ATCO applies to raise electricity rates in Yukon next year

ATCO Electric Yukon wants to lower rates this year, then increase them in 2024.

In a general rate application filed to the Yukon Utilities Board this month, ATCO says it projects a surplus this year — though it doesn't say how much — and it wants to return 40 per cent of it to Yukoners through lower rates starting in August.

That same application asks for rates to go back up next year, to 5.2 per cent above what they are now.

ATCO says it will need more revenue to cover years of inflation and higher capital costs next year to expand infrastructure.

Jay Massie, ATCO's vice-president of northern development and Indigenous relations, acknowledged the odd nature of the application.

"I asked it even internally, like, why don't we just smooth out the whole thing rather than go down and then back up?" Massie said of the conflicting requests. "But there's a principle in utilities where you pay the actual rate you should be paying at the time."

Massie said there are multiple reasons for the application to raise rates: a growing population, increased reliance on electric heat and the slow switch to electric vehicles, all of which he said will require upgrades to infrastructure next year to increase capacity.

"There's a lot of electrical load on the system," Massie said. "We just have to strengthen it and rebuild it to make sure it's going to keep the lights on going forward."

Although the utility is asking for a 5.2 per cent increase in 2024, ATCO forecasts the rate increase to be closer to 10 per cent for ratepayers once it factors in rising fuel costs. That could change, depending on the actual fuel costs next year.

ATCO last applied to raise rates in 2016, which the utilities board approved. 

NDP says ATCO's profits don't suggest rates need to go up

That same year, the utilities board regulated the company's ability to turn a profit. Based on operating costs and revenue, ATCO is allowed to make a nine per cent profit on electricity it buys from Yukon Energy Corp. and sells to Yukoners.

Financial statements from 2016 to 2021 show ATCO's annual rate of return in that stretch consistently hovered between 12 and 13 per cent. 

Massie said ATCO's revenues have been higher than expected in recent years, as the population and mining industry has grown. That's led to more customers and higher electricity sales, while ATCO has had to spend little in past years to increase capacity.

That became cause for debate in Yukon's legislature last spring.

Yukon NDP MLA Lane Tredger asked the government why, when the rate of return for ATCO is nine per cent, larger revenues weren't lowering Yukoners' power bills. Tredger noted ATCO had exceeded its margin by $7 million between 2016 and 2022.

Minister John Streicker, who is responsible for the Yukon Development Corporation, said ATCO wasn't doing anything wrong.

"What happens is that there is an estimate of what is expected in terms of a rate of return. If the return goes higher, you bring a new rate application and you adjust it," he told the legislature last year. "It isn't that ATCO did anything inappropriate, it's that there have been more people switching to electricity — especially electric heat."

Now that a new rate application has come, Tredger told CBC that ATCO's profits over the past seven years aren't an argument to increase rates. If the company truly needs money to expand infrastructure, Tredger said, that shouldn't affect rates.

"When we build a new highway, we don't then charge people a toll to drive on it," they said. 

"We need to start thinking about our electrical infrastructure in the same way, so that when there are upgrades needed to the grid, those are coming from the government and not being put onto individuals."

In an interview this week, Streicker said the Yukon already has some of the lowest rates in the country, and the utilities board is in place to ensure rates are fare. 

"That's the work that the utility board will do," he said Monday. "What ATCO will presumably be saying is that they've had costs at the same time, and that they anticipate those costs to be going up. And I don't think that that part of it is surprising, given that most of our infrastructure has been hitting inflation."

Streicker added that while the board will decide on the application, he has felt ATCO was over-earning and spoke with company executives over the last year to ask they provide some relief to ratepayers.

ATCO applied for rate relief last year due to larger revenues, which the utility board approved in December. That decreased base rates by 4.57 per cent, though the adjustment stopped applying in April.

Along with rate changes, ATCO is applying for a number of renewable projects around the Yukon, like a solar power project in Old Crow. Massie said they're large projects in isolated communities, but they won't affect rates.