Open letter to Yukon Energy CEO David Morrison and chair Piers McDonald:
I would like to respond to some of your comments made in the Nov. 16 article, “Rate hearings wrap up.” In this rate application you are requesting a two-year increase of 12.9 per cent.
First, you state you are not certain whether interveners or the board were satisfied with the answers they got. Well, sir, at least the Utilities Consumers’ Group found far too many of your answers were “I don’t remember.” This ‘selective answering’ was not only out of line, but should not have been condoned by the board chair.
Second, you attempt to spin that Yukon Energy has not had a rate increase for 13 years. Certainly you can’t believe your customers are so juvenile as to not recognize bill increases (which is really what we look at), using rate riders or other methods you are graced with? For example, an average household using 1000 kilowatt hours had a bill increase from $96 in 1999 to $138 at the beginning of 2012 (without rate relief and GST). To be fair, some of this increase is due to your nemesis, Yukon Electrical.
You then spin your reasons for this increase, but in reality it is the bottom-line profits for your shareholder. Could this be due to the fact that you have been spending money like the teenager of a wealthy parent? The problem is your ratepayers are not all wealthy and far too much of this spending has nothing to show for it, nor will it likely ever have, i.e. projects will not end with a “used or useful” plant in-service. Only the wallets of your ever-increasing consultant base are getting fatter, while your customers pay the piper.
The last statement is about finding a new way to govern your rates. Right now we use a rate-based model which costs over a million dollars each time we get a chance to look into your books (in reality it is each time you want another increase). This million-dollar process is exacerbated by experts and professionals from outside the territory. And we have two companies to regulate!
And we have only a very small ratepayer base to get this money from!
You continually waffle on board recommendations, now some six years past, to consider other types of regulation, one of which you claim you don’t like … performance based. Is that a surprise?
With the performance you have shown in the last number of years, you would likely not receive any rate hike, i.e. millions on cost overruns and continuous studies while increasing your bureaucracy from 79 to 92 personnel, while at the same time hiring more and more consultants!
Do you realize that the general consensus for this type of regulation is: 1) lower rates, 2) improved service and 3) more rational allocation of risks and rewards? No wonder you don’t like it.
Utilities Consumers’ Group