INTRODUCTION BACKGROUND MANDATE VISION

Transcription

1 STRATEGIC PLAN

2 INTRODUCTION Yukn Energy's bard f directrs meets annually t develp a strategic plan that sets the curse f the rganizatin fr the next netw years. The bard des this n an annual basis t ensure the crpratin's actins are rted in its mandate and fcused n its lngterm visin. This is the 2012 strategic plan and it includes sme backgrund and cntextual infrmatin, a mandate, a new visin, guiding principles, perfrmance bjectives and strategic pririties. This strategy guides the develpment f the crpratin's yearly business plan, peratinal plans and budgets. BACKGROUND Yukn Energy Crpratin (Yukn Energy) is an electrical utility incrprated under the Yukn Business Crpratin Act. Yukn Energy is a whlly wned subsidiary f Yukn Develpment Crpratin (YDC), a crwn crpratin wned by the Gvernment f Yukn. YDC directs Yukn Energy t fulfill sme f its mandate by ensuring there is a cntinuing and adequate supply f energy in Yukn, in a manner cnsistent with sustainable develpment. Yukn Energy is als respnsible fr the existing hydr assets that nce belnged t NCPC and with these assets it generates, transmits and distributes electricity. Its peratins are regulated by the Yukn Utilities Bard, the Business Crpratins Act, the Public Utilities Act and the Yukn Waters Act. Yukn Energy was established in 1987 and nw supplies pwer t almst 15,000 electricity custmers. Distributin t these custmers is a shared respnsibility with Yukn Electrical Cmpany Limited. Yukn Energy's generating capacity is 141 MW f which 92 MW are frm hydr facilities, 36 MW frm diesel generatrs and 0.8 MW frm wind. Yukn Energy's hydr system has a maximum f 92 MW f summer capacity but this capacity is reduced during the winter mnths t MW as there is less water available in the winter fr the Whitehrse hydr plant. Yukn Energy has 90 emplyees lcated in Whitehrse, Far, May and Dawsn City. Yukn Energy has accmplished a great deal in the last few years. In particular, the crpratin has successfully cmpleted the May B enhancement prject (its largest initiative t date), installed and cmmissined the third turbine at the Aishihik hydr facilities, and cmmissined Stage 2 f the Carmacks Stewart transmissin line. Stage 2 enabled Yukn Energy t cnnect the territry's tw majr transmissin grids, giving the crpratin the ability t manage these assets as ne integrated system. Planners have als been busy wrking n ther ptential resurce ptins and energy cnservatin/efficiency slutins. This strategic plan utlines the ratinale and pririties that will guide Yukn Energy's future actins. The fllwing sectin includes the strategic plan's mandate, visin and principles. MANDATE Yukn Energy plans, generates, transmits and distributes a cntinuing and adequate supply f cst effective, sustainable, clean and reliable energy fr custmers in Yukn. VISION Yukn Energy has a visin fr Yukn's energy future that embraces the scial, ecnmic and envirnmental needs f all Yukners. Every decisin we make is driven by that visin. STRATEGIC PLAN - April

3 PRINCIPLES & VALUES Our principles and values are fundamental t ur success. We: Priritize safety and emplyee wellness in all f ur actins. Undertake a cntinuus planning prcess t prvide energy fr current and future custmers. Optimize the utilizatin f ur assets fr the benefit f all custmers. Operate in a manner that ensures we are transparent and accuntable t all f ur custmers and Yukn residents. Ensure all f ur actins supprt ur cmmitment t sustainable develpment and clean energy. Develp the partnerships required t meet the energy requirements f ur custmers. Operate with respect fr ne anther. Fster a team based apprach t all f ur challenges. Act with integrity at all times. OPERATING ENVIRONMENT Yukn Energy is a regulated public utility gverned by the Yukn Utilities Act and the Yukn Utilities Bard. Yukn Energy is respnsible fr electrical system planning in Yukn and is the primary generatr f electricity in Yukn, supplying 90 percent f all generatin required t serve Yukn cmmunities. Yukn Energy perates a transmissin grid and substatin system cmprising f apprximately 500km f 138kv and 69kv line with n cnnectin t an external grid r pwer surce. With n external ptin t sell pwer, Yukn Energy must mitigate tw significant risks when planning new pwer develpments. First the crpratin must ensure that it des nt verbuild and ratepayers are nt left with a large financial burden in future years if lads diminish and surplus energy becmes the nrm. Secnd, if Yukn Energy underbuilds and cannt meet new lads with cheaper surces f renewable pwer, ratepayers will be saddled with high cst diesel and higher GHG emissins. Yukn Energy base generatin cmes frm three legacy hydr assets lcated in May, Aishihik and Whitehrse. Yukn rates are the lwest in Nrthern Canada and Alaska and cmpetitive with a number f cmmunities in suthern Canada because f these legacy assets. Yukn is a single rate zne with all cmmunities paying the same rate fr the first 1,000 kwh per mnth. As a single rate zne, csts incurred t serve all custmers and revenue frm all custmers impacts rates acrss the territry. Yukn Energy has an aging infrastructure. Apart frm May B and Aishihik 3, the last hydr prject (Whitehrse s Furth Wheel) was built in The Aishihik facilities were cmpleted in 1974 and the riginal Whitehrse and May hydr facilities are bth mre than 50 years ld. Yukn Energy's financial capacity is being challenged by the requirements STRATEGIC PLAN - April

