Open letter to Premier Dennis Fentie, minister responsible for Yukon Energy, re subsidies:
Who is subsidizing whom?
Your government and, as of late, the Yukon Chamber of Commerce have enlisted a bandwagon concerning the evils of subsidized residential electrical rates.
Research on this concept has given our consumers’ group a new perspective on this issue:
1) Government and residential rates
Various government buildings receive secondary power for space heating, i.e. hospitals, schools, college, government offices, etc. This costs them 5.38 cents per kilowatt hour. Residential rates with rate relief is approximately 11.52 cents per kilowatt hour. As well, all governments (federal, First Nations, territorial, municipal) take a piece of the GST, which is a percentage of the bottom line on each residential electrical bill. So who is subsidizing whom?
2) Municipality of Whitehorse vs. residential rates
At least one of the larger users of city electricity, the Canada Games Centre, is on secondary energy, and perhaps other Whitehorse buildings. The same rates as in No. 1 apply, plus GST indirect money.
So who is subsidizing whom?
3. General service (business) vs. residential rates
Some 15, or more, Yukon businesses use secondary power for space or process heating. The same rates as in No. 1 and No. 2 apply, so who is subsidizing whom?
4. Industrial (mines) vs. residential rates
The industrial customers are paying 10.28 cents per kilowatt hour, while residential is 11.52 cents, so who is subsidizing whom? Secondary sales is also available to industrials, but not for residential.
5. Yukon Energy Corporation and Yukon Electrical (to a lesser extent) versus residential rates
With the Yukon Utilities Board Order of 2009-10, the two utilities get to keep most of the profits earned by delivering secondary energy, rather than having it benefit the other customers as was first envisioned. So who is subsidizing whom?
6. The cross subsidy in residential customers’ rates
Those of us with the luxury of living on the grid are charged the same price as those fellow Yukoners who are not on the grid. As such, Old Crow and Watson Lake pay the same price for the first 1,000 kilowatt hours of electricity used as those in Whitehorse or Carmacks. You don’t hear anyone complaining about this. But this is a political decision, not generally applied principles of rate making.
7. The big hoopla about who pays what à otherwise known as the cost of service study.
Computer programs, primed by utility geeks, spit out numbers, which are holy to the utilities and their regulators. What they fail to recognize is the culture around different rate groups.
For mining, as an example, there is only one customer taking a large amount of power, while residential customers are many with more distribution infrastructure needed. Granted, a bit more costs. But Minto only uses 3,200 megawatt hour (a megawatt equals 1,000 kilowatts) per year. Residential Yukoners use more than 125,000 megawatt hours. And mines come and go!
Residential customers are always here, the bread and butter for the utilities. One resident may move out, but another moves in, taking over the electricity. And the utilities can count on a one or two per cent increase per year in residential customers and usage. There is no such consistency in mining!
The businesses and the various governments would not even exist without the residents. Neither would the utilities as they would not be here without this permanency!
The mines would be isolated and have to provide their own power source.
Finally, rates did not go down, as you and your corporate heads promised. In fact they went up considerably in the last two years. You will notice, if you look at your bill, that the electrical rebate takes up approximately the same amount of extra money needed by the two utilities noted in their so-called rate riders.
These riders will magically disappear after the new rate structure, but will simply be transferred to the energy charge. They will not go away!
So, what UCG is yet again stating, Fentie, is there is a need for the residential electrical rebate. As Yukon Energy now receives a freebie from the sale of secondary power, it would be appropriate for them to give this back to the residential consumers of the Yukon through their shareholder, the Yukon Development Corporation.
We are looking forward to a response.
Roger Rondeau
Utilities Consumers’ Group
Whitehorse