Rate hearings wrap up

The Yukon Utilities Board is set to decide whether Yukon Energy should be allowed to raise electricity rates by 12.9 per cent over two years. Three days of hearings on the rate hike wrapped up Wednesday.

The Yukon Utilities Board is set to decide whether Yukon Energy should be allowed to raise electricity rates by 12.9 per cent over two years.

Three days of hearings on the rate hike wrapped up Wednesday.

They saw Yukon Energy executives questioned by a host of interveners on a number of topics.

David Morrison, the president of Yukon Energy, said he thought the hearings went well but couldn’t tell whether interveners and the board felt satisfied with the answers they got.

“It’s not something that’s easy to read,” he said.

Yukon Energy is hopeful that the board will at least give them the go-ahead to increase the amount of money it’s allowed to put away in the diesel contingency fund.

“It’s kind of like an insurance pot,” said Morrison. “If we ran into a drought year where the reservoirs didn’t fill at all or they half filled, we’d have to burn a lot more diesel because you’d have to replace that hydro.”

Yukon Energy had plenty of excess hydro capacity after the mine in Faro closed in 1998, but that’s no longer the case.

“We also haven’t had really low water for a while either,” said Morrison. “We’re kind of looking at it saying, ‘The odds of this occurring are greater the longer you go without it occurring.’”

Yukon Energy hasn’t had a rate increase in 13 years.

The last time it went before the board, in 2009, Yukoners actually saw their electricity rates reduced.

Over the last three years, the utility has incurred a number of expenses, including increased fuel costs, upgrades to the transmission lines, the expansion of hydro capacity at Mayo B and Aishihik and studies it’s done to explore other options for power generation.

While it’s reasonable to expect some increase, the amount that Yukon Energy is asking for is too much, said Roger Rondeau, president of the Utilities Consumers’ Group.

“We don’t object to them having us pay back some of the cost for Aishihik and Mayo B, the transmission lines and the extra cost to run these facilities, but it’s many of the other things around these things that we object to,” he said.

There were millions spent on associated projects while Mayo B was being done, but they were necessary improvements, said Morrison.

Because of new regulations, the height of the dam in Mayo had to be raised. The existing substation on the site also needed to be rebuilt.

Doing everything at the same time when there was a contractor already up there actually saved a bit of money, said Morrison.

But while some money may have been saved on Mayo B, the same can’t be said about the Aishihik hydro station.

“The cost overrun at Aishihik was outrageous,” said Rondeau.

Installing a third turbine at the Aishihik hydro facility came in over budget by $5 million – a 57 per cent increase to the $8.8 million it was supposed to cost.

Morrison wasn’t happy about those cost overruns either.

“When somebody gives you a cost estimate that’s that far out, that and it’s that big an engineering company with that much experience, I think we just got caught. It was our reputation that suffered badly from that,” he said.

But it’s a mistake that Rondeau doesn’t think Yukoners should have to pay for.

He’d like to see the regulatory regime that governs Yukon Energy changed from the current rate-based model to one based on performance.

That’s not something that Morrison is very keen on.

“It’s one of those things people thought was a great idea, tried it, and it didn’t really work very well,” he said. “In practice it seems to be more complicated.”

With the monopoly position that Yukon Energy enjoys in the territory, the current process works well for both ratepayers and the utility, said Morrison.

“I personally like the process. it’s a check and a balance for us as well to make sure we’re paying attention to the right things,” he said. “When you’re sitting by yourself saying, ‘You’re doing a really good job,’ that’s an odd perspective. You need to have the ability to get in front of somebody and test what you’re doing on a regular basis.”

Now that the hearings have finished, interveners have until mid-December to submit their final arguments to the board.

A decision won’t be made until a few months after that.

An interim rate increase of 6.4 per cent has already been applied this year, and another 6.5 per cent hike is set for January.

If the board decides not to allow the increase, Yukon Electric would be obliged to pay that money back to its customers.

Contact Josh Kerr at joshk@yukon-news.com