Premier Dennis Fentie negotiated the privatization of Yukon Energy Corp. without telling his cabinet, says Willard Phelps.
In December, Jim Kenyon, minister responsible for the Crown corporation, threatened to resign when he learned he’d been kept in the dark, added Phelps.
“The premier would have deputies in on meetings and tell them not to tell their ministers,” Phelps told a news conference at the High Country Inn on Wednesday afternoon.
And even the minister of Energy, Mines and Resources, Brad Cathers, was “half clued in” on the ATCO talks, said Phelps.
Phelps resigned with half of the Yukon Energy board on June 8 because of the premier’s secret negotiations with ATCO.
Board directors Greg Hakonson, Paul Hunter and Martin Allen resigned alongside Phelps.
Hunter and Allen attended Wednesday’s news conference to corroborate Fentie’s secretive behaviour.
The negotiations—which included the sale of Yukon Energy’s assets to Calgary-based energy giant ATCO—were delegated to senior officials in the Energy, Mines and Resources Department instead of Kenyon.
The board learned about Fentie’s secret ATCO talks in December.
Fentie—who should have been dealing with the board of directors, or at least the chair—handed Yukon Energy president David Morrison a three-page proposal from ATCO early that month.
It outlined the Calgary company’s desire to buy a significant chunk of Yukon Energy—a Crown corporation worth $600 million in electrical hydro plants, transmission lines and diesel generators.
Morrison alerted Phelps, and a board meeting was called for December 8.
“That was the first document we became aware of,” said Phelps. “It was from ATCO to the government. And it was dated three weeks before our (board) meeting.”
The board, shocked by the proposal, arranged for Phelps, Hunter and Hakonson to meet with Kenyon at 3 p.m. that same day.
“We adjourned at lunchtime and people went their separate ways,” said Phelps.
That’s when the phones began ringing.
Pat Irvin—a board member and business partner of Community Services Minister Archie Lang—called Lang and told him the board was on their way to meet Kenyon, said Phelps.
Lang then called Fentie.
Irvin, who runs a grocery store in Watson Lake, also called Fentie.
“(Fentie) phoned in a rage and demanded David (Morrison) come over right away and I was supposed to come over as well,” said Phelps.
Morrison and Phelps confronted Fentie in his office.
“We went up there and had quite a blow-up—a dust-up—over a lot of things,” said Phelps.
As the argument escalated, a bell rang summoning members of the legislature to question period.
“So we broke and cooled off,” said Phelps.
When Fentie returned from question period, he assured Phelps and Morrison that major Yukon Energy assets would not be sold.
“After the break, behind closed doors, (Fentie) said that they were not really doing anything,” said Phelps. “That they were just going on with rationalization.”
Rationalization is an old proposal that would have the ATCO-owned Yukon Electrical Company Limited swap its few generators for Yukon Energy’s distribution lines. This would make the Crown corporation the only electrical wholesaler and the private company the only retailer.
But ATCO’s proposal went beyond rationalization.
ATCO wanted to gather all the territory’s electrical assets in one pile, and split it 50-50 with the Yukon government.
The setup would greatly diminish Yukon Energy’s control over the territory’s energy decisions—not to mention its assets.
Electrical rates would increase because, unlike a Crown corporation, ATCO pays and can recover income tax from Yukoners.
Phelps was incensed at the price ATCO offered for major parts of Yukon Energy’s infrastructure—including its power plants and transmission lines.
“This was the most ridiculous thing we’ve ever heard,” said Phelps. “The price was goofy.”
At 3 p.m. Morrison, Phelps, Hakonson and Hunter met
Kenyon.
The four discovered the minister in the cabinet room surrounded by handlers handpicked by Fentie, said Phelps.
Deputy Energy, Mines and Resources minister Angus Robertson and assistant deputy minister Shirley Abercrombie were sitting with Kenyon, along with Fentie’s principal secretary Gordon Steele.
The executive assistants to both Kenyon and Cathers also monitored things, said Phelps.
“We got started on the meeting and I think I was the first to raise hell,” he said.
“There’s no trust, no anything,” he said. “And here we’ve taken the corporation where it was an invisible mess and got it to when it was operating damn fine.”
Then it was Hunter’s turn.
“I was concerned about the staff at Yukon Energy and the implications of talking with ATCO,” said Hunter. “And the promise in that room was that there would be no more discussions with ATCO.”
“If they were to continue, (the promise was that) we’d be the first to know.”
At that point, Kenyon seemed perplexed.
“Kenyon said, ‘What’s going on?’” said Phelps. “‘I don’t know anything about this,’ he said. ‘I’ve never been told about this.’”
Kenyon soon realized that Fentie had been negotiating the corporation’s sale behind his back, and decided to resign on the spot.
“And I said, ‘Jim, I agree. I actually feel sorry for you. You’ve been carrying the can as the minister responsible and you don’t even know what’s happening.’”
Kenyon’s resignation was agreed to by those in attendance, said Hunter. Cathers became the designated cabinet go-to guy from then on.
But Kenyon never resigned.
And Fentie’s negotiations with ATCO continued.
Fentie sent Morrison another ATCO proposal in early June.
The seven-page “joint position paper” suggested a new power company would control both Yukon Energy and Yukon Electrical.
The new proposal arose from phone discussions between Fentie and ATCO CEO Nancy Southern in April, as well as a May 12 meeting between Abercrombie and ATCO officials in Edmonton, according to the document.
The new company would be split 50-50 between the Yukon government and
ATCO—giving the Alberta company significant control of the Yukon’s electrical assets.
The awkward business structure allowed Fentie to dodge accusations he was privatizing Yukon Energy.
When the board saw that document on June 8, half of them quit.
“My father used to have an expression,” said Phelps. “If someone lies to you once, it’s his fault. If they lie to you twice, it’s your fault.”
Even Irvin—who was Fentie’s ally when the first document came to light—was taken aback.
“(At the June 8 board meeting,) (Irvin) got red in the face, jumped up, walked around and said, ‘I’ve been lied to,” said Allen. “Those were his exact words.”
Phelps didn’t think to make copies of the first document, but learned the second time around.
The seven-page paper is now in the public domain.
Irvin has since been installed as the new Yukon Energy chair. Barb Joe, Paul Birckel and Luke Johnson remain on the board.
Several requests for interviews with Kenyon and Fentie have not been answered.
Contact James Munson at
jamesm@yukon-news.com.