Open letter to David Morrison, CEO, Yukon Energy Corp.:
The Utilities Consumers’ Group Society recently read that the second phase of the power line project is underway.
We assume this comes from a news release from your corporation, which we have not been privileged to receive.
The Utilities Consumers’ Group has some questions on this subject.
First, the Yukon Energy 20-year resource plan submitted: “Development of this project (the Carmacks-Stewart transmission project) is estimated to cost $32 million (2005).”
Why is it you are now telling us it will cost $68 million; that is, $28 million already spent on Carmacks/Pelly extension and a further estimation of $40 million for the Pelly/Stewart leg?
Even at inflation from 2005, is this not an extreme cost overrun (from $32 to $68 million)?
When will you be applying for your financial regulatory obligations explaining such cost overruns?
Second, in the article you are quoted as stating: “The cost-sharing agreement for the remaining $22 million (in addition to the $18 million coming from the federal government commitment) required for phase two Pelly/Stewart has been worked out between the Yukon government and the publicly owned energy corporation, with no impact on electrical rates.”
From what the Utilities Consumers’ Group understands, there are no customers on this leg of the journey, and Stewart Crossing is already connected to hydro from Mayo.
If there are no new customers, who will you sell the surplus power to in future years when the line is to be complete?
Is there a mine coming online we have not heard about, or is this ‘just build it and they will come’?
Where are the mining share costs of this project that were promised at other regulatory proceedings?
Will this extra power go on to feed your preferential businesses on secondary power, who receive electricity at half the rates of firm residential customers?
If there is no major sales for all this new hydro (and I don’t mean secondary sales), both from Mayo facilities and the Whitehorse-Aishihik grid (with the new Aishihik 3), will not any amount of dollars going towards this project into the rate base, result in an increase in rates? So, where is your ‘no impact’ on customer rates?
And to top this off, taxpayers will be paying for the Yukon government share, so what is the difference? If it’s not mining or the energy corporation itself who is paying?
Where is the regulatory scrutiny of this final leg of the project to see if it is prudent at this time?
Finally, Yukon Energy spokesperson Janet Patterson is quoted: “While the Pelly Crossing-to-Stewart section is substantially shorter than the Carmacks-Pelly section, its estimated cost is higher largely because of the more sophisticated substation required to tie the two grids together at Stewart.”
It is the consumer group’s understanding the Mayo-to-Dawson transmission line was built on a 69kv system while the Carmacks/Stewart system will all be a 138kv system. Is this not why the major cost of this more sophisticated substation will be necessary to connect the two grids of differing voltage?
We are all aware of the boondoggle of the Mayo-to-Dawson project, but now it appears we are getting some further cost repercussions.
Why should taxpayers or ratepayers pay for this major substation when it is the Yukon Energy Corporation that was responsible for this lack of vision? Why should it not be Yukon Energy paying for this lack of prudent development out of its own corporate pocket?
Roger Rondeau, president
Utilities Consumers’ Group