The chair of the board of directors for Yukon Energy is confident the cost of the new power line extension will come in on target or very close to it.

Willard Phelps said this morning there is something of a contingency allowance built into the $27.8-million predicted cost for the main grid extension from Carmacks to Pelly Crossing.

The publicly-owned corporation was working with a ballpark estimate of between $19 million and $25.6 million earlier this year. The final cost released last Thursday is quite close to the refined project estimate provided this past summer to the board by a professional engineering firm, though the chair declined to release the exact amount of that estimate.

'We are very comfortable,' Phelps said of the final cost estimate. 'We are very close.

'It could be less, it could be slightly more, but we are very comfortable with these numbers because it was done right.'

Yukoners have already committed $15 million to the project, with $10 million coming from the Yukon government and $5 million from Yukon Energy's parent company, the publicly-owned Yukon Development Corp.

The Minto mine's owner has committed $7.2 million to the main line construction, leaving $5.6 million that will be added to the rate base and passed on to electrical consumers.

Phelps said the cost to ratepayers, when you amortize the $5.6 million cost over the life of the project, is very small.

The only variable that remains at this point, he explained, is the final cost on some of the transformers and switching gear that is required for the grid extension.

The $17.3-million bid from a partnership involving the three Northern Tutchone first nations is a firm contract price, as are the $3.4-million clearing work and the $693,000-contract for surveying.

'To be honest, I am extremely pleased,' Phelps said. 'It went better than one could have hoped for.

'To have the Northern Tutchone first nations involved in the construction is kind of a ground breaker and a good one.'

The Minto mine is responsible for covering the entire cost of the 29-kilometre spur line, which was originally estimated at slightly less than $4 million, but is now estimated at $8.8 million.

Phelps said it's his understanding the mining company has agreed to pay the new cost, which was a result of higher than-expected prices for different components required for the line, as well as a substantial increase in the amount of power the mine was planning using.

Originally, he said, the mine was planning to mill about 1,500 tonnes a day, but phase two upgrades to the mill are already underway to increase the tonnage to 2,400 tonnes per day and eventually 3,500 tonnes.

Mine owner Sherwood Copper Corp. has gone over the new estimate of $8.8 million, and has accepted it, he said.

'I think they are pretty happy, actually,' Phelps said. 'In the long run, they are going to be way ahead of it, they're going to save a lot of money.'

Sherwood president Stephen Quin said they still need to have a formal review of the finalized numbers before announcing the company's decision on the new estimate. He said he did not want to pre-empt that formal review.

The company president did note that with rising fuel prices, there is that much more of an incentive to get off diesel generation and onto the hydroelectric grid.

The watchdog Utilities Consumers' Group (UCG) is suggesting Sherwood Copper's share of the main line cost should be increased by about $500,000, in keeping with a recommendation by the Yukon Utilities Board.

The board recommended earlier this year that the mining company's contribution should increase proportionately if the cost came in above the high estimate, UCG president Roger Rondeau explained this morning.

Rondeau also wonders when electrical rates will be reduced because of the deal with the mine to buy surplus energy. Both Phelps and Energy, Mines and Resources Archie Lang have predicted the rates would come down as a result of the deal.

Phelps said Sherwood Copper's $7.2-million contribution to the main line is locked in through the power purchase agreement between Sherwood Copper and Yukon Energy.

A new rate structure is not likely going to be in place until late next fall, after the mine has begun purchasing power, he said.

Phelps said the companies that bid on the work are confident that if actual line construction begins next March, it would be possible to have power to the mine by the end of September, the deadline identified in the power purchase agreement.

Involved with the Northern Tutchone first nations in the construction bid is Arctic Power, a Whitehorse company, and Valard Construction, a national company with extensive experience in the power line business.

Phelps said he suspects phase two of the grid extension to complete the line from Pelly Crossing to Stewart Crossing, to tie in to the Mayo-Dawson City hydroelectric grid, could come relatively quickly with the mining industry heating up.

Western Copper, which is moving its Carmacks copper project through the environmental permitting stage, could come on-line quickly, with a huge power demand, he pointed out.

He said there's also the promise of Alexco Resources putting the United Keno Hill silver mines back into production, as well as a couple of others.

'If the mines that keep making noise live up to that noise they are making, there could be quite a demand there.'

Phelps said Yukon Energy is advancing the plan to add a third generating turbine at the Aishihik dam, and well as other opportunities outlined in its 20-year resource plan to increase the amount of power on the grid.

There is the potential, he noted, to double the generating capacity at the Mayo dam from five megawatts to 10, for instance.