriced, underpowered project.
This is just the sort of misguided deal which can pull a company down.
As the YEC ship sinks, Yukoners will be left with the most expensive privately owned, five-megawatt hydro turbine in Yukon history, and with only higher electrical rates to pay for it.
Not the kind of boardroom legacy I’d want.