The Yukon Utilities Board opened three days of public hearings this morning into an application by ATCO Electric Yukon for a 7.5 per cent rate increase this year and next.

The City of Whitehorse, as one of five parties recognized as an official intervener, has already filed evidence from a financial expert suggesting ATCO has a history of forecasting higher costs than its actual costs, to the detriment of ratepayers.

The ATCO application requests board approval of several capital projects. Those include $3.3 million to complete phase one of converting the six diesel generators in Watson Lake to bi-fuel generators capable of burning both diesel and natural gas.

There’s a requirement for $2.9 million to complete the replacement and upgrade of the Ditch 3 diversion structure for the Fish Lake hydro facility.

There are requests for board approvals to replace aging diesels in Old Crow and Destruction Bay, to improve capacity in downtown Whitehorse and continue upgrades to infrastructure in the McIntyre subdivision.

The application requests the approval of $1.2 million to cover the cost of installing the electrical infrastructure for phase three of the Whistle Bend subdivision development, and another $350,000 for street lights.

There is a request for $500,000 to study the use of renewable energy such as wind and solar to reduce the dependency on diesel generation in communities isolated from the grid.

In cases where the board approves a project of an increased cost in operations, ATCO is then allowed to pass those costs on to ratepayers.

Doug Tenney, ATCO’s vice-president of northern development, opened this morning’s hearings with a brief statement to the board and the interveners who will be cross-examining company representatives on the application.

Tenney said the application seeks approval of $14.2 million in capital works this year and $14.9 million next year.

ATCO is looking for approval from the board for $53.7 million in revenue this year and $56.4 million for 2017.

Tenney pointed out ATCO was last before the board seeking rate increases for 2013, 2014 and 2015.

“Since that time, ATCO Electric Yukon has continued to provide safe, reliable and cost-effective service to our customers,” Tenney said.

“As detailed in the application materials, however, there are variances between actual and approved sales volumes, capital requirements, and cost pressures that require ATCO Electric Yukon to come forward to the board, at this time, to ensure that it has the resources needed to continue to deliver the same safe and reliable service to customers at just and reasonable rates.”

The City of Whitehorse, Yukon Energy, the Utilities Consumers’ Group, the Yukon Conservation Society and Whitehorse engineer John Maissan have been granted intervener status.

Shortly after the application was filed last May, the utilities board approved an interim rate increase of 11.6 per cent affective July 1

Interim increases are routinely granted as a means of implementing the rate increase as soon as possible – on a refundable basis – to smooth out the impact on ratepayers should some or all of the rate increase be approved.

Given the board’s normal course of handling applications, it’s not likely there’ll be a decision until well into next year.

In its pre-hearing submissions, the City of Whitehorse filed evidence from Russ Bell, a professional accountant from Edmonton with 35 years’ experience in the utilities business.

In the submission, Bell says there is distinct pattern where ATCO’s forecasts for the costs of production and distribution of electricity to service its customers are consistently higher than the actual costs.

“When the approved forecast is continually higher than the actual costs for a cost category or item, it means that customers are paying for costs that the utility will not incur,” Bell says in the city’s submission.

“While the utility is entitled to benefit from efficiency gains in the test period, the regulator must ensure that savings are from efficiency gains, and not the result of over-forecasting.”

Bell goes on to recommend that the utilities board downgrade ATCO’s forecast of costs in three specific areas, including its forecast for the annual cost of operations and maintenance.

Yukon Energy spokeswoman Janet Patterson said this morning the publicly owned utility is currently preparing its next rate application but there has been no decision when it will be submitted to the utilities board.