Fentie privatization plan jeopardizes Mayo B, says Phelps

Premier Dennis Fentie is privatizing the Yukon Energy Corporation and interfering in a First Nation deal to fund the Mayo B project, says Willard Phelps.

Premier Dennis Fentie is privatizing the Yukon Energy Corporation and interfering in a First Nation deal to fund the Mayo B project, says Willard Phelps.

Fentie’s interference amounts to a “dictatorial attitude” that risks leaving Yukon Energy in shambles, said the former board chair, who resigned last week.

Fentie refused to talk about his privatization plans with the board, said Phelps.

“What they’re doing, in effect, is putting a new management team in for the whole thing,” he said. “It’s going to be expensive and it’s really backdoor privatization.”

Fentie’s scheme would give Alberta-based ATCO—the multinational company that owns the Yukon Electrical Co. Ltd.—ownership of future projects and first dibs on the management of the Crown-owned Yukon Energy Corp., said Phelps.

It’s being called “rationalization,” which is Fentie’s way of manipulating the public, said Phelps.

“There are ways of achieving (privatization) and yet being able to say it’s not privatization,” he said. “Even though you and I both know it is.”

There’s been talk of streamlining the relationship between Yukon Energy and Yukon Electrical for years, said Phelps. Yukon Energy focuses on generation and wholesales to Yukon Electrical Co., which owns power lines and sells the electricity directly to Yukoners.

But, complicating matters, there are exceptions for both companies.

Yukon Electrical owns a hydro station at Fish Lake and a number of diesel generators. And Yukon Energy retails power in Dawson, Faro and Mayo.

Under rationalization, Yukon Energy would own all the power generating assets and Yukon Electrical would get all the transmission lines and retail all the territory’s power. But, Fentie’s deal would also strengthen ATCO’s management of the territory’s power system, giving it defacto control, despite its poor track record running a Crown corporation, said Phelps.

“It would be backdoor privatization, meaning it would be worked so that the Yukon government retains its heritage generation,” said Phelps. “But in the future, what happens with new projects and who gets the money into the rate base?”

Fentie refused to meet the corporation’s board and tried to keep his agenda secret, said Phelps. Greg Hakonson, Paul Hunter and Martin Allen, all board directors, quit alongside Phelps last week.

As experts in Yukon’s electrical grid, they knew about ATCO’s questionable track record in the Yukon.

ATCO managed Yukon Energy when the Crown corporation was created in the mid 1980s. Yukon Energy’s board of directors kicked the private utility company out for doing a shoddy job in the 1990s, said Phelps.

“ATCO, in effect, ran (Yukon Energy and Yukon Electrical) for a fee and quite a high fee,” he said. “In the opinion of the directors they did a lousy job.”

When Phelps was brought in as chair in 2004, he found the public utility company in tatters.

“One of the problems we’ve been playing catch-up on was improperly monitored diesel units,” said Phelps. “There are all kinds of things that should have been done so that when you have a power failure, you can click something on without any problem.”

It is shocking that ATCO never did much research and development that would allow Yukon Energy to adjust to rapid jumps in electricity usage, which is what the territory is dealing with now, said Phelps.

“You’ve got to have five projects you can move ahead with on a timely basis,” said Phelps, adding that studying the impact and feasibility of a hydro project can take five years.

“None of that was done,” he said. “The only reason we’re doing Mayo B is because it’s the only green project that we can bring in quickly and that’s largely because there’s a footprint there.”

The $160-million Mayo B project will connect the Yukon’s north and south grids and add a new powerhouse to the Mayo dam.

But a better, less-expensive project might be in the works now if ATCO had been a good manager in the past, said Phelps, who admitted a stormy relationship with Fentie.

“We had some pretty good fights. I had some confrontations. I could never understand what the fuck was going on.”

Privatization wasn’t the only interference coming from Fentie’s office.

He is jeopardizing the Mayo B project, set to begin construction this summer, by writing his own deal with a consortium of First Nations to help fund the project.

“If we could negotiate a partnership with the right First Nations and get those right—and it’s a tough, complicated, huge task—then I’m convinced we could do it on time,” said Phelps.

“If the government interferes—and I mean interfere, not direct—and pisses the (First Nations) off, and slows it down, this thing will go right off the rails.”

Yukon Energy has a good history working with First Nations, and despite being a tough negotiator, he has a reputation of being honest, said Phelps.

“(First Nations) don’t feel that way, in my view, towards our premier.

“Our biggest task is getting First Nations onside and negotiating the proper arrangements with each of them. It takes patience and time and they’ve got to trust you. We’ve built that trust.”

Yukon Energy earned the faith of First Nations when building the line between Carmacks and Pelly Crossing.

“If (Fentie) gets involved in those kinds of things, this will cost tens of millions of dollars,” said Phelps. “This will be a disaster and government will have to bail it out.

“(Political meddling) can kill a project really quickly.”

There’s a hurry to get the project going for mines soon to come on stream.

“If it gets all screwed up and gets delayed like hell, the federal government will get highly pissed off,” said Phelps. “It will dampen our chances for future funding arrangements and power rates will go through the roof if we start to use diesel instead of hydro.”

Fentie doesn’t know how to strike a power deal with a First Nation, he said.

“I know the players,” he said. “I’ve been doing this for years and years and we’ve got a track record.”

Negotiating with First Nations won’t be any easier if management is sold to an Alberta company, he said.

“What do you think ATCO knows about this kind of stuff?” said Phelps. “Down in Edmonton they don’t know about these local issues.”

“I don’t know why he’s doing this with ATCO. (The board members) aren’t playing their proper roles. We should be at the table. We’re the experts.”

Fentie has not returned any calls on the board resignations, the allegations of privatization or the Mayo B project.

Contact James Munson at

jamesm@yukon-news.com.

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