Yukon Energy Files Power Purchase Agreement with Yukon Utilities Board

Yukon Energy has submitted to the Yukon Utilities Board a Power Purchase Agreement (PPA) for the supply of electricity to the Minto mine. The energy corporation and Minto Explorations Ltd. finalized the PPA last night.

“Completing a PPA and filing the agreement with our regulator is a major accomplishment for the Carmacks-Stewart Transmission Line project,” Yukon Energy president David Morrison said. “It also fulfills a promise we made to Yukoners that they would have an opportunity through the Yukon Utilities Board process to scrutinize the deal.

“We believe we have an agreement that not only protects Yukoners from any rate increases as a result of the line, but that will also bring significant benefits to the territory over the long term,” Morrison added.

The transmission line would allow Pelly Crossing residents to switch from diesel to hydro for their electricity. It would also reduce greenhouse gases by between 22,000 and 29,000 tonnes per year by displacing the Minto mine’s on-site diesel generation. Minto plans to use diesels to supply its power until the transmission line is built.

Key elements of the agreement include:

• a promise that no individual ratepayer will see an increase in their rates due to the Carmacks-Stewart transmission line project.
• provisions for a $7.2 million contribution by Minto to Stage One of the Carmacks-Stewart Transmission Project.
• Minto will pay 100 percent of the cost of the spur line to the mine site (estimated at $3.8 million) in equal blended monthly payments of interest and principal over the first seven years of service.
• a “take or pay” obligation, which commits Minto to purchasing a minimum of $24 million worth of power from Yukon Energy within the first eight years of serving the mine, along with security over the mine to ensure payments are made.
• Minto will provide $850,000 to be placed into a Yukon Energy fund to cover decommissioning costs at the end of the mine’s life.
• A proposed new firm power rate for the Minto mine of approximately 10 cents per kWh.
• A proposed Secondary Energy rate of six cents per kWh available for the processing of low grade ore, if there is surplus electricity after Yukon Energy serves its firm customers and its regular Secondary Sales customers (in other words, Minto would be third in line for surplus power)
• Yukon Energy will purchase Minto’s four 1.6 megawatt diesel generators for $2.24 million, with the energy company making equal blended monthly payments of interest and principal over the first seven years of service.

The Power Purchase Agreement will not be effective until the YUB has given its approval, which is needed on or before the end of April in order for the energy company to finish building Phase 1 of the Carmacks-Stewart Transmission Line by the fall of 2008.

Yukon Energy also requires environmental and permitting approvals from, among others, the Yukon Environmental and Socio-economic Assessment Board Executive Committee (YESAB). The power company filed a submission to YESAB on October 13, 2006 and has since become the first company in the history of YESAB to pass through the Executive Committee’s adequacy review stage. The next step, known as the screening phase, will see YESAB inviting public comment on the proposal.

Stage One of the Carmacks-Stewart Transmission Project includes a 138 kV transmission line from Carmacks to Pelly Crossing and a 25 kV to 35 kV spur to Minto. 

A full copy of the Utilities Board application, including the Power Purchase Agreement, can be found here.

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Contact:
Janet Patterson                                                
Communications Supervisor
Yukon Energy Corporation                                          
(867) 393-5333                                                          
janet.patterson@yec.yk.ca