How very alarming it is to see Jody Woodland, a former member of the Yukon Utilities Board, publicly criticize a public advocate like Roger Rondeau, of the Utilities Consumers’ Group.
It really raises the question of the mindset of this previous regulator while it was supposed to be focusing on balancing “the interests of several classes of ratepayers with those of the utilities.” I have assisted Mr. Rondeau over the years in his role as intervenor and I can assure Woodland that he has indeed learned quite a bit about the regulation of electricity in the Yukon.
While Woodland criticizes Mr. Rondeau for not being satisfied with what happens on the regulation front, if he doesn’t do something to bring YUB decisions into the broader light, how else will ratepayers know what is happening?
While his methods are often unconventional, at least he gets people thinking about the issues.Given the decisions made during Woodland’s term at the YUB, perhaps a mirror might be in order before accusing Mr. Rondeau of not understanding the basics of rate of return regulation.
It is interesting to note that Woodland believes that there are only two ways for a utility to earn more than it forecasts during the rate setting exercise (i.e. control its costs or sell more power than forecasted).
I guess Woodland doesn’t realize that in the Yukon, while base rates are set to recover a set revenue requirement from ratepayers, the utilities are allowed to adjust rate riders in order to recover extra fuel costs and they are allowed to annually increase industrial rates due to a pre-set mechanism.
What Mr. Rondeau has been arguing for recently is a forum to allow the revenue recovery of the utilities to be limited to the amount that the YUB establishes and not let them keep all excess revenues due to increases to rate riders and industrial rates.
For Woodland’s benefit, it is actually simple math. Once the annual revenue requirement is established for the utilities as part of a general rate application review process administered by the Yukon Utilities Board, customer class rates are set to recover the amount of that revenue requirement that has been allocated to those classes.
To maintain the balance that Woodland apparently lives by, any increase to rates and revenue recovery from the industrial class should be matched by a revenue decrease from other customer classes to ensure that the utilities do not earn more than the fair return that has already been determined by the YUB.
What Woodland fails to acknowledge is that the regulators in other jurisdictions are not as influenced by government when trying to do the right thing. Earnings-sharing mechanisms are common in other jurisdictions in order to ensure that ratepayers are not being charged in excess of what is fair and to ensure that utilities are not allowed to make excess profits.
It sounds like Woodland could have used a few more lessons in standard rate-setting practices.
Ratepayers in the Yukon aren’t as gullible as Woodland might think. While base rates may not fluctuate, do you think that ratepayers haven’t noticed that their bills keep fluctuating because of various rate riders that have been added over the years? Perhaps, through the next general rate application process, non-industrial ratepayers in the Yukon will be given an opportunity to see the benefits of reduced rates that have been promised by the utilities when promoting the hookup of industrial customers.
At least they stand a better chance without having people who aren’t very knowledgeable in rate regulation balancing the positions being put forward.