Question re: Diesel to Liquefied Natural Gas generator conversion - April 23, 2014

Mr. Silver:   Mr. Speaker, I have another question for the Minister of Energy, Mines and Resources. The Yukon has depended on diesel fuel for energy production for many years. We have also known for many years that the now 45-year-old diesel generators would be in need of replacement. There was plenty of time for the government to research and to understand the different options available to provide this backup energy.

Why did it take the government so long to initiate a plan to replace the aging diesel generators, therefore eliminating some very valuable options?

Hon. Mr. Kent:    To be clear, the option of the replacement for the diesel generators at the Whitehorse Rapids power facility was something that was brought forward by the board of the Yukon Development Corporation as well as the board of the Yukon Energy Corporation. They felt that natural gas had emerged as the best replacement option for the 46-year-old diesel engines in Whitehorse and they made the business case to my caucus and Cabinet colleagues and we, at that time, determined to move ahead with the project.

Of course, the project is currently working its way through the Yukon Utilities Board process as well as the Yukon Environmental and Socio-Economic Assessment Board and the oil and gas licensing processes. There are still some public opportunities that need to be exhausted, but should those public processes prove the viability of this project, we look forward those natural gas generators in place this winter.

Mr. Silver:   I do appreciate the minister’s answer, but we are talking about the timeline. I’ll move on.

Mr. Speaker, the government has proposed a new $34-million LNG facility to backup power. The government has told the public that this new facility will, in the long run, save Yukoners money. Total diesel consumption from the past 12 months has provided only 1.7 gigawatt hours of energy, which accounts for about 0.39 percent of the total energy consumption — hydro and diesel power combined. Since the LNG facility is slated to be used as a backup only, or a replacement for diesel — as a previous minister told this House — it is a very expensive backup system — $34 million for less than half of one percent of our needs.

How many years will it take to recover the capital costs of this very expensive backup plan?

Hon. Mr. Kent:    As the member opposite mentioned, the cost estimates are in the $34- to $35-million range. What this is doing — it is the replacement of the 46-year-old diesel generators with 8.8 megawatts of natural gas generators, along with the ancillary infrastructures such as LNG truck off-loading, storage and vaporization facilities.

To be clear, this option was brought forward to us by the boards of the Yukon Energy Corporation and the Yukon Development Corporation for us to consider as an option to replace those diesel generators. The Premier and I, along with others, had the opportunity to tour the Whitehorse Rapids facility and got a look at some of the aging infrastructure in there, and I can assure members that it is certainly in need of replacement and we are excited to see this project go forward.

As mentioned, it is in the YESAA process as well as the Yukon Utilities Board process, and we look forward to hearing the results of both of those public processes.

Mr. Silver:   If the minister believes that the corporations would be better suited to answer these questions, we would love to have them sit here this session as witnesses.

We have heard time and time again from this government and the Yukon Energy Corporation that ratepayers will not be subject to increased utility costs if the proposed LNG facilities are to be put in place. This project is currently seeking public comment in the YESAA process and is far from being finalized. Without finalization of the project, let alone approval from the YESA Board, I cannot see any guarantee in these statements.

Can the minister guarantee no increased costs to ratepayers if the proposed LNG facility is to be approved?

Hon. Mr. Kent:    The processes that the member opposite speaks about — what that project is going through, such as the YESAA process and the Yukon Utilities Board process — will provide direction on whether or not the environmental and socio-economic aspects can be mitigated, as well as options through the Yukon Utilities Board process for the economics of this project.

I did have officials from the Development Corporation and the Energy Corporation in last fall. My predecessor — the Minister of Energy, Mines and Resources — also had those officials in last spring to answer the questions that the member opposite posed. Perhaps it’s an opportunity for us to go back in Hansard and take a look at the questions posed by the member opposite during the time that those officials were here. I wasn’t planning on bringing those officials into the House this spring. There is a lot of important business before the House, such as a record budget and several important pieces of legislation. Rather than bringing in officials every sitting, we’ll be looking to bring those officials back into the House this fall.