Yukon Energy is looking to hike the price of electricity.
The company has filed an application with the Yukon Utilities Board for a 12.9 per cent rate increase over the next two years – 6.4 per cent this year and an additional 6.5 per cent in 2013.
It’s a necessary step, said David Morrison, president of Yukon Energy.
“We haven’t had a rate increase for 13 years,” he said.
Although the utility hasn’t technically raised its rates in more than a decade, it has tacked on fuel surcharges and other riders from time to time.
“We’ve done, in our minds, everything we can to keep rates from going up,” said Morrison.
Yukon Energy has been able to find millions of dollars in savings by doing things like renegotiating its debt, restructuring the depreciation rates it charges for equipment and adding new capacity, said Morrison.
While most of that new capacity, like the Mayo B dam and Carmacks to Stewart Crossing transmission line, were funded by the federal and territorial governments, there are operating costs associated with those projects that have to be picked up by ratepayers.
However, those costs are “pretty small compared with what the savings are,” said Morrison. Those two projects alone save Yukon Energy $1.2 million a year in diesel costs every year.
“What’s really driving that is, over time, the cost of everything we do has gone up, but yet we haven’t increased rates,” said Morrison. “We’ve found ways to help smooth that for customers, but we finally got to the point where there are no ways to avoid adding the cost of what we pay for to the system without getting more rates in order to pay for them.
“It’s really that simple.”
But not everyone agrees with that assessment.
“It’s definitely unreasonable,” said Roger Rondeau, president of the Utilities Consumers’ Group.
But he does think it was inevitable.
“One way or another, they’re going to raise our rates,” he said.
In his opinion, Yukoners are getting shortchanged by industry.
“The mines were supposed to take care of these increases, or at least the major part of it, and they failed to do it,” he said.
“I wouldn’t say getting a free ride but they are freeloading on a system where Yukoners have paid all the infrastructure for years and the mines come in and they get hooked up and pay a cheaper rate then we do.”
While retail electricity rates for commercial and residential customers are set by the Yukon Utilities Board, the rates the mining industry pays were set by an order-in-council and set well below what the rest of the territory pays.
Although Morrison said he understands how that can rub people the wrong way, in a previous interview he insisted that industry is paying its fair share.
Because the industrial sector is, for now, a small part of the overall energy use, it takes far fewer assets and costs less to provide them with power, he said.
“The industrial sector actually pays about 114 per cent of the cost of service,” said Morrison. “It’s a really difficult thing to explain to people. They just go, ‘That sounds dumb to me. They’re paying less than I’m paying so they can’t be paying their fair share.’”
The industrial rate, unlike the commercial and residential rates, has a formula for a regulated increase built into its structure.
Regardless, Yukon Energy has requested that the rates be raised for all customers – commercial, residential, government and industry.
Final approval of a rate hike will require a hearing by the utilities board, but Yukon Energy has requested that the board allow the increase on an interim basis, in which case it would come into effect next month.
Even with the price hike, Yukoners will still be paying less than most other jurisdictions, including large centres, like Edmonton and Regina, said Morrison.
“If you look at the North of North America, there is absolutely no doubt that we are by far the cheapest,” he said.
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