Yukon’s assessment board has recommended giving Yukon Energy the green light to build a new, $86-million transmission line from Stewart Crossing to Keno City.
But the project’s future now depends on whether Yukon Energy secures federal funding, which may or may not happen.
The 112-kilometre Stewart-Keno City transmission line would replace an aging, 60-year-old line between Mayo and Keno, and would upgrade the entire length of the line from 69 to 138 kilovolts.
Yukon Energy President Andrew Hall said the project has two main goals.
“The first one is the line between Mayo and Keno is at end of life,” he said. “It has been that way for some time, and it needs to be upgraded.”
That section of line is now one of the major sources of power outages on the Yukon Energy grid.
But the roughly 20 residents of Keno City certainly don’t need a 138-kilovolt transmission line to supply their electricity demand.
The other purpose of the upgrade is to provide a transmission line that mining projects in the area could tie into if they ever go into production.
“There are several prospective mining deposits in that area,” Hall said. “Part of the goal behind the project was to facilitate that development over time.”
Chief among those potential mines are Victoria Gold’s Eagle project and Alexco’s Keno Hill silver district. Alexco is already tied into the existing transmission line through its Bellekeno mine, which closed in 2013.
But the $86-million project is contingent on federal financing, and the Yukon government still has no guarantee that any cash will flow from Ottawa.
The Yukon government included the Stewart-Keno City transmission line in a submission to the House of Commons standing committee on finance earlier this year, as an example of a green energy project the federal government might fund with the new money it’s promised for green infrastructure.
In its submission, the Yukon asked for $64.5 million toward the project.
“Access to affordable clean energy has a material impact on the assessment of potential new mining investment in Yukon,” the submission reads.
But Brad Cathers, the minister responsible for Yukon Energy, said Ottawa has still not created a targeted fund for green infrastructure, so the Yukon has not been able to make a formal application for financing.
“We don’t have an exact timeline on that,” he said. “That’s something that really, until we hear back from the federal government, it’s somewhat of an outstanding question.”
Community Services Minister Currie Dixon said the Yukon government may also try to apply for funding under the New Building Canada Fund, which provides federal dollars for a wide range of infrastructure projects across the country, though it hasn’t submitted an application to date.
If the project doesn’t receive federal funding, Cathers said, the Yukon would have to look at a “pared-down” version of the project, which would likely involve replacing the worst parts of the line between Mayo and Keno City. There is no official cost estimate available for that work.
In that case, he explained, the smaller project would be submitted to the Yukon Utilities Board for review, and the cost would likely be passed on to ratepayers.
Cathers said construction won’t start before the late summer of 2017. “It’s also quite conceivable that it might be delayed,” he added.
The Stewart-Keno City transmission line was criticized by the NDP and the Liberals during this spring’s session of the legislative assembly.
In April, NDP MLA Jim Tredger expressed concern that the government was planning to build an $86-million line without any assurance that any of the mining projects in the area will go into production.
“Has this government signed any power purchase agreements with these mines or are they merely upgrading the transmission line on speculation?” he asked.
He said this project compares poorly to the Carmacks-Stewart transmission line, which was completed in 2011 partly to supply power to the Minto mine. In that case, the mining company paid $7.2 million toward the cost of the main line, and had to make a minimum power purchase of $12 million in the first three years of operation.
Cathers told the News that even though no such agreement is in place now, the government could still recover costs from any mining company that wants to tie into the line down the road.
“Nothing would preclude us from determining what portions of line costs we might ask them to contribute to if they were to join the grid,” he said.
But in an email, Hall explained that companies like Victoria Gold would be required to pay the cost of tying into the grid and making system improvements. He didn’t mention anything about mining companies reimbursing the initial cost of construction. Liberal Leader Sandy Silver has also raised questions about the cost of the project, which was originally estimated at $40 million.
“All this adds up to another poorly planned capital project from a government that is well known for these,” he said.
Hall said the larger price tag is related to changes to the transmission line and substation designs.
If the federal government doesn’t fund the project right now, Cathers said, the line will still need to be upgraded before new mines tie into it. But he defended the Yukon government’s decision to try and complete the $86-million project now, without any mines in sight.
He said the federal government has previously funded the construction of the Whitehorse hydroelectric dam and the Aishihik hydro facility without any assurance that they would be needed.
“The federal government at the time saw the potential for legacy investments that over the long term would add to the potential of the territory’s hydro infrastructure grid to feed residential, commercial and industrial customers down the road.”
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