Time-of-Use Rates

Question: Why does Yukon Energy not offer “off-peak” rates? Wouldn’t this lessen demand at peak hours and avoid the need to burn expensive diesel?

Thanks for your question. It requires a much longer answer than we have space for here. However I will try my best to address some of the key issues related to this topic.

You are likely aware that in some North American jurisdictions as well as many European countries, smart grids have been used to manage peak demand and encourage energy conservation. This is done through charging a higher rate for electricity during peak times (breakfast and dinner hours for example) and a lower rate in the middle of the day or at night.

We have had a number of Yukoners suggest that we should be doing the same, and that by doing so, it would reduce or even eliminate the need for diesel generation.

Here’s the dilemma from our point of view: we can’t implement time-of-use rates with our current meters and grid. We need a "smart grid" system. This means we would need to not only install "smart meters", but would also have to upgrade the distribution, transmission, substation and system control centre infrastructure. All that new infrastructure would be costly; in the millions of dollars. Yukon has a very small customer base and providing electricity already comes at a cost that some feel is very high. We are not convinced rate payers would be willing or able to pay the cost of building a smart grid.

As well, our rate structure does not currently allow for time-of-use rates, so our regulator, the Yukon Utilities Board, would need to make significant changes in that regard. Based on experience in other jurisdictions, there would need to be a large price difference between peak and off-peak rates to see significant behavior change. In some estimates the peak rate would need to be as much as double or triple the off-peak cost. Is this something Yukoners would support? We are particularly concerned about how this could affect low-income Yukoners.

Time-of-use rates and "smart grids" are certainly topics we have discussed regularly and will continue to look into. However, before we move forward, we must make sure we better understand how time-of-use rates would affect the energy use on an isolated grid such as ours. The assumption that time-of-use rates will reduce or eliminate diesel may not be correct. The last thing we want to do is spend money to implement an expensive system, restructure the rates, implement costly and complex energy conservation programs to help people take advantage of the rates, only to realize that we have just moved the peak to later in the day or have created a situation where there is actually an overall increase in the use of electricity, prompting us to burn even more diesel.