4 t fund bth new infrastructure and capital plant upgrades. With Yukn Energy cming t the end f surplus 'legacy hydr' r cheap pwer and the need t invest in an aging infrastructure, meet rising perating csts, and generate higher cst electricity, rates will have t rise. Rates can be ffset by public investment int infrastructure prjects and feasibility analyses, but these funds are significantly diminished. Yukn is the fastest grwing ecnmy in Canada and with r withut new industrial lads Yukn Energy is facing greater than nrmal levels f lad grwth. Yukners are fuel switching and mving t electrical heat and this is adding t lad grwth at the residential and cmmercial level. It is estimated that 90 percent f all new residential and cmmercial cnstructin are installing electric heat. Large new residential develpments will als impact the requirement fr additinal generatin in a significant manner. Yukn Energy is cmmitted t develping new business relatinships with First Natin Develpment Crpratins t share 'risk' and t encurage greater public acceptance f prjects. Yukn Energy needs t emply new strategies and engage new large custmers in discussin nt just abut the cst f linking t the transmissin netwrk but als the cst f electrical generatin itself. Yukn Energy needs t manage public expectatins relating t energy supply ptins and this will require detailed analysis and discussins. SYSTEM CHALLENGES & RISKS Yukn's ppulatin cntinues t grw and with ptential mines cnnecting t the grid, Yukn Energy culd see a 50 percent lad grwth within five years. Acquiring sufficient planning funds t carry ut the at risk planning wrk required t bring new prjects n line. Electrical requirements t serve ff grid lads are frecast t be much larger than n grid electrical requirements. In serving new lads Yukn Energy must be able t meet the criteria set ut in the Yukn gvernment's Energy Strategy. Yukn Energy must als be able t meet the Climate Change Actin Plan targets fr Green Huse Gas Emissins. Yukn Energy must develp prjects t meet this grwing lad and arrange the financing required t build the prjects while ensuring ratepayers are prtected frm prject financing risks. Yukn Energy must als wrk diligently t keep Yukn electrical rates within acceptable limits in rder t encurage ecnmic grwth, while increasing its capacity t serve new custmers. Yukn has a very small custmer base which will impair the utility's ability t prvide the capital required t finance new generatin prjects. STRATEGIC PLAN - April

