Talks among Calgary-based energy giant ATCO, Yukon government officials and their consultants on a potential merger of the territory's and ATCO's electricity assets were called everything but negotiations at a press conference Tuesday.

Premier Dennis Fentie opened the afternoon proceedings by denying the government was ever in negotiations. He then refused to take questions from the media and left a pair of high-level bureaucrats to explain the government's actions.

"It's an impossibility (to engage in such negotiations) under our process," said Fentie before walking out of the press conference.

"For any government to make a decision to negotiate with anyone requires sanction by cabinet."

In October 2008, Fentie received a proposal from ATCO to discuss a new asset arrangement of the Yukon Energy Corp. and ATCO's Yukon Electrical Co. Ltd. He then tasked Shirley Abercrombie, the assistant deputy minister of Energy Mines and Resources, "to open a dialogue with ATCO."

Two months later, Willard Phelps, then-energy corporation chair, found out about the ATCO-government tete-a-tete, had a heated argument with Fentie and believed he received assurances the talks would be called off.

When Phelps learned early in June that the talks had continued, he and three other board members resigned from the board in protest. Phelps released a seven-page joint position paper to media indicating "talks" had reached the advanced stages.

The paper, produced by Abercrombie and the consultants, outlines a merger of the energy corporation's $200 million worth of assets with ATCO's Yukon Electrical Co. Ltd. assets, valued at $63 million, to create

"OPCO", to be owned 50/50 by the government and ATCO.

While no assets would change hands, the paper indicates ATCO would pick the new company's president, manage personnel and suggests ATCO was angling for control of a new board of directors.

Yesterday, Abercrombie said that over a period of seven months, the government held six meetings with ATCO in Calgary, at which several options were bandied around, including a limited partnership, trading or

purchase of assets and the OPCO model.

But these were not considered negotiations, she insisted.

"One of the things we were doing on this was we wanted to explore where the boundaries were ... and that's what that paper is doing," explained Abercrombie of the leaked position paper.

"It's exploring the boundaries on where we might hit a wall with ATCO ... because to be honest, we didn't really know where ATCO was going with this and we wanted to know where the boundaries were. So that's

what that is. It's exploring, we're not negotiating."

The paper also indicated that as Abercrombie and the consultants were horse trading with ATCO, the premier was offering carrots to ATCO behind the scenes.

"(Fentie) asked ATCO to consider making Whitehorse a northern base for a wider set of investments, and (he and Nancy Southern, ATCO's deputy chair) discussed water infrastructure, waste management and specific forms of housing," reads a position paper footnote.

Here's Abercrombie's take on this aspect of the talks:

"Water, housing ... it was raised at one meeting, but I said that was a separate issue, that was not my area of expertise and I would not be addressing it."

Before the government engaged in talks, ATCO demanded and got a confidentiality agreement.

"This is common for companies to do this when they're talking about their company and their role," said Abercrombie.

"We got into this negotiation, we were looking at financial numbers, we were looking at lots of stuff. So we signed a confidentiality agreement and that's still in place now."

"So when Willard spilled the beans, the talks got called off?" asked a reporter.

"Yes. Yes," Abercrombie responded.

As to how far-reaching the confidentiality agreement extended, there was no clear answer.

Phelps claimed that when he confronted Fentie in December 2008, Jim Kenyon, then the minister responsible for the energy corporation, was totally unaware of any such dealings. Fentie took over the portfolio from Kenyon in early July.

Abercrombie said after receiving ATCO's proposal, the government informed David Morrison, the energy corporation president, and assumed he would inform the board, which he eventually did.

As for "discussions" with ATCO, they ceased in June, and no agreement was reached between the Yukon and ATCO.

Reading from a prepared statement before taking questions, Abercrombie said since the late 1980s, four or five such discussions have taken place with ATCO.

She also indicated a future deal could materialize.

"Should government decide to move forward with the review of the proposal and benefits to the Yukon were recognized, this information would be submitted to cabinet for approval to develop a discussion paper and implement full consultation with the Yukon Development Corporation and the Yukon Energy Corporation board of directors, first nations and Yukon public."