Re Yukon Utilities Board cost of service hearings:
Last week, the Yukon Utilities Board directed hearings on what is called a Phase Two, electricity cost-of-service and rate design. I recognize this is all in front of the board as I write, and it is somewhat taboo to speak of this when the process is in progress. But the public has the right to know what is happening prior to a board decision, because by then it is too late, as we have already learned from prior board proceedings.
First, let me try to explain what this board is mandated to do. They first get a general rate application from each of the utility companies, Yukon Electrical and Yukon Energy, to set their respective revenue requirements making up all their costs for what is called test years (usually forecasted in advance for two years). This was completed and as you have heard in our consumers’ group’s previous correspondence, both companies overearned their forecasted revenues in these years, Yukon Energy in secondary sales and Yukon Electrical in all sales.
The board allowed them to keep all of these extra profits. So, in our perspective, this process was a failure.
After the total amount of revenues are supposedly set, the companies then file a joint application on how much (cost of service) and how to (rate design) collect these revenues from each of the rate-payer groups (residential-government and nongovernment; general service-government and nongovernment; municipal; and industrial). This is where we stand right now.
What the public deserves to know is that this is all being done without any Yukon-specific load studies. What we actually have is highly paid computer geeks from Manitoba and Alberta punching in a bunch of numbers that they infer from load studies in their home bases. These two companies can not even agree on the results these models spit out, as was obvious in their joint application before the board; i.e. there were several disagreements in the two companies’ positions.
In their joint letter to the board on September 30, 2010, only a week before the hearing, they write: “The companies recommend the board accept the cost-of-service ratios as reported in the GRA filing for this proceeding, which has been based on the most readily available data, and in recognition of the cost of service will not determine rate changes at this time (due to a government order-in-council).
In their next Phase Two application, the companies will reevaluate this issue to ensure the results are consistent with the load characteristics of the Yukon. The companies have admitted that they don’t know the true costs for each ratepayer group as there has been no Yukon-specific load studies undertaken.
Yet they have the audacity to tell us the mines are paying their fair share of the predetermined costs and we, the residents, are paying too little.
No specific Yukon data, but the companies know the mines are paying their share É all at a time when residential ratepayers are paying over 13 cents per kilowatt hour and the mines are paying around 10 cents a kilowatt hour.
Certainly there may be a bit more cost associated with servicing residential and commercial customers, but the culture of residential consumers is that we are always here paying our part É not coming and going and expecting a deal when we’re here.
On the first hearing day, Thursday, we heard Alexco was to be connected as an industrial customer that day. They would now be taking over two megawatts of power, allowing them to go from a general service to industrial customer. However, we also heard Alexco would have to wait until the transmission line between Pelly and Stewart is complete to ramp up their projected production to 400 tonnes per day.
Yet, Yukon Energy tells us in this hearing that it is residential and small-business consumers driving the necessity to use future diesel É especially those bad customers who use electrical space heating.
Who do you think is driving the need for the construction of all these new power facilities and causing peak demand time when diesel may have to be used on the system?
If one researches load profiling or the determination of load characteristics for different electrical rate group users, one finds the following:
In the electricity generation sector, a load curve is charted to show the amounts of electricity certain customer groups use over a period of time. Generation companies use this information to plan how much power they will need to generate at any given time.
In the electricity distribution sector, the load profile of electricity usage is important to the efficiency and reliability of power transmission.
The power transformer or battery-to-grid are critical aspects of power distribution sizing, and modelling of batteries and transformers depends on load profile.
The factory specification of transformers for the optimizing of load losses versus no-load losses is dependent on the characteristics of the load profile that the transformer is expected to be subjected to. A transformer also has a cyclic rating allowing for variation of load profile, which allows the transformer to be overloaded at peak times so long as there is a sufficient cooling down period at the lower point in the load profile.
From all of this, one can deduce that since there are no Yukon-specific load studies conducted, the companies are not being prudent in their cost of service allocation to all rate groups. As this further demonstrates, the companies appear not to have an accurate grip on their planning criteria, as well as the efficiencies and reliability in their systems.
And yet they want the board to approve their approach and then set a rate design using this approach.
Roger Rondeau
Utilities Consumers’ Group
Whitehorse