A draft policy to open the door for independent power producers interested in contributing to the territory's energy needs was released last Thursday.

The Yukon Conservation Society, however, is already calling the policy seriously flawed because of the provision to permit natural gas as a substitute to displace diesel fuel.

Anne Middler, the society's energy co-ordinator, said last Thursday afternoon the intent of permitting independent power producers is to encourage the development of renewable energy to displace dependency on fossil fuels.

Allowing for the replacement of one fossil fuel with another is not the way it's supposed to work, she said.

"The Yukon Conservation Society is definitely supportive of an independent power producer policy, but not this one.”

She said the utilities should not be allowed to purchase energy produced by fracked gas.

The society, she said, will make its comments known, and they'll include the same comments they made in the fall of 2009 when the Yukon government opened the discussion on independent power production.

Middler pointed to the very first paragraph of the draft policy released for discussion.

The opening paragraph indicates the provision for IPPs will emphasize efficiency, conservation and renewable energy.

It also goes on to say: "The policy facilitates purchase of electricity from independent power producers, and calls for the replacement of imported diesel fuel with Yukon's oil and gas resources.”

It's widely accepted that the vast majority of the Yukon's natural gas resources are held in shale deposits that would require hydraulic fracturing to extract the gas.

Energy, Mines and Resources Minister Scott Kent said last week he realizes there's been a quite a bit more discussion around natural gas since 2009, when it was looked favourably upon as an alternative because it was much cleaner than diesel.

It remains in the draft policy for discussion because of the opportunities that might arise with future industrial

developments, for instance, he explained.

Kent said if a large mine were to come along and install its own generation using natural gas, allowing for natural gas as an alternative for IPPs would provide the mine with the ability to sell excess power back to the grid.

"Obviously, some feelings have changed since 2009 but we still feel it is important to include it because it was a policy that did undergo a fair amount of public scrutiny,” the minister said of the provision for natural gas.

Kent said he recognized the concern raised about the plans to import liquefied natural gas for a new generating facility in Whitehorse and the conversion to diesel-natural gas generators in Watson Lake.

"This is an opportunity for Yukoners to put forward their thoughts on natural gas and obviously we would consider them,” Kent said.

"We feel natural gas is another opportunity to offset diesel.”

Kent emphasized the policy is in draft form, and the public does have until July 25 to make comments.

The intent is to have the policy finalized by the end of this year with some form of implementation next year, the minister said.

The government has received expressions of interest in the IPP policy from the private sector, he added.

Back in February, the government began taking applications for its net metering program, which was finalized last fall.

The program allows for the sale of excess power from small, independent producers who may have a windmill in the back yard or a creek running by that can support a micro-generator.

Only power produced by renewable resources qualifies for the net metering program.

The policy for independent power producers allows for the sale of excess power from larger types of generation, perhaps from wind turbines, such as the two turbines on Haeckel Hill.

The draft IPP policy proposes two tiers.

Tier one would allow for smaller projects, such as the wind turbines on Haeckel Hill.

Once the policy is adopted, the tier one program would be sent to the Yukon Utilities Board for umbrella approval.

From then on, Yukon Energy and the Yukon Electrical Co. Ltd. could process and approve projects on their own. Only sources of renewable energy would be allowed for tier one projects.

Each tier two project would have to go through a full public review and screening by the utilities board, at the applicant's expense.

Tier two projects would generally include renewable sources of energy such as wind and solar power but also allows for the use of natural gas for generation.

Among the issues raised in the discussion paper is the need to ensure the integrity of the grid is protected.

Along those lines, the policy currently caps the amount of generation allowed for under the tier one program at 2 megawatts, or the equivalent of 11 Haeckel Hills.

It also recomends that all IPP projects, big or small, proposed for the isolated communities dependent on diesel generation be subject to full public review by the utilities board to ensure service stability.

The isolated communities are Old Crow, Beaver Creek, Burwash Landing, Destruction Bay, Swift River and Watson Lake.

IPPs will be reinbursed at the cost of what Yukon Energy or Yukon Electrical would have to pay to provide the same amount of power.

In Whitehorse, for instance, independent producers would be paid 21 cents per kilowatt hour, 30 cents per kwh in communities reliant on diesel generation except in Old Crow where IPPs would be compenstated at a rate of 64 cents per kwh.