Yukon Energy forced to rejig Minto mine dealadmin
The Yukon Utilities Board has given the Yukon Energy Corp. one week to renegotiate a tentative power deal with the owners of the Minto copper mine that the board says could affect ratepayers.
Regulators with the board, which regulates energy sales in the territory, ruled in a decision dated April 30 that the proposed power purchase agreement between the utility and Sherwood Copper’s Minto Exploration Ltd. requires numerous revisions in order to protect Yukon ratepayers from cost overruns.
It says the deal does not justify the power rates being proposed for the mine ”” an assessment that backs critics like former utilities board chair Peter Percival, who has maintained that the mine is not paying its fair share of the construction costs.
“I think the board made a cautious step in the right direction. They agreed with the interveners that if there were any losses, they should not go to the rate base and that the ratepayers wouldn’t have to pay for it,” he said Tuesday.
“However, the actual agreement, in my opinion ”” and I think somewhat suggested by the board ”” was not a good deal and that really, the utility should not have been entered into that agreement.”
Yukon Energy’s deal would create a power link between the Minto mine, Pelly Crossing and Stewart Crossing, and the Whitehorse power grid. It has been estimated that the project, which is scheduled to begin this fall, will cost $35 million.
Under the deal, Minto Explorations has promised to pay $7 million toward the construction of a $31-million power line between Carmacks and Stewart Crossing. It has also promised to pay the entire cost ”” $4 million ”” of building a spur line from the new main line to the mine site.
However, under the deal the company will not have to make any payments until it has been in operation for four years.
The utilities board ruled that it would be inappropriate for Yukon Energy to finance the mine’s portion of the costs. If those costs should rise above the current estimates, the board said the mine should pay a share of the overruns.
But even with the changes demanded by the board, Percival said the tentative deal would be too good for the mine to turn down.
“I think Minto got a sweet deal out of it and I think the board did the best it could in evaluating the information that was presented to it,” he said.
“It’s not going to kill the deal; the savings are too great. And if the price of diesel goes up, as it looks like it’s going to go up, they’ll be in a position to save even more money.”
The utilities board has given Yukon Energy until May 9 to reach an agreement with Minto over the recommended changes.
Officials at Yukon Energy told CBC News that they are studying the ruling. Energy Minister Archie Lang is expecting to receive a full briefing on the ruling on Wednesday.
Information from: www.cbc.ca