Mayo B waits on Na Cho Nyak Dun deal

Yukon Energy owns the carbon credits from Mayo B, says its president, David Morrison. But Chief Simon Mervyn wanted some of those credits to go to the Na-Cho Nyak Dun.

Yukon Energy owns the carbon credits from Mayo B, says its president, David Morrison.

But Chief Simon Mervyn wanted some of those credits to go to the Na-Cho Nyak Dun.

“Hopefully, there will be carbon credits attributed to the First Nation, but to date it’s negotiable,” he said in a previous interview with the News.

But Morrison dashed Mervyn’s hopes at a Mayo B news conference on Friday.

“(The Na-Cho Nyak Dun) don’t own the carbon credits because they don’t own the actual physical plant,” said Morrison.

“The carbon credits are our carbon credits.”

The credits will be addressed in a deal Yukon Energy is about to sign with the Na-Cho Nyak Dun on jobs and partial ownership.

“Whether or not there’s a deal on carbon credits, I don’t know yet,” he added.

Morrison wants to wait for the deal to be signed before offering the public any details, he said. It should be signed when Morrison returns from a two-week work/vacation break.

The Na-Cho Nyak Dun deal is the only missing piece of the puzzle for Mayo B.

Everything else is falling into place for the project, said Morrison.

The construction contract has been awarded to Peter Kiewit Sons’ Inc. and the Yukon Environmental and Socio-economic Assessment Board gave a green light for construction, he said.

The project will see a new powerhouse linked to the dam that currently sits on the Mayo River, downstream from Wareham Lake, near Mayo. Connected to the dam with a new underground penstock, the powerhouse will produce an additional 10 megawatts at the site, bringing Mayo’s total power production to 15 megawatts.

Omaha-based Kiewit Construction won the $85.4-million contract to build the powerhouse after six-month-long negotiations over the project’s specs. Kiewit beat out four other companies who made bids, including runner-up Ledcor.

Construction is expected to begin in July and is projected to finish in early 2012. A turbine has been ordered from Chinese manufacturer Chongqing Yunhe Hydropower Group Corporation. It’s the same company who provided a turbine for the Taku River Tlingit’s micro-hydro dam in Atlin. A generator has also been ordered from Siemens and will be manufactured in India, then assembled in Austria and Poland.

“The era of the General Electric turbine is over,” said Morrison.

The project will provide 150 jobs but it will take several months before that peak is reached, he said. All local contracts, such as tunnelling for the penstock and construction of the penstock itself, will be listed in the benefits agreement with the Na-Cho Nyak Dun.

Also on Friday, the Yukon Environmental and Socio-economic Assessment board handed down its decision to let the project proceed, but with a firm set of conditions, mostly in relation to the chinook salmon that spawn in the Mayo River.

“The project has significant adverse environmental and socioeconomic effects in Yukon that can be mitigated by terms and conditions,” says the board’s draft screening report.

Yukon Energy should adjust flow rates coming out of the powerhouse when chinook are spawning, and in-water construction must occur outside spawning times, it says. And sediment from construction must be monitored and erodible rocks must be covered with riprap to avoid silt filling up the river.

Workers must avoid damaging the Huffman Farmstead, an early Yukon settlement, as well as two archeological sites near the construction site, adds the report.

The work camps must also be alcohol-free and a zero-tolerance approach to drug use must be enforced to stave off any negative socioeconomic effects on Mayo, the report concludes.

The public has 30 days to comment on the report, which the board will follow with a final request for information from Yukon Energy and a decision document.

Morrison held the Friday conference just minutes after the board’s report was released.

He still hadn’t read its conclusions, he said. But Morrison was confident the public utility could meet the proposed rules.

“We can meet (the conditions),” he said. “The thing about conditions is that they cost more money.”

Mayo B is happening in conjunction with the construction of a transmission line between Carmacks and Stewart Crossing, which will merge the Yukon’s northern and southern grids.

Grande Prairie-based Valard Construction has been awarded the $11-million contract to build the transmission line’s second leg, also announced on Friday.

Valard built the first leg of the line in 2008 and will hire Arctic Power to carry out parts of the project. The first poles will be placed in the next few weeks and stringing is expected to be completed by early fall.

Substations for the line will be built over the course of the fall and the line should be working by the end of the year, said Morrison.

The financial plan for the two major capital projects was also revealed on Friday.

The scheme is nothing like what Yukon Energy originally planned, but it still provides an excellent deal for ratepayers, said Morrison.

The federal government is providing $71 million for both projects and Yukon Energy will also take out a $100-million bond with TD Securities.

From that total of $171 million, $120 million is going to Mayo B and $40 million is going to the transmission line’s second leg. The remaining $11 million will be spent on smaller capital projects over the next few years, including research for future hydro stations.

The bond won’t be completely paid though rates and power bills. The Yukon government has put up $52.5 million to repay the capital and interest on the bond and only $36.5 million will go into the rate base. The remaining $11 million is the same $11 million going toward future projects and will be put into the rate base at a later time, when the projects are budgeted.

As for the $36.5 million going into the rate base right now, Morrison says the injection is rate neutral because Mayo B and the transmission line will offset expensive costs.

The only hiccup in rolling out the Mayo B project may come from the Yukon Utilities Board, which is holding a hearing on the project between April 6 and 9.

Morrison was in Vancouver on Tuesday to do research for the Utilities Board hearing on Mayo B, said Yukon Energy spokesperson Janet Patterson. He’ll go on vacation after his research and will return in two weeks, she said.

Contact James Munson at

jamesm@yukon-news.com.