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Who should get cheap Yukon power?

The latest blockbuster has arrived just in time for summer reading season at the cabin: Viability Analysis of Southeast Alaska and Yukon Economic Development Corridor.

The latest blockbuster has arrived just in time for summer reading season at the cabin: Viability Analysis of Southeast Alaska and Yukon Economic Development Corridor, published by the Alaska

Energy Authority and the Yukon Government on June 26.

Clocking in at 84 pages plus six appendices, it’s a meaty read that may take you the rest of our brief summer.

It’s an intriguing story.

The plot goes like this. The Yukon has surplus hydro-electricity in the summer and shoulder seasons. You can see the power of the water spilling through the Schwatka dam when you take your summer visitors to the fish ladder.

Skagway, on the other hand, has a power shortage. Almost a million cruise ship passengers visit the town every summer. Each cruise ship is essentially a small city with its own fossil-fuel electricity plant. The report says the cruise ships might buy as much as 30 gigawatt-hours of power, almost 10 per cent of total Yukon power production today.

So you have three main characters: the Yukon, Skagway and the cruise ships.

Spicing up the plot is a cunning plan concocted by Skagway. If they can develop the West Creek hydro project near Dyea, which has been languishing on the hard drives of engineers since the 1980s, they could sell power back to the Yukon in the winter when we have a shortage of cheap hydro.

Then there’s a subplot involving laying a fibre-optic cable between Whitehorse and Skagway, to connect to Skagway’s new undersea cable to Juneau and Seattle. The Yukon would no longer be a captive customer of the Alaska Highway fibre line, always fretting that the villainous back-hoe operators of Fort Nelson will render our iPhones and credit card machines useless at any second.

An early victim in the report is the grandiosely-titled “Yukon-Southeast Alaska economic development corridor.” The idea was if you had a power line and a fibre optic cable, the project could be marketed as a “corridor.” Government communications officials love this kind of thing.

Unfortunately the report said it was actually cheaper to build the power line and fibre separately. Communications officials will need to hire some marketing consultants to come up with a sexier name for “power line.” Perhaps “Trail of 98 energy corridor” or “Chilkoot gigawatt highway” would work.

I would avoid the “Dead Horse Gulch” brand, despite its historical resonance and nearby location.

The report says the power scheme (not counting the West Creek cunning plan) would actually be financially viable and would require zero subsidy, which doesn’t happen very often in economic development reports. The power line would cost somewhere north of $100 million, and be in operation for decades. The cruise ships would pay 27 cents per kilowatt hour, which is cheaper than diesel (depending on your assumptions about how much diesel will cost in a few years, of course). The Yukon would get nine cents for its power. And the 18 cents in between would just barely cover the cost of building and maintaining the new power line.

It’s a pretty good idea, in theory. However, the key assumption is that the cruise ships would buy 30 gigs of power. This might not happen if they invested in energy efficiency, went solar, or fossil fuel prices stayed low. And, as a recent Yukon News story reported, not all cruise ships are currently capable of tapping into shoreside power.

The West Creek project is an interesting idea, but getting the permits for that project will not be easy. In the longer run, however, the Whitehorse-Skagway power line would enable development of many different small and large hydro projects from Carcross to Skagway. They would just have to get their power to the line along the highway, which would make them much cheaper to build than as standalone projects.

As readers of Sherlock Holmes know, sometimes it is the dog who doesn’t bark that is the most important clue.

In the case of this story, that silent dog is the Yukon power consumer. Why, one might ask, do we need to spend $100 million and go to all this trouble to sell cheap power to the cruise ships? Why not sell it to Yukoners, many of whom are burning diesel (which is essentially what home heating oil is) to heat their homes in months like April and October when the Yukon has surplus power.

You might think 27 cents is an attractively high price to bring in revenue, but the effective price received by the Yukon is 9 cents since the power line acts as an expensive middleman.

Insofar as we have surplus cheap hydro, we should probably be figuring out ways to use it to make the cost of living cheaper for Yukoners and to lure new businesses and jobs here. Going out of our way to help the cruise ship companies seems less important.

If the Skagwegians can get West Creek permitted and offer us cheap power in the winter, then that would change the equation. But until then, a power line project for just the cruise ship market seems like a second best.

The problem here is that selling cheap shoulder-season power to Yukoners is a different sort of problem from selling power to cruise ships. The power line project is an engineering challenge, which we are very good at fixing. If you give engineers enough money, they can definitely build a power line to Skagway.

The shoulder-season idea is a political and organizational challenge. We all have wires already connected from the Schwatka dam to our houses to use heat pumps or similar gadgets to displace home heating oil.

But someone would need to coordinate our two electricity companies, the utilities board and the Department of Energy to offer a scheme of low-price power for home and commercial heating in the shoulder season. Then you would have to get hundreds or thousands of Yukon homeowners to sign up. It would actually create a lot of local jobs, as Yukon contractors did power retrofits to houses.

If we proceed with selling cheap hydro to the cruise ships, it will be an admission that we couldn’t organize ourselves to sell cheap Yukon power to Yukoners.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He won this year’s Ma Murray award for best columnist.

You can follow him on Channel 9’s “Yukonomist” show or Twitter @hallidaykeith