(Whitehorse) – Yukon Energy has applied to the Yukon Utilities Board for a general review of the energy corporation’s revenue requirements for 2005. However the energy company’s application does not include a request for a general rate increase. Although Yukon Energy’s costs have risen since the last general review of its operations in 1996/97, the corporation is asking that it be allowed to use various deferred accounts that have built up, to cover those higher costs. If the Utilities Board grants the request, there won’t be a need for a general rate increase for at least two years.
“We’ve made the decision to go to the Utilities Board for two reasons,” Yukon Energy President David Morrison said. “In the interests of transparency and accountability, it’s time for us to get back before the YUB. For instance, the Board has never had a chance to review the cost of the Mayo to Dawson transmission line. We feel that’s important. Secondly, without a review, Yukon Energy will have a revenue short fall in 2005 of approximately $1.1 million.”
Morrison said while Yukon Energy can’t continue to operate under rates set in 1997, the utility’s proposal for using money from deferred accounts would give a reprieve from general rate increases in 2005 and 2006. Key components of the proposal include the creation of an Income Stabilization Trust, changes to Yukon Energy’s depreciation rates, updates to the Energy Service Regulations and changes to secondary sales rates.
The Income Stabilization Trust is to be created from amounts that have been set aside in various accounts that the energy corporation cannot currently use as revenues.
“For instance, we sell power for site maintenance at the Faro mine, but since 1998 that money has been accumulating in an account that we aren’t allowed to access,” Morrison said. “By the end of 2004, there will be approximately $2 million in that account and we’re requesting that the Utilities Board allow this to be set up as a trust fund to benefit ratepayers.” As well, there are amounts available in the Diesel Contingency Fund, which is an account designed to cover the extra costs of low water. The current balance of almost $800,000 is not typically required when the Faro mine is closed.
Yukon Energy is also asking to update the rates at which it depreciates its assets, which will help reduce its costs in 2005.
While Yukon Energy is not asking for general rate increases, it is looking for adjustments in the amount it charges the Faro mine interim receiver and secondary sales customers. More than 80 per cent of current secondary sales are to government (the Whitehorse hospital, Yukon College and the Whitehorse Extended Care Facility).
“Currently we are charging an unrealistic market value for our secondary sales. The 20 or so customers taking advantage of this option to heat their buildings are getting power for about 42 per cent of what it would cost them to heat with oil. We’re seeking to increase that to 70 per cent, which will still be a good deal for the customers,” Morrison said.
“We are also asking to charge the normal general service government rate for power to the Faro mine interim receiver, to make it consistent with rates charged for site maintenance at other properties that are funded by government,” Morrison added. Switching the customer to a government rate will increase the amount it pays by about 19 per cent.
Yukon Energy is asking the Utilities Board to grant these two changes on an interim and refundable basis effective January 1, 2005. Delay in implementing these adjustments for several months until all matters in the application have been reviewed will increase Yukon Energy’s revenue shortfall for 2005.
“Overall, we think we’ve come up with the best possible plan for meeting our financial requirements while delaying a hike in general power rates,” Morrison said. “We look forward to discussing the proposals with the Utilities Board and other interested parties.”
Yukon Energy plans to work with the Utilities Board to hold a workshop for those interested in intervening in the hearings, to help them understand the process and learn how they can make a submission.
Also available on this site: a summary of the application and the full application and supporting documents.
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Contact:
Janet Patterson
Communications Supervisor
Yukon Energy Corporation
(867) 393-5333
janet.patterson@yec.yk.ca
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