Power rate boost is essential, YEC insists
Without an increase in electrical rates, Yukon Energy would be operating in the red next year, says the corporation’s president.
Photo by Whitehorse Star
David Morrison
Without an increase in electrical rates, Yukon Energy would be operating in the red next year, says the corporation’s president.
David Morrison told the Yukon Utilities Board on Monday that Yukon Energy has been earning less than allowed for the past three years since its electrical rate was last approved by the board back in 2008-09.
“In short, ongoing cost pressures as reviewed in the application have become simply too material to continue without a reasonable rate increase at this time,” Morrison told the members of the board in his opening statement into a new rate application.
Yukon Energy is asking the board to approve a 12.9 per cent increase over two years, retroactive to Jan. 1, 2012.
The board has already given interim approval to the 6.4 per cent requested for this year.
The interim rate began showing up on monthly bills beginning July 1. The board has also approved an additional 3.5 per cent on an interim basis beginning Jan. 1, pending its decision on the rate application.
The hearing, which resumed today, is scheduled to end Wednesday.
Morrison told the board that Yukon Energy has toed the line for several years, resulting in significant savings to ratepayers.
The mounting cost of doing business, however, is catching up with the publicly owned utility, he said.
Morrison said the addition of the Mayo B hydro facility, the installation of a third turbine at the Aishihik hydro plant and unifying the two grids has saved millions of dollars in diesel generation that would have been required without the additional hydro resources.
But with the new assets come higher overhead and operating and maintenance costs, he said.
“Forecast labour expense by the end of 2013 is $2.5 million higher than in 2009 approved costs, reflecting a forecast increase in 12.26 FTE (full-time equivalent) positions,” he told members of the board. “Non-fuel and non-labour O&M is forecast to increase by $2.7 million over 2009 approved costs.”
The growth in demand and the cost of supplying it, he said, have gone up faster than Yukon Energy anticipated back in 2008-2009.
Morrison and Yukon Energy’s chief financial officer, along with a private utility consultant, were questioned by different parties about several aspects of the application, from numbers to policies.
Where, for instance, does Yukon Energy get the authority to muscle in on a large customer normally serviced by Yukon Electrical Co. Ltd, utility lawyer Allison Sears asked on behalf of her client.
Sears said Yukon Energy’s application indicates it will be selling the power to the Whitehorse Copper mine if the proposal to reprocess tailings goes forward.
From the 1960s to the early 1980s, when Whitehorse Copper shut down, it was Yukon Electrical which provided the service by buying power and then selling it to the mine, Morrison acknowledged under questioning by Sears.
Sears asked how Yukon Energy’s stance on Whitehorse Copper would affect Yukon Electrical if Yukon Electrical went ahead with its own application for a rate
increase next year.
Morrison said it’s generally understood Yukon Energy, as the primary generator of electricity in the Yukon, supplies new industrial customers, just at it has for the Minto Mine and the Bellekeno Mine and mill.
Morrison said having Yukon Energy supply the Whitehorse Copper load if the project goes ahead would save Yukoners $210,000 that would otherwise go the private utility.
But Yukon Electrical owns all the hardware to service the site, Sears pointed out.
She then asked Morrison who’s going to get out of bed when there’s an outage at Whitehorse Copper. Yukon Energy Staff? Yukon Electrical staff? Both? Sears asked.
The City of Whitehorse has also retained a team of utility consultants to review and asked questions of the applications.
The Utilities Consumers’ Group began its cross-examination of the Yukon Energy team Monday afternoon and continued this morning.
The Yukon Conservation Society is also scheduled to ask questions as one of the interveners.
Electrical engineering consultant John Maissan of Whitehorse is also scheduled to cross examine the Yukon Energy panel.
See letter.
Yukoner
Nov 13, 2012 at 3:47 pm
start charging the mines more retroactive - what a joke it cost to much here as it is