Fentie’s secret negotiations with ATCO revealed

ATCO is negotiating the purchase and control of Yukon Energy Corporation assets in closed-door talks with the premier’s office, a seven-page joint position paper written by ATCO and the Yukon government reveals.

ATCO is negotiating the purchase and control of Yukon Energy Corporation assets in closed-door talks with the premier’s office, a seven-page joint position paper written by ATCO and the Yukon government reveals.

The unsolicited bid from the Calgary-based energy giant has been kept secret by Premier Dennis Fentie, his close associates and negotiators in the department of Energy, Mines and Resources for at least seven months.

Under the proposal, a third energy company — referred to in the document as OPCO (operating company) — would be created in the Yukon.

That company, splitting ownership 50/50 between ATCO and the Yukon government, would incrementally subvert both Yukon Energy and ATCO-subsidiary Yukon Electrical Company Limited, the only utility companies currently serving the Yukon.

Both those existing companies would have to trade assets so Calgary-based ATCO eventually controlled half the Yukon’s power equipment.

ATCO is lobbying to buy Yukon Energy assets to get there, while the government would prefer it to invest in future projects, according to the document, which is dated May 27.

Through the new company, ATCO would have considerably more influence over the territory’s energy system.

According to the paper, the Yukon would appoint the chair and ATCO the president. ATCO would draft all roles and responsibilities of the chair, board and president. The president would come from within ATCO would fill

senior management positions in the new Yukon utility.

If ATCO has its way, the president would live outside the Yukon. The government was pushing for the president to remain a Yukon resident.

Also, ATCO wants the president to serve a five-year term. “Longer would be better,” Fentie told ATCO’s CEO Nancy Southern, according to the document.

Half the board would be appointed by ATCO and half by the government.

“Further work is required to determine if a position for First Nations on the board is required,” says the paper. “There was no discussion of the consequences to composition of board if First Nations require directors.”

There are no job losses considered in the negotiations, Fentie told reporters Tuesday.

But the document suggests the new company would slowly assume “resource planning, project development, regulatory and customer service functions,” and it’s not clear how that would affect existing staff.

Yukon Energy and Yukon Electrical would “eliminate or minimize the need for permanent utility staff,” ceding the work to the new company. This was agreed to by both the Yukon and ATCO, however, “more consideration is to

be given in this area,” it reads.

Yukon Energy and its single shareholder, the Crown-owned Yukon Development Corporation, currently decides which projects to build and generates almost all the territory’s power. Under the new arrangement, ATCO would

become a partner on generation projects.

ATCO is aggressively pursuing an investor position in the Mayo B dam extension and the construction of the Pelly Crossing to Stewart Crossing transmission line, the document reveals.

The utility deal should be a foothold for future ATCO investment in the Yukon, Fentie told Southern in a telephone conversation in April, according to the document.

Fentie invited Southern to consider privatizing “water infrastructure, waste management and specific forms of housing” in the Yukon. The assistant deputy minister of Energy, Mines and Resources, Shirley Abercrombie, would

contact government officials necessary for such discussions, the position paper says.

ATCO demanded the Yukon Energy Corporation’s board of directors, lawyers and consultants not be invited to negotiations, keeping it firmly in the hands of Fentie’s inner circle, said former Yukon Energy chair Willard Phelps.

The secretive and domineering approach led Phelps and three board directors to resign nearly three weeks ago.

Fentie refused to address the mass resignation or Phelps’ accusations Fentie was negotiating “back-door privatization.”

Phelps made the secret negotiations with ATCO public on Wednesday, and asked Fentie to confirm them.

He laid out 10 points for Fentie to address. Fentie refused.

“I haven’t read the allegations, nor will I,” he said 30 minutes after Phelps’ news conference, speaking in Rotary Peace Park at the start of the Yukon River Quest.

“The government has been consistent in its answers. If you want me to repeat myself, I don’t think that necessary.”

After Fentie refused to answer the questions, Phelps released the seven-page position paper.

Phelps heard about ATCO’s utility merger bid late last year, he said.

He asked for a meeting with Jim Kenyon, the minister in charge of Yukon Energy, but was rebuffed.

At the time, Fentie was talking to Yukon Energy president David Morrison, who is supposed to report only to the board.

Morrison first saw the position paper on June 1, five days after it was drafted.

“He called me and he was upset,” said Phelps, who ordered Morrison to provide a copy of the document.

Phelps resigned the following Monday, alongside board directors Greg Hakonson, Paul Hunter and Martin Allen.

“I genuinely don’t understand the motivation behind this,” said Phelps, noting there are no gains for the Crown-owned Yukon Energy or the Yukon public in the position paper.

The amount and type of project ATCO would help finance and build is still being negotiated.

It all depends on what Yukon Energy and Yukon Electrical assets are included in the 50/50 ownership deal the new company would be offered.

“ATCO suggests that all new buildings and land be included in 50/50 assets,” the document reads. It also wants all distribution and transmission assets to be included in the 50/50 deal, and that “ATCO has an option to invest

up to 50 per cent in all new distribution assets and the portion of all new transmission and generation assets that is included in rate base.”

The Yukon government only wants wire assets to be considered 50/50 assets. Instead of selling, the government prefers ATCO investing in future projects on a case-by-case basis. The government also suggested existing

generation, buildings and land not be included in the 50/50 ownership split.

After Yukon Energy employees demanded Fentie end the secrecy surrounding the negotiations at a rally last Thursday, all discussions with ATCO were stopped, newly installed Yukon Energy chair Pat Irvin said on Tuesday.

The talks are still on, Fentie said Wednesday.

“We’ll continue to talk with ATCO and anyone else who has good ideas about providing reliable, consistent, efficient, affordable energy to the Yukon,” said Fentie.

In Rotary Park, Fentie was asked if there was a May 12 meeting between ATCO and Yukon officials in Calgary.

“As far as I know, the discussions wrapped up in April,” he said.

Why wasn’t Yukon Energy allowed to participate in negotiations? Fentie was asked.

“You’re asking a question that’s foreign to me,” he said.

Is a new energy company being created?

“That’s possible,” he said. “There’s nothing final or remotely determined in that regard.”

He declined to address any more of Phelps’ assertions.

“I’m not going to respond to people’s opinions,” he said. “They’re entitled to them.”

Contact James Munson at jamesm@yukon-news.com.