An unexpected Rate Stabilization Fund extension is a win for Yukon residents, says the Utilities Consumers’ Group.
“It’s a good news story for once,” said Roger Rondeau, the group’s president.
“(The territorial government) promised a rate reduction this year, but there won’t be a general rate application until after the revenue from the Minto mine is known.”
The Energy, Mines and Resources department planned to scrap the subsidy July 1, suggesting electricity bills would drop in February.
That didn’t happen.
Now, the subsidy will continue until that long-predicted utility-cost decrease happens.
It is supposed to come once the Sherwood Copper Minto mine taps into the territorial power grid and buys about $4 million in electricity per year.
The Yukon Energy Corporation will apply for a rate change this year. It’s that rate review that’s supposed to lower rates.
Rising fuel costs have changed the way people consume energy, yet the high cost of electricity still hurts low-income households, said Rondeau.
“Some people are having their power shut off even after they’ve switched to running electric heat because they can’t afford the heating fuel,” he said.
The original subsidy cost a household $99 for using 1,000-kilowatt hours of electricity per month.
Then a 50 per cent cut in the subsidy last summer increased that bill to about $117.
It was expected the same bill would increase to $136 when the subsidy was scrapped entirely on July 1.
More a stopgap than a permanent solution, the fund at least provides stability for the consumer, said Rondeau.
“(Electricity rates are ) a burden for low-income people,” said Rondeau.
Yukon Electrical is also applying for a rate increase this year, he added.
The company is asking for a five per cent increase this year and another six per cent in 2009, said Rondeau.
“With two companies applying, we could see rate increases every six months,” he said.
“With stable rates, people can budget, but they can’t if their bills are constantly changing.”
The Yukon Energy Corporation is getting its application together and could be ready by the fall, according to Energy, Mines and Resources .
But a rate reduction isn’t certain, said Rondeau.
The Yukon Utilities Board will decide to increase or decrease electricity costs when it meets to consider the utility companies’ general rate applications.
The utilities board can prohibit or limit rate changes when the utility companies apply for rate changes, fixing prices for a set amount of time.
“Nothing’s a guarantee,” said Rondeau.
There’s still much to calculate, such as budget overruns of the transmission line to the mine and surrounding communities, consumer costs, operation and maintenance of the line and the revenue from the mine after it taps into the line, said Rondeau.
Rates will decrease if the Yukon Energy Corporation clears enough revenue.
“If they clear $2 million, then it stands to reason they could knock our rates down,” said Rondeau.
Critics argue consumers avoid energy conservation because the subsidy encourages people to use more.
The more electricity used, the greater the subsidy — more energy efficiency means fewer subsidies.
The fund isn’t meant to be a subsidy, said Rondeau.
“The consumer considers it a dividend,” he said.
“We own Yukon Energy Corporation. If they can’t offer us a reasonable, affordable rate, they have to find another way (to compensate the consumer).”
After the Faro mine closed in 1998, the fund was created to protect consumers from increasing electricity prices with the loss of the grid’s biggest customer.
The subsidy was never meant to be a permanent measure.
Over the past nine years, it has cost the government $29 million.