The case against cheaper electricity

The case against cheaper electricity Keith Halliday's March 20 Yukonomist column is highly critical of the engineers working on the Next Generation Hydro feasibility study. As one would expect from an economist, the focus of the article is almost exclus

Keith Halliday’s March 20 Yukonomist column is highly critical of the engineers working on the Next Generation Hydro feasibility study. As one would expect from an economist, the focus of the article is almost exclusively on the matter of price. The report by the engineers uses 18.3 cents per kilowatt-hour as the cut-off, eliminating any projects that would result in higher energy costs. Halliday notes that although the two other northern territories have much higher energy costs, Alberta has a much lower cost (5 cents per kilowatt-hour). And the current residential price in the Yukon is only about 14 cents/kilowatt-hour. So why use 18.3 cents/kilowatt-hour for future energy projects?

There are at least two good reasons. Firstly, our current energy cost is the result of some massive subsidization – more than $175 million in capital subsidies by federal and territorial governments plus a 2.6 cent/kilowatt-hour residential subsidy for the first 1,000 kilowatt-hours. So the “real” current cost of our electricity is much closer to 20 cents/kilowatt-hour, approaching the same price as N.W.T. energy.

Second, energy production globally is the No. 1 source of greenhouse gases. Alberta’s “cheap energy” is almost entirely generated by fossil fuels. No wonder it’s so cheap – for now.

The Yukon will be well-served in the future by much cleaner renewable hydro-electric or other alternative sources (wind, solar, geothermal), even at 15-20 cents per kilowatt-hour.

Stuart Clark

Whitehorse

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