The Yukon’s two electrical utilities are planning to rejig power rates.
The changes are expected to lower rates for low-energy users and raise rates for heavy users in an effort to encourage conservation, Yukon Energy Corporation president David Morrison said in a news conference Friday.
But depending on how the proposed changes are received by the Yukon Utilities Board, there might be some surprises.
Power rates are going to be re-evaluated through something called a Phase 2 Rate Application, which is basically a bunch of hearings on whether everyone in the Yukon is paying their fair share for power.
Both Yukon Energy, which is publicly owned, and the ATCO-owned Yukon Electrical Company Limited, filed the application together earlier this year.
The first part of the hearings, which haven’t been scheduled yet, will look at how much each customer group shoulders the cost of producing power.
The utilities classify customers as residential, commercial, government and industrial. Both commercial and industrial are believed to pay roughly their full share of the cost of power production. The government, through orders-in-council passed by previous administrations, pays more than its fair share. Residential customers pay less.
“There are people whose thesis is that it shouldn’t be this way,” said Morrison on Friday. “Quite frankly, I’m not uncomfortable with that because it came from government policy. Government has decided to pay for it.”
An order-in-council prevents any reallocation of costs from one group to another. The hearing is only meant to find out exactly how much each group pays.
But Morrison refused to confirm that rates won’t jump after deliberations on the issue.
“I don’t think (residential rates could go up),” he said. “I don’t think it would change. I can’t think of anyone who would reason that it should. And again, these are set this way because of various old orders-in-council. There’s an order-in-council out there that says you can’t reallocate.”
The second stage of hearings will deal with reallocation of rates within the residential group, a proposal first floated by Yukon Energy a year and a half ago.
The proposal would create three user groups based on how much energy is used.
First block customers would be those who use less than 1,000 kilowatt hours a month. Seventy per cent of residential power consumers are in this group. Under Yukon Energy’s proposal, these bills will fall by around 12 per cent. Second block users will be people who use between 1,000 kilowatt hours a month and 1,500 or 2,500 kilowatt hours a month. Their bills will go up. So will bills for people in the third block, those who use more than second block users.
In the energy business, second block users are meant to have some kind of conservation signal to push usage down, said Morrison. The extra money gathered by second and third block users is meant to pay for diesel.
Asked if the proposal is unfair to people who shifted to electrical heat because it was green, Morrison said it benefits more people than it hurts.
“It’s not great for everybody,” he said. “If the average consumption is 850 kilowatt hours a month, if by far most people are under 1,000 kilowatt hours a month, what’s wrong with those people getting a benefit? And what’s wrong with people paying the cost of diesel they make us use?”
Customers may also get a simpler power bill down the road if the board asks the utilities to wrap up the many riders meant to adjust costs.
“You might end up getting a cleaner bill,” said Morrison. “Now, I’m only saying that because it could happen.”
But Yukon Electrical is actually applying to add another rider to the bill.
Yukon Electrical currently buys power in bulk from Yukon Energy to supply customers where it distributes power. It bases those orders on consumption predictions. If the predictions are too low, Yukon Electrical has to buy more power. And if they’re too high, Yukon Electrical buys less.
That difference is currently absorbed by Yukon Electrical, whether it’s extra money in its pocket or a drain.
But now, Yukon Electrical wants a rider that will allow it to pass that cost or refund on to customers’ bills. So if Yukon Electrical ended up buying more than it thought, the customer gets a percentage on their bill. If they pay less, the customer gets a refund.
Yukon Electrical spokespeople did not return calls.
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