Regulators to examine Yukon Electrical profits

The Yukon Utilities Board will investigate whether Yukon Electrical broke the rules by earning too much of a profit. As Yukon Electrical's regulator, the board decides how much money the company can make from ratepayers.

The Yukon Utilities Board will investigate whether Yukon Electrical broke the rules by earning too much of a profit.

As Yukon Electrical’s regulator, the board decides how much money the company can make from ratepayers. The Utilities Consumers’ Group, after reviewing the company’s financial reports for 2009, noticed a major spike in the utility’s rate of return.

“They either cut costs or made more money than they planned, and then they sent the profits to their shareholders in Alberta,” said Roger Rondeau, head of the consumer’s group.

Rondeau did not provide the financial report and one was not readily available on Yukon Electrical’s website. The company is owned by energy giant ATCO, which is headquartered in Calgary.

“There’s a half million dollars that Yukon Electrical over earned in 2009,” said Rondeau.

The board has twice rejected his call for penalties. On June 30, the group filed another complaint. In an e-mail statement, the board’s secretary announced the issue will be discussed at the next board meeting.

Letting the company get away with over earning encourages deceitful behaviour before regulators, Rondeau argues.

The power company is lowballing forecasts for energy sales during its regulatory hearings, he said. While the company has its finances regulated to earn a certain amount, the low forecasts allow for more profits than expected. Those profits would normally be used to benefit ratepayers if the forecasts were accurate, but because they’re unexpected, the company can do what they want with them, said Rondeau.

“The gamesmanship of lowballing the sales forecast to increase the revenue requirement must be discouraged,” says his group’s complaint to the utility board.

It wasn’t clear by press time how much Yukon Electrical over earned.

The last general rate hearing for the company was in 2008. The board determined it could earn a 9.25 per cent return on investment.

Rondeau says the actual return on investment was 11.5 per cent.

Jay Massie, a Yukon Electrical spokesperson, was unable to provide a response by press time.

This type of behaviour has been happening for years, said Rondeau.

In 1996 and 1997, the board held rate hearings that would determine the amount Yukon Electrical and the territory’s other power company, Yukon Energy Corporation, could earn.

The company’s ended up lowballing forecasts and earning too much profit, said Rondeau.

“It happened again,” he said. “It happens every time there’s a general rate application.”

The board’s decision to reject the consumers’ group complaint was grounded on the finality of rate hearings to regulate profits.

“The way I read is once they make a decision, they have no authority anymore and no responsibility,” said Rondeau.

The rejection of some of his proposals, like making the rate of return on investment more flexible, is tantamount to abdicating their responsibility, he said.

“If they can’t police them properly, then they better get out of the business.”

Contact James Munson at

jamesm@yukon-news.com

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