SOMBA K'E/YELLOWKNIFE - Yellowknife's downtown might start warming up with natural heat now that the city has announced Corix Utilities as a prospective business partner to cover the cost of the proposed $60.4-million Con Mine community energy project.

Mayor Gord Van Tighem, left, shakes hands with Eric van Roon, vice-president and chief operating officer for Vancouver-based Corix Utilities on Monday. The city and Corix have signed a memorandum of understanding, naming the utility company as a prospective business partner for the Con Mine community energy system. Joining the mayor and van Roon is David Kitching, managing director of sustainable energy for Corix. - Nicole Veerman/NNSL photo

The city and Vancouver-based Corix have signed a memorandum of understanding, and hope to sign a contract by the fall, to develop the project. If completed, the system could heat 39 downtown buildings with a mixture of wood pellet boilers and geothermal heat from beneath the now-defunct Con Mine.

The agreement being considered will have the private utility company fund, develop and operate the system, while the city participates in the governance, policy development and ownership of the resource.

Bob Long, senior administrator for the city, said a governance structure hasn't been set yet, but the most important principles have already been agreed upon.

"We will have the major say and determination of rates and the ownership of the assets will remain with the community of Yellowknife," he said. "They've had no trouble with either one of those issues in terms of our business arrangements.

Eric van Roon, vice president and chief operating officer for Corix, said his company supports this approach and has had success with it in the past.

"It's an approach that we have undertaken a number of times and seen work well with other major infrastructure projects," he said.

The city originally hoped to have a private partner take the risk of any capital cost overrun, while the city takes the risk of hooking everyone up to the system. However, residents rejected the city's March referendum asking for permission to borrow up to $49-million for the project, leaving the city without the necessary funds to take a capital position.

"We don't have the authorization to borrow any money, so we won't be borrowing any money. That's why they're here," Long said of the two Corix representatives who visited Yellowknife for the announcement Monday.

Long said although there will be no borrowing, the city will be looking for government grants to put toward the project to reduce the overall cost for customers.

In February, the city announced that three private partners, who were never named, were interested in the project.

"We picked Corix because they indicated they were the most flexible in terms of what the community benefits and community objectives would be in this project," said Long. "They see that coming into a community is a long-term commitment.

"They want Yellowknife to succeed and they want to succeed and us together in this project looks like it will be a big success."

City councillor David Wind, the only councillor to oppose the city's attempt to borrow funds for the project, said there is still a long way to go before the project moves forward, but if it does and Corix puts up the money, it's great news for Yellowknife.

"If it turns out that the private partner is interested in proceeding and that Yellowknife winds up getting a clean, alternate energy source out of this, financed by that private partner and that it's viable and everything works with no risk to the taxpayers, I'll be a happy camper," he said after the announcement.

The next step for Corix is to conduct research to ensure the business case, written by Vancouver-based Compass Resource Management, is sound.

Corix has worked in the territories on a number of other projects, including water treatment plants in Aklavik, Tuktoyaktuk, Holman, Deline and Edzo.

The utility company has also worked on community and district energy systems for Simon Fraser University in Burnaby, B.C., and the University of Oklahoma.

If an agreement is reached between the city and Corix, development of the system will begin in 2012, as was laid out in the city's business case.

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