Electricity demand is growing in the Yukon, but our regulator just took a huge step backward in meeting the demand.
There are many options to ensure adequate electricity supply – like renting generators or building new infrastructure – but one of the simplest is Demand Side Management (DSM). DSM programs aim to reduce energy consumption and lower our daily peaks in electrical demand by helping us change when and how we use electricity.
DSM is a cost-effective way to ensure our existing power infrastructure goes further. Unfortunately, Yukon Energy has just been ordered to halt all current and future DSM programs.
The Yukon Utilities Board (YUB) exists to regulate our electrical utilities (Yukon Energy and ATCO Electric Yukon) and ensure they aren’t spending money frivolously. This is an important role, but in this case it appears that the board’s views aren’t consistent with best practices in the utility industry.
On Dec. 27, 2018, the YUB directed Yukon Energy to cease all DSM programs, including all initiatives to reduce energy demand in the territory. These programs are used by utilities across Canada and some are already underway in the Yukon. Some readers have likely received rebates on LED lightbulbs or a timer for their car’s block heater. Another option not yet used in Yukon involves cheaper electricity during off-peak hours – so you pay less to run your dishwasher overnight than at 6pm.
We should be ramping up our efforts to manage energy demand – instead, the YUB is calling for an end to existing programs and a ban on any similar programs in the future.
Demand side management is about meeting electrical demand without the environmental and social impacts of building new energy infrastructure. It’s about saving money on our electricity bills and reducing the $1.5 million per year that Yukon Energy spends to rent backup diesel generators.
But the YUB doesn’t think it’s a good idea.
This is the YUB’s reasoning: “[Yukon Energy/YEC] has indicated the benefits of expanding the [DSM] program and submitted that its programs have met or exceeded key performance indicators. However, the Board notes that the Yukon government has DSM incentive programs in place, and the Board is of the view that it is better to leave DSM projects to government, rather than having ratepayers fund these projects. For these reasons, the Board is of the view that continuation of DSM programs by YEC is not necessary. Accordingly, the Board denies YEC’s requests to continue with any DSM programs other than end-of-life streetlight conversions….”
Unfortunately, the board’s view that “it is better to leave DSM projects to government” is not supported by evidence from the Canadian and U.S. utility industry.
The Consortium for Energy Efficiency, a collaborative effort among North American efficiency program administrators, releases an annual report on the state of the industry. Its latest report indicates that $8.5 billion of ratepayer funds went towards gas and electric DSM programs in North America in 2016. Only $300 million came from other sources including governments.
From this data, it appears that most utilities have identified ratepayers as the most appropriate funding source for DSM programs, rather than governments. Utilities spend money on DSM because it’s cost-effective and it works: in 2016, North American ratepayer-funded programs saved an estimated 30,166GWh of electricity, or about 67 times Yukon’s annual electricity consumption.
The Yukon government does offer some great energy-efficiency programs through the Energy Solutions Centre, designed to reduce greenhouse gas emissions and save Yukoners money on electricity and fuel bills. But government can’t do it all. Some efficiency programs require action by the utility – such as “peak shaving” and “load shifting” programs to reduce peak electrical loads in midwinter or shift daytime demand to the middle of the night when it can be supplied by less costly and less polluting sources.
Such DSM programs would help to reduce the massive electrical demand swings of the Yukon grid, making it easier and less expensive to meet demand peaks. Shouldn’t our utilities lead the design and delivery of these programs? Ask BC Hydro, Hydro Quebec, or SaskPower. All these utilities (and many more) run their own DSM programs.
The Yukon government, through the minister responsible, should insist on a full accounting of the YUB’s decision and consider taking action to ensure that DSM is part of a more affordable and sustainable energy future for the Yukon.
And while we’re thinking about bringing our Yukon Utilities Board into the 21st century, there is another update to consider. Currently, the YUB has a purely economic mandate. The board doesn’t have to consider environmental or social issues in its decisions.
These days, governments and utilities attempt to balance the environmental, social, and fiscal aspects of their endeavours. So why would our utility regulator not demand the same?
Fortunately, the Board’s mandate can be modernized.
We wouldn’t be the first to update our regulator’s mandate. In California, the words “safeguards the environment” are written into the mission statement of the state utility regulator. Similarly, Alberta’s utility regulator aims to “protect social, economic, and environmental interests of Alberta.”
Let’s follow these excellent leads and ensure the Yukon Utilities Board is making the right choices to secure our energy future.
A fully referenced version of this commentary is available online at www.yukonconservation.org.
Cody Reaume is an energy analyst with the Yukon Conservation Society