Open letter to Premier Darrell Pasloski:
Last week, the Yukon Utilities Board heard an application by Yukon Energy to increase electrical rates by 13 per cent. Part of the proceedings dealt with the difficulties in planning around the electrical needs of large industrial customers such as mines.
In a jurisdiction with a large electrical grid such as in B.C., the consequences of a mine starting up or shutting down can be absorbed in the system. With a small generation base as we have in Yukon, these events cause financial chaos for the utility. Just think back to the financial problems caused to Northern Canada Power Commission and Yukon Energy by the ups and downs of the Faro mine.
The proceedings before the utility board showed that (1) at present, any new large industrial customer connecting to the grid will likely result in the burning of fossil fuels to produce a significant portion of the additional electricity required, (2) the additional electricity will cost significantly more than the cost of our present generation and (3) under the present statutory framework that obliges the utility to serve new customers, this will result in an involuntary transfer of the risk and cost of new generation equipment from the industrial customer’s shareholders to all Yukon ratepayers.
Let me suggest that the murky legal obligations on Yukon Energy present the utility with a difficult planning chore. The obligation to serve set out at section 106 of the Public Utilities Act should be amended to clearly set out that the obligation does not apply to large industrial customers of a certain size threshold that can be set by regulation. One just has to review the testimony of David Morrison, president of Yukon Energy, to see the difficulty of determining the scope of the obligation to serve.
You may also wish to consider whether the economic development mandate given the utility through its parent company under the Yukon Development Corporation Act and the policy directives under that act need clarification to make it clear that any direct or indirect subsidization of industrial customers is the bailiwick of the government, not the utility.
Clearing up the mandate for Yukon Energy will allow the utility to focus on keeping the lights on, rather than going through Mission Impossible planning exercises.
As Energy Minister Brad Cathers said the other day in the legislature in relation to electrical rates, “We’re focused on minimizing the financial risk to taxpayers and ratepayers from any and all decisions.” That’s a sensible starting point for any energy policy. Also part of that policy should be a clear recognition that there is no magic bullet that will allow the utility to provide cheap electricity to new customers, and that research into new forms of generation such as wind, solar and biomass requires a role for government where economic and environmental considerations can best be integrated.
Your comments would be appreciated.