Atlin hydro project won't be in this year's Yukon budget, gov't says

The proposed Atlin Hydro Expansion Project in northern B.C. is stuck in funding limbo — and that's prompted the Yukon government to drop the project from its upcoming budget and five-year capital plan.

"There are several requirements that must still be finalized before the project is in a position to receive Government of Yukon construction funding," reads a recent written statement from John Streicker, the territory's minister responsible for the Yukon Development Corporation. 

"We do not anticipate that the project will be ready to enter construction within the next fiscal year."

The Yukon government has long touted the hydro expansion project — which would see an increase in the amount of renewable energy produced in nearby Atlin, B.C., and sold to Yukon Energy — as a key part of its strategy to reduce emissions. The project would supply Yukon Energy with clean power during winter and reduce the territory's reliance on diesel generators.

The project would also include the construction of a transmission line from Atlin to Jakes Corner in the Yukon, construction of a substation, and upgrades to the transmission line from Jakes Corner to Whitehorse.

The Yukon government says it still supports the project as the proponent — Tlingit Homeland Energy Limited Partnership (THELP) — looks to close the funding gap. The territory has committed a $50-million grant to the project, and is one of several funding partners including the B.C. and federal governments.

That funding gap now sits at about $84 million, according to Lee Francoeur, president of THELP.

"If we can have that [funding gap] filled, we are good to go and we will start building right now," he said.

Francoeur says that requires the federal government to cough up more money for the project. In the meantime, he said he understands the Yukon's position and why there won't be any territorial money budgeted for the project this year.

"They want to go forward with it. And I respect that. We're not trying to, you know, get in the way. If I have a beef, it's that the federal government has not stepped forward as forthrightly as Yukon," he said.

"With the lack of the federal dollars to fill the funding gap, the Yukon really has no ability to bridge that gap on their own. So they've said to us, 'when the feds step up, we're there.'"

The funding gap means that the target date for operation has been pushed back by at least a year. The earlier target was to see commercial operation by 2025, but now Francoeur says he's hoping for 2026 or 2027, "depending how quickly we can get the funding flowing."

The project's budget has gone up significantly in the last few years, which the company has blamed on inflation, supply chain issues, higher commodity prices and a weak Canadian dollar. Last year, it was estimated at $330 million — a $100-million increase over a year before.

The escalating costs and changing timeline prompted the opposition Yukon Party last year to question the viability of the project, with party leader Currie Dixon expressing "extreme concern" about what had earlier been a "fairly reasonable-sounding" project.

Francoeur says his company has also developed a "plan B," which would require a smaller funding commitment in the short term, but also delay the timeline for the project. It's "not ideal," he said, but it would keep the project from going off the rails. 

"Like I've said to our partners several times, I don't want to build a bridge to nowhere. I don't want to be throwing tax dollars at an incomplete business plan," he said.

"Even if it's a smaller injection, and we're thinking around the $10-million range, and you know, if we can get that kind of commitment, we feel we can stay somewhat on course."