Media Releases
Oct 06, 2008
Yukon Energy Seeks Rate Reduction for Customers
As promised, Yukon Energy has applied to the territory’s utilities board for approval of its 2008 and 2009 revenue requirements, including rate reductions resulting in an overall saving to ratepayers in 2009 of $1,334,000. The requested rate reductions reflect forecast revenues due to the completion of Phase 1 of the Carmacks-Stewart transmission line and the connection of the Minto mine to the system.
To promote energy conservation and efficient price signals, Yukon Energy proposes that rate reductions occur only for the first block energy charges. If approved by the Yukon Utilities Board, the application would reduce the first block energy charges by 17.8 percent for residential non-government customers and by 13.5 percent for non-government business customers.
“Most Yukoners stay within that first block of 1,000 kilowatt hours a month for residential and 2,000 kilowatt hours a month for businesses,” Yukon Energy President David Morrison said. “If our request is approved, it will mean substantial savings for those customers.”
To further promote energy conservation, Yukon Energy proposes that second block energy charges be increased. All of the resulting added revenues would be used to contribute to the proposed reduction of first block residential rates.
“There is a growing demand for electricity in the Yukon,” Morrison said. “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 send price signals to Yukoners that will encourage them to practice energy conservation as much as possible.”
However if Yukon Energy’s proposal is approved, there will still be some overall savings for residential non-government customers who use up to about 1,300 kilowatt hours per month. For example, while those who use 1,000 kilowatt hours per month will see a reduction of $22.26 on their bill, those who consume 1,300 kilowatt hours will still save $1.16 per month. Once customers start using more than that, they will have to bear an increase. At 1,400 kilowatt hours a month, they will pay $5.88 more per bill. For those using 1,500 kilowatt hours, they’ll face increases of $12.91 a month.
The Yukon government has a number of energy conservation initiatives aimed at helping Yukoners reduce electrical consumption and save money.
Yukon Energy has asked that the proposed rate changes go into effect on an interim basis starting November 1, 2008. This would allow consumers to benefit from the cost savings even before the Yukon Utilities Board makes a ruling on final rates.
It is the role of the Yukon Utilities Board to determine a time schedule for a review of Yukon Energy’s application.
For more information, see background sheet below.
Contact:
Janet Patterson
Supervisor, Communications
Yukon Energy Corporation
(867) 393-5333
janet.patterson@yec.yk.ca
RESIDENTIAL RATES AND BILLS BACKGROUNDER
Same Bills for Yukon Energy and YECL customers
OIC 1995/90 directs the Yukon Utilities Board to fix rates for retail residential customers, other than government customers, in accordance with the following rate policy for Yukon:
• Same rates throughout Yukon - no variation between Yukon Energy and YECL customers
• Fix runoff rates (second block rates) on basis of:
o rate design principles to promote economy and efficiency
o runoff rate block cannot be less than 1,000 kWh/month
o separate runoff rates may be allowed for customers in different communities, provided that these rates are fixed for each community or rate zone throughout Yukon in accordance with the same rate design principles.
Since at least the YEC/YECL 1996/97 General Rate Application (GRA), the YUB has approved residential rates for non-government customers based on these policy directions.
• First block rates (up to 1,000 kWh/month) are the same throughout Yukon, for all communities and all customers of Yukon Energy and YECL
• Second block rates (use over 1,000 kWh per month) are the runoff rates that apply to all Yukon Energy and YECL customers:
o Same runoff rates for hydro grid (WAF and Mayo) and Large Diesel (Dawson City and Watson Lake) communities; after completion of YEC’s Mayo-Dawson Transmission, Dawson and Stewart Crossing are part of Mayo grid
o 1997 runoff rates for Hydro and Large Diesel zones were fixed at 10.45 cent/kWh to reflect incremental diesel generation costs forecast for 1997 at about 30 cents/litre
o Small Diesel communities (e.g., Pelly Crossing until Carmacks-Stewart Transmission connection) and Old Crow had higher rates to reflect higher diesel generation fuel costs.
Residential Customer Use Levels
Most residential non-government customers in Yukon typically use less than 1,000 kWh per month, and do not therefore typically use second block energy subject to runoff rates.
• 70% of all monthly bills (YEC and YECL) during 2007 did not exceed 1,000 kWh
Other information on YEC/YECL residential non-government use levels in 2007:
• About 84% of customers typically use less than 1,300 kWh per month
• About 90% of customers typically use less than 1,500 kWh per month
• Electric heat use exists on the hydro grids – it is reported that about 13% to 15% of Yukon households rely primarily on electric heat as primary heating source.
Key factors affecting bill changes since 1996/97 GRA
Today, both Yukon Energy and YECL have new rate applications before the YUB. The 1996/97 GRA was the last time that rate applications involving both Yukon Energy and YECL were reviewed by the YUB.
