SOMBA K'E/YELLOWKNIFE - If Corix Utilities signs a contract in the fall to become the city's private partner in the Con Mine community energy project, it's in it for the long haul.

"We look for long-term arrangements," said Jack Touhey, vice-president of the Vancouver-based utility company that has about 2,000 employees.

To prove the company's commitment to long-term investments, Touhey said Corix has a 50-year contract to own, finance, operate, maintain and renew infrastructure for 12 utilities, including a district energy system, at three U.S. Army bases in Alaska.

"This type of long-term operation, utility-type installations, are exactly what our investors are looking for," he said, noting the benefit of a long-term agreement is more time to pay back the project's capital costs, keeping utility rates down.

The city announced last week it had signed a memorandum of understanding with Corix for the $60.4-million Con Mine community energy project. If completed, it would heat 39 downtown buildings with a mixture of wood-pellet boilers and geothermal heat from below the now-defunct Con Mine. The utility company and the city plan to negotiate the terms and conditions of a contract and come to an agreement by the fall.

So far, the agreement being considered has the private utility company funding, developing and operating the system, while the city participates in the governance, policy development and ownership of the resource. This would include taking part in setting the utility rates.

Mayor Gord Van Tighem said by having a role in rate setting, the city will act as a regulator. That's important, he said, because "if there wasn't a sort of neutral, outside control, there would always be the perception that somebody could charge whatever they want in a non-competitive environment."

Van Tighem said it hasn't been determined yet whether the community energy system would be regulated under the NWT Public Utilities Board.

Touhey said, if the system is built, the rates would reflect the investment - paid in part by equity from investors and in part by debt - that Corix put into the utility. The utility company would make its money by having a higher rate of return on the equity portion of the investment, he said.

Before residents rejected the city's March referendum request seeking permission to borrow up to $49-million for the project, the city hoped to keep the utility rates down by taking a capital position in the project, in turn, reducing a private company's investment.

"Typically there is an element that the rates of return are slightly higher when there's a private utility that's investing in it. We like to think that there's benefits though that come to offset that in terms of our operational skills and experience that we can bring that we hope will bring added efficiently and bring down the operating costs."

Corix's experience with district energy systems is widespread. Among others, there's the Dockside Green development in Victoria, B.C., the UniverCity project at the Simon Fraser University in Burnaby, B.C. and a system at the University of Oklahoma.

The utility company has also been responsible for building five water treatment plants for the GNWT in Aklavik, Tuktoyaktuk, Holman, Deline and Edzo, and is building five more in Jean Marie River, Wrigley, Trout Lake, Fort Good

Hope and Lutsel K'e.

The next step for Yellowknife's community energy system is a preliminary design, which will indicate the overall capital cost of the project.

Van Tighem said it's hard to say what the final system will look like because there's still a lot to do before an contract can be signed and construction can begin.

"At this point, it's again just one step at a time."

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