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SOMBA K'E/YELLOWKNIFE
Hopes of retaining federal money for the city's district energy project for downtown were kept alive as city council approved the formation of a "subsidiary."

Equivalent to a municipal Crown corporation, the subsidiary will allow the city to provide proof in its application for federal funding that there is a plan for geothermal energy extraction in the downtown core.

Mayor Gord Van Tighem said a $14.15-million Clean Energy grant is still available from Natural Resources Canada to help the city meet costs for building the geothermal portion of the project, using underground heat from Con Mine. It's ultimately hoped that district energy can provide heat for 39 downtown buildings with a mixture of heat from wood-pellet boilers and geothermal energy.

"This is the next hurdle into hopefully obtaining federal input into the Yellowknife project," said Van Tighem. "We had to prove that we had the wherewithal to invest in the project, which would have required borrowing.

"Should the federal money continue to be available, it will need to be held at arm's length, which means it is held by a subsidiary."

Van Tighem added it would be similar to the relationship between the GNWT and the NWT Power Corporation.

According to bylaw, the subsidiary's role in the partnership will be to act as the city's agent with private investor Corix Utilities in order to ensure services are delivered to the public.

The city will "operate the community energy system, maintain the direct relationship with customers, and control rate setting."

The alternative energy project lingered for much of 2011 after a referendum to borrow money for the project was defeated by voters last March. If passed, it would have allowed the city to borrow $49 million toward the project, which had a total price tag of $61 million at the time.

Last summer, however, the city attracted investment interest from Vancouver-based Corix Utilities.

Since then, both the municipality and Corix have been working on a feasibility study.

If council approves it in February, it could lead to a final contract in March.

"We certainly want to see the terms of reference or an outline of what the subsidiary is going to be responsible for," said city councillor Cory Vanthuyne. "I understood we (had) to pass the bylaw first, but we want to have a good outline of what is expected or a terms of reference to look at."

Similarly, Coun. David Wind said he had no problem supporting the formation of the subsidiary for the time being.

"I still have a lot of serious reservations about the community energy plan," he said, adding that he wanted to see the details of the arrangement with Corix. "It didn't seem to me to make a lot of sense to stand in the way of possibly getting $14 million from the feds toward a community energy system just for the sake of opposing it."

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