5 It will be imperative t find funding partners t help finance new generating and transmissin prjects. Yukn Energy must ensure that grwth in new generatin is balanced in a way that meets current and future demands but at the same time des nt create a situatin where ratepayers are left with a large surplus that cannt be utilized. Yukn Energy must be able t meet the requirements fr new supply in a manner cnsistent with the aspiratins f Yukners wh are fcused n the develpment f renewable surces f supply. Yukn Energy must examine ptins t reduce r remve diesel generatin frm the system where pssible. Yukn Energy must plan fr the retirement f its lder diesel units and identify reliable replacement capacity. develpment f energy systems and the generatin, prductin, transmissin, and distributin f energy in all its frms. YDC incrprated Yukn Energy Crpratin under the Business Act in 1987, s that Yukn Develpment thrugh its subsidiary Yukn Energy Crpratin culd wn and perate the recently acquired electrical energy generatin, transmissin and distributin assets f NCPC (federal agency) fr custmers f Yukn. The electrical rate structure suggested by Yukn Energy is subject t the authrity f the Yukn Utilities Bard. Yukn Energy and Yukn Develpment Crpratin negtiate a prtcl with the Yukn gvernment annually r biannually which utlines what is expected each year frm the crpratins. Additinal directin frm the Yukn gvernment cmes t the crpratins as an Annual Sharehlder's Letter f Expectatins. STRATEGIC CONTEXT Gvernment Plicy Yukn Develpment Crpratin Act The Yukn Develpment Crpratin Act and its regulatins direct Yukn Develpment Crpratin (YDC) tward certain activities that the crpratin has instructed its whlly wned business Yukn Energy, a regulated electrical utility, t undertake. In particular, the Yukn Develpment Crpratin Act directs YDC t participate in the ecnmic develpment f Yukn by ensuring there is a cntinuing and adequate supply f energy in the territry in a manner cnsistent with sustainable develpment. The Act gives the crpratin the pwer t develp and prmte the Yukn Gvernment Energy Strategy The Yukn gvernment's Energy Strategy guides hw energy can be prduced, cnserved, and used in Yukn. It prmtes sustainability, energy security, self sufficiency, ptimizing benefits, climate change crdinatin, leadership, and partnerships. A number f pririties are listed under the headings f: efficiency and cnservatin renewable energy il and gas electricity energy chices. In particular, the Energy Strategy prmtes the use f renewable energy including the cmmitment t increase the renewable energy supply 20 percent by The strategy STRATEGIC PLAN - April

6 acknwledges the need t manage demand, in rder t ensure the best use f the existing electricity supply. It als recgnizes as the ecnmy grws, industrial develpments can lead t legacy pprtunities fr new renewable infrastructure. The gvernment's Energy Strategy prvided directin t establish a net metering and independent pwer prducer plicy bth f which are nw in develpment. Net metering allws custmers the ability t generate their wn clean electricity, t lwer the amunt f electricity they buy, and t sell back any excess. An independent pwer prducer plicy enables businesses t generate and sell electricity t Yukn Energy when cnditins are apprpriate. Yukn Gvernment Climate Change Actin Plan The Yukn gvernment's 2009 Climate Change Actin Plan seeks t enhance knwledge f climate change, adapt t climate change, reduce greenhuse gas emissins, and lead actin in respnse t climate change. The Yukn gvernment has set a cap n its wn greenhuse gas emissin by 2010 and a target t reduce its emissins by 20 percent by 2015 with the gal f being carbn neutral in Public Utilities Act The Public Utilities Act amng ther things defines a public utility as prducing, generating, string, transmitting, selling, delivering r furnishing electricity r gas t r fr the public r a crpratin fr cmpensatin. The act als defines the rle f the Yukn Utilities Bard (YUB) and the regulatin f public utilities via a franchise. There are several Orders in Cuncil that direct the YUB as well. One is the Rate Plicy Directive (1995) O.I.C. 1995/090 that ensures Yukn Electrical Cmpany and Yukn Energy cannt charge custmers different rates and all Yukn residential custmers wh use 1000 kwh r less per mnth are charged the same n matter their lcatin in Yukn. One f the YUB's rles is t regulate the utilities in Yukn t ensure the territry has a cst effective and adequate supply f electricity. Sustainability Yukn Energy is a member f the Canadian Electricity Assciatin (CEA) and as such is cmmitted t its Sustainable Electricity initiative a three prnged visin which includes the health f the envirnment, sciety and the ecnmy. The initiative has fur elements: a CEA plicy fr sustainable develpment, crprate respnsibility, the develpment f perfrmance indicatrs and reprting, and a CEA public advisry panel and methd fr external verificatin. The plicy that Yukn Energy has adpted cmmits Yukn Energy t the fllwing: Minimize the adverse envirnmental impacts f ur facilities, peratins and businesses; Manage the envirnment resurces and ecsystems that we affect t prevent r minimize lss and supprt recvery; Manage greenhuse gas emissins t mitigate the impact f peratins n climate change, while adapting t its effects; Prvide a safe and healthy wrkplace fr ur emplyees and cntractrs; Supprt a fair, respectful and diverse wrkplace fr ur emplyees and cntractrs; STRATEGIC PLAN - April

