Question re: Diesel to liquified natural gas generator conversion - May 8, 2014

Mr. Silver:   Last week, the Yukon Utilities Board rejected parts of an application from Yukon Electrical Company Limited for new power generation in Watson Lake. The Utilities Board is currently looking at an application from Yukon Energy Corporation for a new LNG facility here in Whitehorse. In other words, it has not yet been approved. At the same time, YESAB is reviewing that project and has not issued an approval either. While these approvals remain up in the air, the government has gone ahead already and spent $17 million on the project, including more than $8 million to purchase the new LNG generators themselves.

Mr. Speaker, as we saw in Watson Lake last week, sometimes projects don’t get approved. Why has the government made such a huge financial commitment to a project that has yet to be approved? Are there any penalties involved if the government has to cancel some of the commitments that it has already made?

Hon. Mr. Kent:    I thank the member opposite for the question. As he mentioned, currently there are two outstanding public processes with respect to this project that have yet to provide their rulings — the Yukon Utilities Board as well as the Yukon Environmental and Socio-economic Assessment Board. The natural gas engines were ordered ahead of YUB's assessment as well as YESAB’s assessment so that the Energy Corporation can receive them within the construction period. These engines are long-lead items — they take a long time to procure and to order. That’s why they were ordered ahead of time.

When it comes to the question that the member asked about penalties and any other additional charges that may be incurred with respect to this, I will direct that question in a letter to the chair of the Yukon Energy Corporation and provide it in writing to the member opposite.

Mr. Silver:   In December, the Yukon Energy Corporation president appeared here as a witness in the Legislature. I asked him whether or not a partnership agreement had been signed with the local First Nations to participate in this project, and he said, “Partnership agreements that we’ve had with First Nations on other projects have not been always signed months and months and months prior to going ahead. They have a life of their own in the sense that they’re discussions between groups.” Since that time, we know that discussions with the Ta’an Kwäch’än Council ended unsuccessfully. Does the Yukon government have a signed partnership agreement in place with the Kwanlin Dun and will the minister provide a copy of that agreement?

Hon. Mr. Kent:    Of course the Yukon Energy Corporation believes that it has a responsibility, whenever possible, to create opportunities that can benefit all Yukoners, including our First Nation citizens. As the member opposite correctly stated in his question, there was talk on the LNG project with both the Kwanlin Dun First Nation and the Ta’an Kwäch’än Council. The Ta’an Kwäch’än Council chose to back out. In the meantime, everyone knows there has been an election at Kwanlin Dun. I haven’t heard from the new chief as to whether or not they’ve made a decision to sign the partnership agreement. If there is one in place, I will check with the Yukon Energy Corporation as to whether or not it could be made a public document and, if it can, I will provide it through releasing it publicly or by tabling it on the floor of the House.

Mr. Silver:   The Yukon Energy Corporation has been working to involve local First Nations in the proposed LNG project. There is an obligation the government must meet under the Kwanlin Dun final agreement, for example.

We know that there have been discussions about Kwanlin Dun owning part of the facility and about Kwanlin Dun possibly getting into the retail LNG business as well. In December, just days after assurances that negotiations were proceeding, the Ta’an Kwäch’än Council abandoned its plans to partner with Yukon Energy Corporation on this project. A lot has changed since December, and there has been no public update on the status of Kwanlin Dun’s involvement on this project.

Once again, has the government met its obligations under the Kwanlin Dun and Ta’an Kwäch’än final agreements with regard to this project?

Hon. Mr. Kent:    The member opposite correctly asserts that there are some obligations under the project. There could be YACA obligations. There are also obligations under the Yukon Oil and Gas Act and an impact benefits agreement between the Energy Corporation, Yukon government and affected First Nations. When I determine through the Energy Corporation whether or not an agreement has been signed with the Kwanlin Dun First Nation, I will endeavour to make that public if that is possible. I will look into the questions that the member opposite asked. As I mentioned, there has recently been an election at the Kwanlin Dun First Nation. There is a new chief and new councillors, and I’m sure that they are immersed in briefings on a number of subjects. I did run into the new chief last night, and she mentioned as much to me when I ran into her in the community.

I will check with the Energy Corporation and the Yukon Development Corporation and get back to the member opposite.