Yukon North Of Ordinary

News archive for November 13, 2012

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.

By Chuck Tobin on November 13, 2012 at 3:24 pm

photo

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.

CommentsAdd a comment

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

north_of_60

Nov 13, 2012 at 11:50 pm

Yes, a rate increase is essential; the cost to provide electricity has increased.
How much of that increase in cost should be borne by the mines that caused the increased use of expensive diesel fuel, and how much should be borne by residential customers.

Let the mines and the commercial users bear most of the increase, since they’re the ones that actually benefit from more mines using more electricity.
Residential customers shouldn’t see an increase any greater than the general increase in the cost of living.  Anything more would be gouging those who have no choice.

Linda

Nov 14, 2012 at 1:39 pm

It’s pretty tough being a renter in this town faced with electric heat. Electric heat is supposed to be “greener” than using oil, however here it all amounts to the same thing, have electric heat, push YEC into using diesel, no one saves anything. I feel like I’m being punished for renting a house with electric heat, it pushes me into the highest rate payer bracket for residential electricity. I know that when I buy a house next year I will look for an oil heated home, backed by wood of course. At least the oil companies don’t charge me more money if I buy more oil than my neighbors.

vlad

Nov 14, 2012 at 1:40 pm

North of 60; What is commercial user according to you??
You say that some mini business, that is just trying to survive, should pay more, while some CEO, president, or a big government bureaucrat, making a million, for a lousy job he or she does, should not be increased at all???
I think you got it wrong.

Yukon Energy

Nov 14, 2012 at 3:13 pm

When the Minto mine hooked up to the Yukon grid, residential customers saw a rate decrease of 2.47 percent. So it’s not true to say only industrial and commercial customers benefit when mines become electrical customers.

Habsfan

Nov 15, 2012 at 12:06 pm

We are presently in a tight fiscal environment. Everyone is cutting back on the fat. I don’t see YE cutting back on the fat. Until they cut back on the fat, don’t come looking for my hard earned money!!

Anonymous

Nov 15, 2012 at 7:17 pm

Given that we have frequent power outages I think YEC should be more focused on being able to provide steady electricity before they up the rate.

north_of_60

Nov 15, 2012 at 10:50 pm

somebody missed the point…so I’ll slightly rephrase it to make it clearer.

Most of the increase should be borne by the mines and the commercial users who actually benefit from more mines using more electricity.

north_of_60

Nov 15, 2012 at 11:27 pm

Back when the Faro mine was sucking up all the power the dams could produce, plus burning diesel to keep up, the least expensive house to heat was super-insulated to current standards, heated with wood and electric back-up.  One can still run a house like that for less than 6000 kWh per year, plus 4-5 cords of wood.

That’s seems acceptably ‘green’ to me.

Atom

Nov 16, 2012 at 1:01 am

If the big mines don`t want to pay for power in the Yukon, how can anyone claim they are big business.

When a Mining Company submits a proposal, any review prior to approving their project should require they pay this nominal fee in their `big scheme` of things. They shouldn’t hide behind the legislation that says they can`t be refused power in the Yukon. If they had any credibility at all, they would assume the cost of power in the Yukon and not leave it to the masses (33000 residents) to supplement them.

YE Smokescreen

Nov 16, 2012 at 9:04 am

Yukon Energy, let me see if I have my facts straight. You received millions in taxpayer money for projects like the Mayo B expansion. You have realized higher profits due to the extra electricity that was sold to primarily mining companies. The taxpayers whose money helped finance a lot of your expansion received a measly 2.47 percent decrease for a short span of time which you now want to rescind and add roughly an additional 10 percent on as well. Nice racket you have going there. Are you sure you are a energy company and not a big oil corporation as you seem to use a lot of the same tactics.

more of the same

Nov 16, 2012 at 3:57 pm

Wasn’t Minto promised a rate freeze at what???.07 cents per kilowatt for the next how many years??? I also believe that the Gov’t promised that Yukoners would never have to pay extra to cover a shortage of power caused by Minto and resulting in having to run the diesel generators? ....and now we are going to get hit with a 12.9% hike??!! How about taking Minto off the grid altogether so we don’t have to run generators at all?

north_of_60

Nov 17, 2012 at 2:07 am

“in the last couple of winters, diesel generation has been needed regularly.”

A large amount of that diesel fuel is burned on cold winter mornings to provide electricity to thousands of electric hot water heaters, in unoccupied houses, after everyone has left for school or work. Forty years ago electric utilities were using relatively primitive technology to control electric hot water heaters to manage expensive peak loads. It seems like our current digital technology should be able to do that even more cost effectively.

We shouldn’t be expected to pay more for electricity until they start using readily available, cost effective means to manage peak demand and use less diesel generation.

What happened to “Power Smart” thinking?

Yukonertoo

Nov 17, 2012 at 7:31 am

Our government seems obsessed with what is best for mining interests from outside at the expense of those of us who make Yukon our home. Mining interests are here today gone tomorrow. Sure there is lots of money to be made here: unfortunately, much of those earnings leave Yukon, in the form of wages and profits. Yukoner’s needs respecting electricity should always take precedence over mining interests. We are selling power to mines at cheap rates and Yukoner ratepayers pay the price. What the hell is wrong with a Yukoner first policy from OUR energy producer. Stop this corporate welfare and look after the owners of our utility. Fentie is likely not the only conservative who wants to sell our power generation capacity to the private sector: beware!

Free North

Nov 19, 2012 at 12:10 pm

A 12.9 percent seems incredibly large. How did the Yukon Electric not have the foresight to see that this would be required? Do they not have analysts that forecast their profit margin growth, and are able to move the rates in the necessary direction. Like moving a big ship they should be able to forecast when moves need to be made, so they are not making last minute 90 degree turns that would cause all sorts of turbulance, and shock. I am not sure what I resent more, paying for the increase or the additional year of retroactive fees.

Yikes!

Nov 20, 2012 at 10:40 pm

Do another thermoscan flyover of the city and you will see that the glass house people(ytg,yec,feds) have the buildings with the greatest losses.

The senior on a fixed income is not wasting copious amounts of power and has not received a 13% raise on red line pensions since the last increase.

Do not subsidize the mines with chilblains of the elderly.

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