Question re: Stewart-Keno transmission line - April 28, 2016

Mr. Silver: So far this Sitting, we’ve heard about several projects that the government said that it’s proceeding with and they all have one thing in common: the government has no idea how they’re going to pay for them. The proposed fibre optic line is one; the Whistle Bend continuing care facility and also the paving of the Dawson runway are also on the list as well.

I would like to add one more to that — the Keno-Stewart Crossing transmission line. First announced in 2014, the government has spent more than $5 million on this project to date. It is currently before YESAB for review. Originally pegged at about $40 million, the cost of this project has now ballooned to over $80 million before it has even started.

Mr. Speaker, will the minister confirm that the price tag is now at $86 million?

Hon. Mr. Cathers: The work on the Stewart-Keno transmission line — some of the numbers are being finalized. The member is correct that the initial estimate before the detailed work was done on that had the cost estimate lower. The current cost estimate is roughly $86 million. As I’ve indicated previously, we are currently looking at this project. We’re also currently considering options for phasing-in repairs because that line itself is one of the oldest pieces of line in Yukon Energy’s systems. A significant portion of power outages affect that section, but we are looking at options for doing the project differently from what was originally conceived and comparing those cost options to long-term needs.

Mr. Silver: It’s worth noting that the last time Yukon Energy Corporation did a major capital project under this government’s watch, it was the LNG facility — and that was $6.4 million or 18-percent overbudget.

Earlier this year, the Government of Yukon sent a wish list to the new Governor of Canada for projects that it wants Ottawa to help fund. The proposed Stewart-Keno power line wasn’t on that list. The Government of Yukon said that it would pay $22 million and was looking for Ottawa to provide $64 million. We’ve learned recently that the minister’s colleagues haven’t actually asked Ottawa for the funding of their project.

Mr. Speaker, can the minister confirm that no application has been made to Ottawa for the Stewart-Keno line either?

Hon. Mr. Cathers: In fact, we’ve looked into whether the opportunities for federal funding for the Stewart-Keno transmission line — the indications we’ve received from the federal government were not initially clear about whether we could apply under Building Canada. We now understand that does not appear to be a pathway forward, so it was not part of the formal applications to date; however, the new federal Liberal government has made promises in terms of increased investment in green energy infrastructure. Depending on whether they actually follow through on those promises and the details of how they put in place a federal funding program, that may be a potential avenue for investment in this project.

Of course we’re also looking at the options within the territory, which include funding the project within the rate base or funding it through a combination of putting it into the rate base and an investment from the Yukon government. No final decisions have been made and the costs themselves are not finalized because there is more engineering work that needs to be done.

I would point out to the member that the line itself is in fact in need of repair and replacement. What I have back from the Yukon Energy Corporation and Yukon Development Corporation is that the cost difference between putting in place a 69-kilovolt line and a 138kV — is about a 10-percent difference in total project cost. Both options are still being explored.

Mr. Silver: Just for review, the last time the Yukon Energy Corporation built a big project it was almost 20‑percent overbudget. $5 million has already been spent on the Stewart-to-Keno project. Cost estimates have jumped from $40 million to $86 million before the project has even started — the largest federal transfer in Yukon history and it is still “Blame Ottawa”.

We know that the Yukon Party government hasn’t even applied for funding for Ottawa to help in the cost of this project. All this adds up to another poorly planned capital project from a government that is well known for these. We know that the money from Ottawa has not even been asked for.

Let’s turn to the Yukon’s $22-million share of this project. Will we be borrowing this money?Because it sure isn’t in this budget that we’re currently debating.

Hon. Mr. Cathers: Unfortunately it appears that the member did not adjust his supplementary question after I answered that question during my previous response.

Again, the decisions for how this project will be funded and the exact scope of the project have not been finalized. What the member does not seem to recognize also is that, in fact, this Yukon Energy Corporation is a board that is governed by appointees who are made to that board, and the member sits on the all-party committee that reviews nominees to that board. They in turn answer to their parent corporation and are accountable to the Yukon government through an annual protocol and letter of expectations.

What I should again remind the member of with this project is that we do need to invest in repairs to the line to Keno, which is one of the oldest ones on Yukon Energy Corporation’s grids and is responsible for a high proportion of power outages and is actually slightly past end of life.

As I indicated to the member previously, we are considering options for reducing the cost, but the numbers that I have from Yukon Energy Corporation as recently as this morning — is that the cost difference between putting in place a 69-kV line and 138-kilovolt line is roughly 10 percent difference in the cost. But again, we are considering both options at this point in time, considering phasing it and looking at financing models.

The bottom line is that some investment does need to be made in the line to improve reliability in this area.