Utility hearings began this morning into an application by Yukon Energy to raise certain electrical rates and offset what the Crown corporation maintains are revenue shortfalls for this year.

Yukon Energy is also asking to use money accummulated in special funds related to the defunct Faro mine, which closed in 1998, as well as include the cost of the assets of the new Mayo-Dawson City transmission line in its general rate base.

If the application is approved, there would be no need to visit residential and general rates for at least two years, Yukon Energy president David Morrison said in his opening statement to members of the Yukon Utility Board.

Approval of the application, Morrison told the board, is an important step to allow the publicly-owned corporation to address regulatory issues and maintain what he described as a key role in the development of the territory's future.

'There is much to be done over the next several years, and Yukon Energy will be actively engaged with the board and key stakeholders to ensure we deal with the necessary regulatory requirements in a comprehensive say,' Morrison said.

Yukon Energy is forecasting a revenue shortfall of $1.15 million for this year.

It's asking the board to raise the rate for its secondary-use power generated by surplus hydro power, redirect revenue from sales to the Faro mine site, and use funds that have been accummulated by sales of electricity to the mine site.

ï Secondary sales were promoted by Yukon Energy as a means of selling excess power and creating a shift to greener energy away from diesel and propane energy sources.

From the 25 customers currently signed on as secondary sales consumers, it's expected Yukon Energy will raise an additional $450,000 from its proposed increase.

Originally sold at 3.3 cents per kilowatt hour, the corporation has hiked the price to 5.5 cents, pending a decision by the utility board. Any portion of the increase will be returned to the consumer.

ï Yukon Energy is also looking to redirect $330,000 in annual sales revenue to the Faro mine into its general revenue, rather than special funds established to smooth out the on-again, off-again nature of the Faro mine and its impact on the rate base.

ï Use of those special funds, currently totalling $2.8 million, to offset anticipated revenue shortfalls this year and in the next two years, to a maximum of $950,000 per year.

Morrison told the board while there were management problems and cost overruns with the Mayo-Dawson transmission, the project is still a huge benefit to Yukon ratepayers and has become even more so with the rising cost of diesel fuel.

Justification for the new $36.2-million-plus line was based on using excess power at the Mayo dam to remove the need for diesel-generated electricity in Dawson.

Yukon Electrical Co. Ltd., the Whitehorse-based regulated utility that buys wholesale power from Yukon Energy, opened this morning with its cross-examination.

Yukon Electrical spokesman Ed Sager said in an interview today the company has concerns with Yukon Energy attaching its new Mayo-Dawson project to the general rate base.

Local businesses have also expressed concerns regarding the Crown corporation's decision to hike the cost of secondary power sales, Barry Bellchambers explained this morning.

Bellchambers said of the 25 secondary sale customers, 12 or 13 are private-sector businesses, and others are non-government organizations supported by government.

The increase from 3.3 cents per kilowatt hour to 5.5 cents represents a 60-per-cent increase, Bellchambers pointed out in an interview this morning.

He said in the world of the private sector, it's not realistic for one business to suddenly up its rate by 60 per cent for its customers.

The High Country Inn invested $350,000 to take advantage of the discount cost of electricity and replace its oil and propane-fired heat with electrical furnaces.

In the same week it brought its new heating system on-line, Yukon Energy announced it was increasing the cost of its secondary power, he pointed out.

He said it was the discount price and the aggressive marketing campaign by Yukon Energy to sell excess power and reduce local dependance on fossil fuels that attracted the hotel.

'The problem is if it goes through, the return is way, way out of what I anticipated,' he said of the investment to take advantage of the discount power.

While the Faro mine was operating, it was common to use the large diesel plants at the Whitehorse dam to generate additional energy above what could be generated hydroelectrically.

Since Faro's closure, however, there has been little call if any for diesel generation on the Whitehorse-Aishihik-Faro grid.

It's expected the cost of the hearings will be $800,000, according to documentation before the board.