Billing, Regulatory
Mar 27, 2009
Our Rate Application Explained
One of the benefits of our new transmission line from Carmacks to Pelly Crossing is that it has allowed us to ask for a rate decrease. Before the line was built, we promised to pass along to Yukoners some of the additional revenue we would receive as a result of gaining a new customer, the Minto mine, through the construction of the Carmacks to Pelly line. That’s why in October of last year we asked our regulator, the Yukon Utilities Board, to approve changes to our rates that would result in an overall saving to Yukoners this year of more than $1.3 million.
We wanted to go further than just passing along revenues from the Minto mine. We wanted to provide the biggest reduction possible to the largest number of Yukoners possible. That’s why we have proposed changes to our rate structure that will reward those who practice energy conservation. Here’s how it works: rates would be substantially reduced by 17.8 percent for a household’s ‘first block’ energy charges; for the first 1,000 kilowatt hours per month of energy used. ‘Second block’ energy charges (energy over 1,000 kilowatt hours a month) would increase, the amount dependant on the amount of energy used. All the added money we would receive from ‘second block’ charges would go to further reducing ‘first block’ rates. Since most households stay within that first block of 1,000 kilowatt hours a month (the average monthly usage is about 750 kilowatt hours) this method would allow more Yukoners to benefit from greater savings.
Two tiered rate structures are not new. Similar systems are used by utilities right across the country, and Yukon Energy has had a two-tiered system in place for many years in which the second block is at a higher rate than the first.
It was important to us to encourage energy conservation though this application. There is a growing demand for electricity in Yukon. While we are aggressively looking for new renewable power to meet this demand, this process takes time. In the absence of new generation, we face the prospect within a few years of running out of hydro and turning on our diesels. That’s why it’s important to us that we send price signals to encourage energy conservation. Conservation is the cleanest and least expensive way to meet the increase demand for electricity (think of it as building a virtual dam). And it’s easier than you might think…turning the thermostat down one degree saves 400 kilowatt hours per year; washing clothes in cold water saves as much as 720 kilowatt hours. Hanging clothes to dry even half the time saves another 520 kilowatt hours.
However if our proposal is approved, there will still be some overall savings for residential customers who use up to about 1,300 kilowatt hours per month. For example, if you use 1,000 kilowatt hours per month you will see a reduction of $22.26 on your bill; if you consume 1,300 kilowatt hours you will still save $1.16 per month. Once you start using more than that, you will have to bear an increase. At 1,400 kilowatt hours a month, you will pay $5.88 more per bill. If you use 1,500 kilowatt hours, you will face increases of $12.91 a month.
The Yukon Utilities Board Response
In November last last year, the Yukon Utilities Board said it wanted to wait for a future hearing to consider the rate adjustments we have proposed for ‘first block’ and ‘second block’ customers. In the meantime, the Board has ordered us to implement an interim rate reduction of 3.48 percent. The interim rates went into effect on December 1, 2008.
The Utilities Board hasn’t said an outright ‘no’ to our request. It’s merely said it doesn’t want to make a decision about our proposal at this time.
The oral public hearings for our rate application are set for this coming May. We hope that at that time, the Utilities Board will be open to considering our proposal.