7 Clean Energy Cmmunicate with and engage stakehlders in a transparent and timely manner.; Cmmunicate with and engage Abriginal peple in a manner that respects their culture and traditins; Prvide ecnmic benefits t sharehlders, cmmunities and regins in which we perate; Prduce, deliver and use electricity in an efficient manner while prmting cnservatin and demand side management; and Prvide electricity t custmers in a safe, reliable and cst effective manner t meet current and future needs. Clean energy, green energy and renewable energy are all terms used tday with varius meanings. Clean energy describes bth renewable and nn renewable technlgies that generate pwer. The renewable frms are varied, but typically are described as wind, slar, gethermal, bi pwer, marine and hydr. These nce alternative energy surces are nw becming mre main stream as the technlgies that supprt them becme mre efficient and affrdable. Nn renewable surces f pwer such as natural gas are seen as an alternative t il and diesel. Clean pwer can be thught f in several different ways, fr instance: 1) hw clean is the energy is that is prduced (any emissins) and 2) hw clean is the technlgy's full "lifecycle" i.e. what type f materials are needed t build the technlgy, where d these materials cme frm, where are the cmpnents manufactured, what impact des the assembly have, and where d the cmpnents g when the technlgy is decmmissined? Yukn Energy adpts the same apprach as BC Hydr t defining clean energy. It is any f the fllwing: bigas, bimass, energy recvery generatin, gethermal, hydrcarbn, hydr, hydrgen, municipal slid waste, slar, tidal, wave, wind r ther ptential clean r renewable electricity surces. Resurce Planning Resurce planning identifies the best clean energy generatin and transmissin ptins that can be develped t meet predicted future demand. In 2006, Yukn Energy's 20 year Resurce Plan was develped and filed with the Yukn Utilities Bard. The plan details near and lng term energy frecasts fr varius baselad and industrial lad grwth scenaris. This plan is currently under review and is being rewritten t ensure Yukn Energy has adjusted t new cnditins facing the crpratin nw and ver the next five and ten year perids. Resurce planning is a challenging exercise because any amunt f grwth n the existing system has a large impact n peratins due t the fact that Yukn is islated r uncnnected t an external transmissin grid like BC. This makes meeting new demand, especially frm industrial clients, a significant challenge. T date resurce planning effrts have largely been fcused n renewable energy slutins that meet future demand near t (within 50 km) r n the existing transmissin grids, prjects like adding the third turbine t the Aishihik pwer plant and the May B hydr enhancement. Frecasts fr energy demand are cnstantly being adjusted and present STRATEGIC PLAN - April

8 scenaris indicate that even with the implementatin f the existing prpsed prjects, demand will be greater than generatin. New generatin is required alng with cnservatin and demand side management slutins. The 2011 Resurce Plan will address future grwth scenaris within the cntext f existing gvernment plicy guidelines (Energy Strategy and Climate Change Actin Plan) and advancements in clean energy technlgies. It will als cnsider the intrductin f an independent pwer prducer plicy, and a net metering plicy. The plan will as well address the need fr a demand side management (DSM) prgram and the impact f adding demand side management initiatives t the system. T avid future diesel use, the resurce plan examines the ptential fr waste t energy, bimass, and wind generatin alng with LNG, Gethermal and DSM ptins. Public Opinin Surveys As part f Yukn Energy's multi year public awareness campaign, the crpratin cmpleted tw sets f public and stakehlder pinin surveys: ne in June 2010 and the ther in early The first set f surveys were designed t get a sense f what Yukners and the business cmmunity knew and believed abut the crpratin. The findings frm the first surveys helped design a public awareness campaign t give Yukners a better understanding abut wh Yukn Energy is, what the crpratin is trying t achieve, and why. Fllwing the campaign, a secnd rund f phne and internet surveys was undertaken t gauge whether the public's knwledge abut Yukn Energy had changed. Over 600 peple tk part n the Phase I surveys and the fllwing trends emerged: Yukners understd that hydrgenerated electricity is the mainstay f pwer generatin in the Yukn, but strngly supprted the develpment f alternative energy surces t supplement hydr. Yukners are lking t Yukn Energy t bring frward creative ideas in meeting future energy needs. Yukners strngly supprted the need fr energy cnservatin as a part f the slutin t managing the Yukn's energy supply and saw this as a shared respnsibility amng the public, the business cmmunity and big industry. While Yukners had cnfidence in Yukn Energy's ability t plan, develp and manage the territry's energy needs, there was als cncern that plitical and vested interest grups can be detrimental t effective, strategic, lng term planning. Yukners wanted t remain engaged in the discussin arund the territry's energy issues and the crpratin's bjectives fr a clean energy future. The Phase II survey cnsisted f telephne and nline surveys and "pulse plls" targeting the general public and the business cmmunity. Many f the questins paralleled questins asked during Phase I t identify changes in knwledge, awareness and views f Yukners cncerning energy related issues. High respnse rates fr the surveys indicate that Yukners are significantly engaged and interested in energy related issues. Within the general public, there are varying levels f awareness regarding the different STRATEGIC PLAN - April