The following key factors have affected residential non-government rates and bills in Yukon after the 1996/97 GRA, and prior to Yukon Energy’s current application:
• Closure of the Faro mine –
o lead to new rate Rider J to cover lost rate revenues (% rider charges to base rates)
o Yukon Government established Rate Stabilization Fund (RSF) subsidies to help offset Rider J impacts on first block energy charges
• Ongoing escalation of diesel fuel prices – rate Rider F charges to each kWh used
o Rider F covers fuel price escalation since 1997 for YECL and since 2005 for Yukon Energy
o Yukon Energy secondary sales rate increases since 2005 offset Rider F increases
• YECL rate increases – in April 2008, YECL filed for rate increases - as of August 1, 2008, the YUB approved an interim 5% rate increase for YECL (Interim Rider R) that applies to all base rates – YECL’s application seeks further increases for 2009
For a residential non-government customer using 1,000 kWh/month, the bill increased almost 10% between spring and fall 2008.
Electric heating has become less costly to customers than oil heating
At today’s electricity rates, which reflect diesel fuel prices forecast for the 1996/97 GRA plus subsequent rate riders, residential customers are receiving inefficient price signals that second block electricity is presently cheaper for heating than using furnace oil.
• In 1997, electric heating costs, with rates fixed to promote economy and efficiency, were more than double the cost for oil home heating, e.g., a home in Whitehorse with electric heat was about 120% higher cost than heating with fuel oil (assuming 80% efficiency, oil price about 43 cents per litre ex GST).
• Since 1997, oil prices have soared – but aside from rate riders, electricity rates in Yukon have remained fixed at 1997 levels.
• By August 2008, electricity runoff rates would have needed to be about 37 cents/kWh (ex GST) if the same 1996/97 GRA rate design principles were to be applied to reflect current diesel fuel prices; however, with furnace oil prices (ex GST) at $1.32/litre, oil heating costs in Whitehorse (ex GST) approximated 15.44 cents per kWh compared with electric home heating costs at 14.4 cents/kWh (runoff second block rates with all riders, including latest YECL interim rate Rider R).
Rate changes proposed in Yukon Energy application
Yukon Energy today remains on track to complete the Stage One Carmacks-Stewart Transmission Project and initiate service to the Minto mine in about mid to late October 2008 in accordance with the Minto PPA and the rate schedule approved by Board Order 2008-13. The additional major new firm sales of surplus WAF hydro generation are forecast, as previously expected, to provide material net revenue benefits to ratepayers. Accordingly, as previously committed, Yukon Energy seeks approval in the application, on an interim refundable basis, for retail rate reductions (Rider U) effective November 1, 2008 and continuing at the same level through the 2009 test year (rate reductions worth $1.334 million in 2009). The proposed interim rate changes are identical to the final 2009 rates proposed in the application.
By reducing the surplus hydro generation, new industrial loads also advance the timing for potential renewed diesel generation in Yukon. To promote economy and efficiency as directed by OIC 1995/90, Rider U rate reductions are therefore proposed (where feasible) only for first block rates. In addition, residential runoff rates are increased to start restoring efficient runoff rate signals, with the resulting added revenues being used within each residential class to further reduce first block residential rates.
These rate adjustment proposals are designed to prevent rate revenue rebalancing among retail customer classes.
The proposed reduction in the first block (first 1,000 kW.h per month for Residential, first 2,000 kW.h per month for General Service) retail rate energy charge is as follows (on average over a year, about 70% of non-government residential customer monthly bills, and 67% of non-government general service customer monthly bills, show only first block energy level use):
Class Cents/kW.h Change Overall Percentage
Rider U+Base Rate=Total Change
Residential Non-Government (0.496)+(1.624)=(2.12) (17.8%)
Residential Government (0.715)+(1.991)=(2.71) (14.2%)
GS Non-Gov (1.50) + 0 =(1.50) (13.7%)
GS Municipal Gov (1.50) + 0 =(1.50) (13.5%)
GS Fed and Terr. Gov (3.96) + 0 =(3.96) (17.4%)
The increase in the second block energy charge proposed to all residential non-government customers equals 6.70 cents/kW.h and to all residential government customers equals 6.73 cents/kW.h.
Forecast additional second block revenue is applied to reduce residential first block base rates in each class as noted above.
For a residential non-government customer using 1,000 kWh/month, the overall bill reduction will be $22.26 per month.
Notwithstanding the proposed increases in runoff rates, overall savings will occur for all residential non-government customers with use of up to slightly more than 1,300 kW.h per month:
At 1,000 kw.h/month: Saving of $22.26/month (16.1% of current overall bill)
At 1,300 kW.h/month: Saving of $1.16/month (0.6% of current overall bill)
At 1,400 kW.h/month: Increase of $5.88/month (3.0% of current overall bill)
At 1,500 kW.h/month: Increase of $12.91/month (6.0% of current bill)
At 2,000 kW.h/month: Increase of $48.09/month (16.6% of current bill)
