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Energy rates fluctuate while hydro power tightens

With Yukon electricity rates rising, the Whitehorse General Hospital is bracing for a hit.“This definitely will cost us 11 per cent more, so…

With Yukon electricity rates rising, the Whitehorse General Hospital is bracing for a hit.

“This definitely will cost us 11 per cent more, so that’s going to be another $45,000 to $50,000 a year,” said Whitehorse General Hospital spokesperson Val Pike. “We’re not terribly happy with it.”

The hospital buys secondary power from Crown-owned Yukon Energy Corporation.

But, with surplus hydro power being diverted to the Minto copper mine, there is little extra power on the grid, so the secondary customers are out of luck.

“We had budgeted for surplus power to be available,” said Pike.

Secondary customers buy power that otherwise would be wasted, said Yukon Energy chief financial officer Ed Mollard.

“They’ve got boilers over there (at the hospital), and they’re on secondary power,” he said “But the example we’ve had in the past is ... if it starts getting really cold and we’re getting going close to where we’re going to have to burn diesel, we’d phone them and say, ‘You’re off. You got to stop your own oil boilers because we don’t have any hydro power to give to you right now.’”

The secondary users aren’t the only ones to face higher power rates.

This week, the territory’s power providers appeared before the Yukon Utilities Board to argue for changes to the rates users pay.

Facing a shortage of hydro power, the Yukon Energy Corp. is worried about having to burn high-cost diesel during peak hours.

So, on Monday, it announced a pricing scheme that behaves like a carbon tax.

To encourage conservation, Yukon Energy has asked to drop energy rates 17.8 per cent for people who keep energy use beneath 1,000 kilowatt hours per month.

However, users who use more than that will pay progressively more per kilowatt hour.

The tipping point on whether your lose or save this winter is actually much closer to 1,300 kilowatt hours a month, said Yukon Energy vice-president of operations David McDonald.

“Eighty-four per cent of customers typically use less than 1,300 kilowatt hours a month ... If you use 1,300 or less you will actually save some money (about $1.16). If you go over that amount it will cost you a little bit more money,” he said.

There is also criticism that the elimination of the Rate Stabilization Fund will undo any bill decrease from Yukon Energy.

The cuts would nullify any decrease in energy bills, said Opposition energy critic Gary McRobb in a letter issued on Tuesday.

However, McRobb’s math wasn’t clear and he could not be reached for comment by press time.

The Yukon Electrical Company Ltd., a private company based in Alberta that sells power and maintains the territory’s power grid, is also applying to increase its rates.

The increase is needed to keep up with infrastructure costs, said Yukon Electrical general manager Jerome Balby.

“We also have some new capital dollars that we’re proposing to spend on a new billing system that’s required, a new automatic meter reading system that’s required, and also some upgrades to a major community here in the Yukon for a new backup diesel generator that’s in Carcross,” he said.

Yukon Electrical’s proposal notes the Minto copper mine will use all the surplus hydro power available, which is currently sold to secondary customers.

“(Secondary customers) are required to have an alternate system, an oil system or propane system, because if we get in trouble on the system and we need that power somewhere else we can cut them off,” said Mollard. “They’re interruptible.”

Diesel fuel costs are already showing up in energy bills, said Balby.

“It absolutely is right now, whether Yukon Electrical or Yukon Energy is required to burn additional diesel to meet the needs of the Yukon, those costs are then passed on to consumers. So they kind of flow through to the consumers.”

It’s still unclear when diesel might be used as a base load.

“In terms of the when will diesel have to be on what we call the margin, being available for base load, we’re not exactly sure about that,” said Balby. “It’s inevitable that at some point there may be more diesel required which would put upward pressure on costs.

“However if some new hydro can be developed and put into the market on time and meet some of the needs, perhaps we can avoid that situation.”

This isn’t likely, he said.

“These generation projects are very expensive and it takes a lot of work to bring them onto the market place,” he said.

Yukon Energy played down the effect of cutting off secondary customers.

“We gave them those numbers months ago,” said McDonald, referring to surplus power going to the Minto mine.

“We did a preliminary estimate in what we thought would be the Minto mine load. In turns out the Minto mine load will not be as much as we thought. So there will in fact be some secondary sales, some additional hydro power will be available for another year or so.”

The reduction in power use at the Minto mine is 15 to 20 per cent of what the company thought the mine was going to take, he said.

Other secondary customers include Yukon College and the Law Center as well as large businesses such as Pizza Hut and Boston Pizza.

“We are still using secondary sales right now,” said Pike. “So that’s a good thing.”