Work has begun on a $5.3-million project funded by the Yukon government to plan improvements to the Stewart-Keno City transmission line.
The project will lay the groundwork for replacing the transmission line between Mayo and Keno City, which is over 60 years old, and for upgrading the entire line between Keno City and Stewart Crossing from 69 to 138 kilovolts.
Three contracts have recently been awarded for work that includes the design of the new transmission line and substation.
“It’s a very old line,” said Janet Patterson, spokesperson for Yukon Energy. “There’s sagging in places. It’s not a reliable line.”
She said between 20 and 25 per cent of power outages in the territory occur along the Stewart-Keno City line, and that the upgrade will make the entire Yukon grid more stable. However, she added that she hasn’t heard of any complaints from local residents about the reliability of their electricity.
The planning is funded by the territorial government, not Yukon Energy, so electricity rates won’t increase, Patterson said. The project should be shovel-ready by the spring of 2017.
But the upgrade isn’t just about improving reliability for customers. It also aims to pave the way for future mines and other economic development in the area.
“There are several mineral deposits in that area,” Patterson said. “The potential is there. You need to have the infrastructure in place so that if it did go forward, there would be power.”
Victoria Gold Corporation’s Eagle gold project, north of Mayo, is the region’s most viable proposed mine. It is fully permitted, but needs about $400 million in capital to begin construction.
Patterson said the upgrade isn’t being completed specifically for Victoria Gold’s benefit, and that no final agreement has been made about whether the Eagle gold project will tie into that line.
But John McConnell, Victoria Gold Corp.‘s president and chief executive, said he has a memorandum of understanding with Yukon Energy stating the mine will tie into the Stewart-Keno City line.
Still, he said a higher-powered transmission line isn’t necessary for the Eagle development.
“The current line the way it is is fine,” he said. He suggested the upgrade was for future projects in the area.
Lewis Rifkind with the Yukon Conservation Society wondered why the Yukon government is paying to upgrade infrastructure for mining projects that may never come to pass.
“Basically, we’re subsidizing the mining industry,” he said. “We’re not talking about tens of thousands of dollars, we’re talking about millions of dollars.”
Rifkind said there are many other instances where taxpayers are paying to maintain infrastructure that mostly benefits mining companies.
For example, $464,000 was allocated to maintenance of the Nahanni Range Road in this year’s Highways and Public Works budget, though the road provides access to the Cantung mine, and not to any communities.
Similarly, $1 million was devoted to construction and maintenance along the Canol Road, though the north part of the road is mainly used to access mineral exploration sites. Public contracts worth at least $97,500 were awarded in the last fiscal year for work on the North Canol Road.
Rifkind questioned whether mining exploration warrants this kind of public financing.
“We’re just throwing money at these resource extraction projects, and for what?” he asked.
But Simon Hennig with the Canadian Taxpayers Federation said government funding for infrastructure development that will clearly benefit private companies is simply the cost of attracting business to the territory.
“Usually, roads, power lines, we don’t typically qualify as corporate welfare,” he said.
He said there are three major things governments can do to promote economic development.
“One of them is to have a competitive tax structure. Another one is to have a reasonable regulatory system. And the last thing they can do is to have the infrastructure in place.”
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