The Yukon Utilities Board is recommending the territorial government consider holding hearings on the proposed $31-million Carmacks to Stewart Crossing transmission line extension.
And in a 55-page report on the Yukon Energy Corporation’s 20-year resource plan — sent to the government on Monday — the board suggests several more reviews and meetings are needed before the transmission project can receive its “firm” support.
The board tentatively recommends the first stage of the Carmacks-to-Stewart project — to Pelly Crossing — as laid out by YEC, should proceed.
But if a dedicated hearing on the project takes place, “its outcome may impact the board’s views on whether this project should proceed,” it continues.
“Likewise, the outcome of YEC’s forthcoming application to the board regarding the power-purchase agreement may also affect the board’s recommendation here to proceed with the Carmacks-Stewart line.
“In the absence of an approved power purchase agreement, the board cannot make a firm recommendation on the Carmacks-Stewart line.”
If the government decides to hold dedicated hearings on the project, these should be held “as soon as possible.”
On December 21, YEC released a draft of a power purchase agreement it struck with Sherwood Copper to provide grid electricity to the Minto copper-gold mine near Pelly Crossing.
That agreement requires the utility to build a $20-million power line extension from Carmacks to Pelly Crossing. That’s phase one.
The agreement also requires a $3-million extension spur to be built from the new transmission line.
Under the deal, Sherwood will pay $7.2 million of YEC’s cost to build the transmission extension and has committed to a take-or-pay agreement for electricity worth $24 million.
Final approval for the power agreement will follow a utility board review, after YEC makes an application with the board by the end of January.
But the draft power-purchase deal has seen criticism from several energy watchdogs.
Some suggested the government might see the board’s report as sufficient for it to endorse both the power-purchase agreement and the construction of first phase of the transmission line extension.
Those critics are now applauding the board’s report.
“It doesn’t tell the government that they’ve got sufficient information and that they should go ahead (with the transmission project),” said energy watchdog Peter Percival in an interview Wednesday.
The power agreement literally makes or breaks the feasibility of the transmission line itself, said Percival.
Approving the transmission line without first reviewing the power deal between YEC and Sherwood would be backwards, he said.
“The line actually has to have the mine buying power that’s available, otherwise it wouldn’t make sense. You’d never pay it off (without Minto buying power),” he said.
But others are reading the report far differently.
“It doesn’t say that they want the government to have a hearing,” said YEC president David Morrison. “It says if the government decides that it thinks it needs a hearing, it wants it to do it quickly.
“It’s always been up to the government to decide,” he said. “It’s a government decision.”
The YEC’s position is that there have already been sufficient hearings for the Carmacks-to-Stewart project, said Morrison.
And he described the utility board’s report as a “decision,” which “endorses all of the items that we have in the (20-year resource) plan.”
The corporation committed to having its power agreement with Sherwood reviewed and approved by the board, said Morrison.
Though the board’s report suggests the outcome of a review may undermine its tepid endorsement of the overall project, Morrison sees things differently.
“There’s been a review of the entire project with exception of the power-purchase agreement, which is one element of it,” he said.
“There’s all kinds of other ways to build a transmission line. We could have gone to the utilities board and said, ‘We need to build this for the future of ratepayers, put it in the ratebase.’ They would have said ‘Yes’ or ‘No.’ But we happen to have a customer.”
While Morrison seems to put the ball into the government’s court, many fear its ministers aren’t fully engaged on the file.
The government has failed to show leadership on the transmission project and needs to “clear the air” on a number of fronts, said Liberal energy critic Gary McRobb.
The utility board’s report also states that the power-purchase agreement includes changes to electricity rates, and is therefore calling for YEC to file a full rate application before October 31, 2007.