9 resurce develpment prjects being cnsidered. There is, hwever, a general recgnitin that strategies are needed t increase energy prductin t meet future demand and that the industrial sectr will be the big energy cnsumer. Other trends include the fllwing: There is a slight decline in the level f public cnfidence in Yukn Energy's ability t effectively plan and develp clean energy surces t meet future needs. There is a strng preference fr alternative energy and increased energy cnservatin measures (Yukners see this as imprtant frm an envirnmental perspective and t diversify capacity t meet future energy requirements). There was increasing supprt fr hydr t supplement alternative energy frm levels indicated by the Phase I survey results. The majrity f respndents indicated that expanding alternative energy r a mix f alternative and hydr generatin was preferred. Only tw percent f respndents preferred t expand diesel generatin capacity. The questin was nt asked fr natural gasgenerated electricity. The issue f paying fr alternative energy received a mixed respnse. While a majrity f survey respndents were willing t pay mre fr alternative energy the majrity f "pulse pll" respndents were NOT willing t pay mre than they are currently. The results f the business surveys indicated increased cnfidence in Yukn Energy's ability t assess future energy needs but n increase in cnfidence in the crpratin's ability t develp the resurces required t meet thse needs. Business/ cmmunity leaders als expect the availability f pwer t get wrse within the next five years. While there was still a lw level f supprt fr diesel generated electricity, there was an increase in mderate supprt which culd be linked t reliability cncerns. There was sme willingness t pay mre fr renewable energy with 10 percent saying they wuld pay ne t tw percent mre and 42 percent willing t pay up t five percent mre. A third phase in the public awareness campaign began in Octber 2011 and will run until the spring f 2012, with the gal f prviding Yukners with mre detailed infrmatin abut the wrk we have dne t date regarding future energy ptins, and what we have planned fr the near future. Charrette Yukn Energy's mst recent 20 Year Resurce Plan, which was develped in 2006 fr the planning perid, prvided the first public review f Yukn pwer resurce planning since the early 1990s. Public engagement f the 2006 Resurce Plan was limited t a public wrkshp n the Resurce Plan fllwed by Yukn Utilities Bard review at a public hearing. As part f its pririty t engage Yukners, Yukn Energy is changing the way it invlves Yukners in its prject specific and lnger term resurce planning prcesses. Previusly, public invlvement began nce a decisin t mve frward n a specific prject was made r a resurce plan was finalized and ready fr filing with the Yukn Utilities Bard. It is nw crprate practice t engage affected First Natins, stakehlders and the interested public at the cncept stage f a prject t wrk tgether t identify issues, research pririties STRATEGIC PLAN - April

