Fentie went to ATCO for Mayo B money: Phelps

ATCO's bid to privatize the Yukon Energy Corporation was not unsolicited, says Willard Phelps. The assertion by the former chair of the utility contradicts statements by Yukon government officials.

ATCO’s bid to privatize the Yukon Energy Corporation was not unsolicited, says Willard Phelps.

The assertion by the former chair of the utility contradicts statements by Yukon government officials.

Two separate proposals from ATCO to increase its Yukon holdings came about because Premier Dennis Fentie approached the Calgary-based energy multinational in the spring and summer of 2008 to secure a $50-million investment in the Mayo B hydro project, said Phelps.

The first proposal arrived on Fentie’s desk in October 2008, and sparked seven months of talks between a small circle of public servants in the Energy, Mines and Resources Department whom Fentie tasked to negotiate with the multinational.

The negotiations were held without the knowledge of the corporation’s minister, Jim Kenyon.

Last week, an official told a news conference the bid was unsolicited, shielding the government from any responsibility for having initiated the ATCO negotiations.

Not true, said Phelps, who was told by Yukon Energy president David Morrison on multiple occasions that Fentie went to solicit cash for Mayo B from the Alberta company because Ottawa was slow to respond to Yukon’s funding request.

A second member of the Yukon Energy board at the time – who did not want to go public – corroborated Phelps’ story.

“(Fentie) was pushing for more federal money and it looked as if there was some interest in Ottawa, according to him,” said Phelps.

Yukon Energy was also trying to get Ottawa on board for Mayo B in mid-2008, but requests for meetings with counterparts down south never materialized.

The original estimate for Mayo B was pegged at $50 million, and with Ottawa slow to respond, Fentie told Morrison that he would ask ATCO.

“(Fentie) said it to David and David told (the board),” said Phelps.

“He was talking about ATCO having lots of money,” said Phelps. “I kept saying that ATCO isn’t doing anything for free.”

The Mayo B project, which will cost $160 million by current estimates, was an 11th-hour decision brought on by the sudden surge of potential mines about to come online in the territory in 2007.

The board’s 20-year Resource Plan, released in 2006, became obsolete when commodity prices rose the next year, said Phelps.

Most of the projects were long term and wouldn’t be ready soon enough, so the board scrambled and proposed Mayo B, which will only provide five megawatts of power to the Yukon’s electrical grid when completed.

The project is important to power future mines, but not necessary as a money maker on its own, so government is a better source of funding, said Phelps.

“And Ottawa should pay their share because they benefit with the mines,” he said.

Besides, a private company like ATCO can list its taxes as an expense and make energy customers cover the cost, ramping up the cost of electricity. That’s a cost the publicly owned Yukon Energy Corporation can’t claim, helping keep power costs down.

“(For Mayo B), you’re looking for money that isn’t going to need a return,” said Phelps.

Nevertheless, Fentie approached ATCO.

Before Fentie received the company’s proposal, Prime Minister Stephen Harper flew north to Dawson City at the end of August. There, Fentie pitched Mayo B to Harper, said Phelps.

When the proposal from ATCO arrived in October 2008, Fentie bragged about having made the bid happen, said Phelps.

“When the (October document) came in, Fentie was excited and gave the document to David (Morrison). He was saying to David that he went to talk to them and he was basically taking credit for it at that point.”

That document, a copy of which was leaked to the News last week, outlines Mayo B and hydro projects along the Robert Campbell Highway as potential places Yukon officials told ATCO were worthy of its investment.

When the Yukon Energy board found out about the proposal in December – which included the outright sale of publicly owned assets to the Alberta company – it demanded a meeting with Fentie, and received assurances the talks only sought cost efficiencies between Yukon Energy and ATCO’s current holding in the territory, the Yukon Electrical Company Limited.

The term for streamlining the relationship between both companies is “rationalization,” and the Yukon Energy board was already looking at the issue when Fentie claimed he was doing the same.

Fentie made those assurances to three board members on December 8. The clash also led to a meeting between the EMR officials who were leading the negotiations and Fentie’s cabinet the same day.

That was the first time Kenyon, the minister responsible for Yukon Energy, found out about the ATCO talks, according to board members.

That’s also when Fentie started calling the bid unsolicited, said Phelps.

“He started denying he had anything to do with it to his cabinet colleagues after the blowout,” said Phelps.

On the cover of the eight-page proposal that ATCO sent Fentie last October, it explicitly states: “An Unsolicited Proposal to the Yukon.”

The unusual header is likely a request by Fentie himself, said Phelps.

“Why would you go out and write ‘Unsolicited Bid’ on the cover?” he said.

Ottawa eventually did make a $71-million investment in Mayo B, which was announced last May.

Mayo B was a clear winner when Ottawa began working on an economic stimulus bill last fall because it was shelf-ready and a green project, said Phelps.

A second proposal from ATCO surfaced in June of this year, which, instead of Yukon Energy assets being sold, involved the creation of a new energy company half-owned by ATCO and the Yukon government that would effectively usurp managerial control of the assets.

Phelps has called the proposal “backdoor privatization” that would lead to higher energy rates.

When Phelps found out that the ATCO negotiations had continued, he and three other board members resigned in protest.

Fentie held his first press conference on the Crown corporation in crisis last week, more than two months after the mass resignations.

While Fentie refused to take questions and left three senior bureaucrats to handle reporters, Shirley Abercrombie, the assistant deputy minister of EMR whom Fentie tasked with the negotiations, said the first October bid was unsolicited.

Requests made to Yukon Energy for an interview with David Morrison were not returned.

Calls to Fentie’s spokesperson were not returned either.

Contact James Munson at

jamesm@yukon-news.com.

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