Yukoners can expect to see an application for a significant decrease in electrical rates in three years or so, says the chair of the Yukon Development Corp.

Willard Phelps said today if the extension of the electrical grid from Carmacks to Stewart Crossing goes ahead as planned, additional revenue of $3 million a year from the Minto mine could indeed prompt a reduction in rates.

And with Premier Dennis Fentie's announcement Tuesday of a $10-million contribution toward the first phase from Carmacks to Pelly Crossing, the financial risk has been minimized for ratepayers, Phelps said.

He explained the contribution solidifies the financial aspect of the first phase as Yukon Energy, the development corporation's publicly-owned subsidiary, prepares to seek approval from the Yukon Utilities Board.

Under the proposal for the Carnacks-Pelly extension, which is estimated at somewhere between $17 million and $23 million, the new Minto mine would also contribute $7.2 million, with the development corporation chipping in $5 million.

Yukon Energy has also stated that if the proposed Carmacks Copper mine comes on line, it too will have to contribute $8 million-plus to the extension of the main line, in addition to 100 per cent of the cost for the spur line running into the mine site from the Klondike Highway.

Phelps noted, however, without the certainty of the Carmacks Copper venture right now, and without the $10 million contribution from the Yukon government, Yukon Energy would have had to go before the board with an application involving a much greater risk to the ratepayers.

'We have to get their blessing to build this line,' Phelps said of the utilities board. 'And all this is really without Carmacks Copper, and they are not going to allow us to gamble with the ratepayers. Look at what happened with Faro.'

Phelps said if Carmacks Copper does come on-line eventually, the $8 million it will be required to contribute to the main line construction could be applied to the second phase from Pelly Crossing to Stewart Crossing, estimated as an additional $15 million-plus.

Phelps explained that if the first phase goes ahead, ratepayers could expect to see a push for a rate decrease in two years following the hookup of the Minto mine, which is owned by the Sherwood Copper Corp.

Under a proposed agreement between Sherwood Copper and Yukon Energy, ratepayers will be providing the upfront financing for Minto's $7.2-million contribution to the main line.

They will also be providing the $3.9-million loan to bring in what will be a privately-owned spur line from the Klondike Highway into the mine site.

Phelps pointed out that with a minimum of $3 million in annual sales to the mine going into a trust fund, ratepayers could have their initial risk of $7.2 million for the main line covered off in two years, given the company will also be required to make annual payments on the principal.

So after two years, said Phelps, with the additional revenue from the sale of surplus hydroelectric energy on the system, there's no reason why Yukon Energy wouldn't apply to the ulitilies board for a reduction in electrical rates.

'It could be reasonably significant,' he said of the impact the Minto mine alone would have on rates.

The chair of the development corporation, however, declined at this point to comment on how the possibility of rate reduction three years from now might fit with the possible cancellation of the Rate Stabilization Fund in three months' time.

Phelps also pointed out that if the Carmacks Copper mine does eventually come on-line, the utilities board might want to consider directing its $8-million contribution for the grid extension to the second phase of the project.

'The Yukon government will also work with Yukon Energy Corporation and industry to ensure that stage two can be constructed without any direct cost to other ratepayers,' reads the press release on the $10-million announcement.

Fentie explained this morning by phone that there is the possibility of another mineral interest between Pelly Crossing and Stewart Crossing, as well as ongoing work by Alexco Resources to get the United Keno Hill silver mines back into production.

The $10-million contribution for the first phase is in keeping with the Yukon Party commitment to combat climate change, Fentie insisted.

He said providing the Minto mine and Pelly Crossing surplus hydroelectric power is expected to displace 24,100 tonnes annually of greenhouse gas emissions from diesel fire generators.

The needs of the Minto mine, expected to go into production this spring, will be provided by four diesel generators until it is hooked into the electrical grid.

Yukon Energy is proposing to begin construction of the first phase this year, with a goal of delivering power to the mine site by the end of September 2008.

Meanwhile, the publicly-owned corporation officially applied to the Yukon government Tuesday for approval of the Carmacks-Stewart extension.

In turn, Justice Minister Marion Horne sent marching orders to the utilities board later in the day. She directed it to conduct a full public hearing into the proposal, with a deadline of April 30 to provide her with its recommendations, or no later than the end of May.

The Rate Stabilization Fund knocks off a maximum of $37 a month on the bill for homeowners' spending on consumption.

It has been in existence for nine years to help offset the loss of revenue after the 1998 closure of the Faro mine. It was created by the NDP, extended by the Liberals and then extended again by the Yukon Party but was scheduled to end Saturday. Energy Minister Archie Lang announced last week a three-month extension to June 30.

Lang, however, said the stabilization fund was under review but he didn't know if its continuation is an option.

While some argue, including the minister, that the fund provides consumers with a form of subsidy and hides the true cost of energy, others view the annual break on the monthly bill as a dividend payment from a publicly-owned corporation.