Re Electrical cost of service to industrial customers (i.e. mines):
I will try to follow up on my last week’s letter about electricity cost of service to the different ratepayer groups in the Yukon.
The mines currently pay a little more than 10 cents/kWhr. for their power consumption, set by an order-in-council from the Yukon government until 2012. Currently, residential customers are paying over 13 cents/kWhr. and general service (businesses) even higher rates.
The utility companies (Yukon Electrical and Yukon Energy) tell us that using diesel to generate electricity would cost 27 cents/kWhr. in today’s market. Which mine in the Yukon would not jump on paying half (13.5 cents/kWhr.) of what it would cost them to provide their own energy needs, i.e. if they had to use their own diesel generators? At least a 50 per cent savings?
A certain sign that these mining industrials are more than happy with the price they are receiving is that they have never appeared before the Yukon Utilities Board to argue their case. The utility companies make a deal with the mines, then go on to tell us these mines are presently paying more than their cost of service. The current government has given them this benefit of the doubt: a firm cost until 2012.
However, as was demonstrated in the UCG last letter, no one knows that this is an accurate cost! It is only a hypothetical guess plugged in by highly-paid computer geeks contracted from outside by the utilities, who, by the way, already have excessively paid management personnel but cannot perform these tasks themselves (another story).
It appears from all of this, that the present Yukon government is again subsidizing the mining industry for its energy needs. Coincidentally, they are telling residential customers that our interim electrical rebate will soon vanish because it sends the wrong message about costs for electricity. All at the time when nobody, including the board that regulates these companies, has a clear reckoning of the real costs to provide electricity to each rate group. Mining is important to the Yukon economy, but Yukoners don’t have to sell our soul to the companies that operate in this industry!
Utilities Consumers’ Group