10 and pprtunities fr prject cllabratin. This same early engagement apprach has been applied t the develpment f the 2011 Resurce Plan due in the spring f T enhance public understanding f resurce planning issues and t infrm the 2011 Resurce Plan, Yukn Energy engaged Yukners (alng with natinal and internatinal recgnized energy experts) in a three day Charrette planning prcess in Whitehrse in March where Yukn's energy demand situatin and ptential pprtunities, bth near term and lng term, were reviewed. A crss sectin f Yukners representing varius interests was invited t participate in the three day prcess. The Charrette included technlgy specific presentatins frm experts each mrning with facilitated team discussins arund energy chices in the afternn. Daytime sessin results were summarized and presented each evening, giving members f the public an pprtunity t cmment and add t what was develped by the teams. The feedback lp als included a recap f each evening's event fr the benefit f daytime participants. Prir t the Charrette, cmmunity meetings were held in three Yukn cmmunities (May, Dawsn City and Haines Junctin) t learn abut electrical energy cncerns at the cmmunity level. In additin, stakehlder interviews were carried ut invlving apprximately 50 individuals and representatives frm a brad array f rganizatins, agencies and gvernment departments. The Charrette's expert backgrund reprts, presentatins, summaries f cmmunity and stakehlder cnsultatins and summaries f the Charrette are all available n Yukn Energy's web site. The bjectives f the Charrette were: T educate Yukners abut the territry's current energy circumstances and the ptential ptins t meet future energy demand; T infrm the Yukn Energy Resurce planning prcess; T develp energy planning principles Yukn Energy can use when making energy planning decisins and that can help with risk and trade ff assessments; and T hear hw Yukners want t be engaged in future energy planning and energy decisins. The Charrette resulted in the develpment f fur energy planning principles: Reliability Affrdability Flexibility Envirnmental Respnsibility Yukn Energy has cmmitted t cntinue engaging Yukners in resurce planning, including pprtunity t cmment n a draft f the 2011 Resurce Plan. In develping the 2011 Resurce Plan, Yukn Energy has wrked t integrate its industry sustainability cmmitments, the territrial energy and climate change plicy cntexts and the principles identified by Yukners during the Charrette prcess int a chesive dcument identifying the tradeffs and chices required t determine the Yukn's future energy mix. Obligatin T Serve Regulatry principles and precedent maintain that Yukn Energy has an bligatin t serve custmers that request service within its STRATEGIC PLAN - April

11 franchise area that are willing t pay their csts t cnnect t the grid. Majr industrial custmers lcated far away frm the current grids wuld likely nt be added t the grid due t the high cst f transmissin cnnectins that wuld be paid by the custmer. This issue gets tested n a case by case basis and may be limited by capacity, feasibility r risk factrs. Independent Pwer Prducer (IPP) Plicy The IPP and Net Metering Plicies were identified as pririties in Yukn gvernment's Energy Strategy. Yukn Energy, Yukn Develpment Crpratin and Yukn Electrical Cmpany Limited have been wrking with Yukn gvernment in develping the plicies. Yukn Energy was directed (alng with Yukn Electrical) t return t the YUB with an IPP plicy (which will be the YG plicy). The draft plicy has nt yet been released fr public review. The IPP will prvide Yukn Energy with capacity; hwever the utility sees purchased pwer as an upward driver n rates. Net Metering Plicy The draft plicy went ut fr public cnsultatin in 2011 and the revised plicy is nw with the Yukn gvernment fr apprval. Custmer side generatin (net metering) is ne f the cmpnents f the CPR recently cmpleted as part f the develpment f a DSM plan. This plicy wn't prvide capacity fr Yukn Energy but can help custmers reduce their electric bills by the number f kilwatt hurs they self generate. PERFORMANCE OBJECTIVES Optimize System Reliability and Efficiency Backgrund Pririties The cmpletin f May B and Aishihik's third turbine bring an additinal 17 MW f hydr capacity t the Yukn Energy system. The newly integrated Yukn transmissin grid brings with it bth new challenges and new pprtunities fr lng term planning and peratinal efficiencies. The new hydr assets will prvide clean energy fr new and existing custmers and will ffset the use f diesel, which will save ratepayers mney and reduce GHG emissins. Yukn Energy has made significant prgress in imprving system reliability n the Whitehrse Aishihik Far (Suthern Yukn) grid ver the past three years but cntinues t struggle with t many utages n the May Dawsn (Nrthern Yukn) system. Implement peratinal training and staff develpment plans t enhance the integratin f the May Dawsn and Whitehrse Aishihik Far grids. Update and implement peratinal plans fr the Aishihik plant which incrprate the newly installed Aishihik third turbine int the system. Develp and implement new peratinal prtcls fr the new May B hydr prject.. STRATEGIC PLAN - April

12 Cntinue the peratinal review f system efficiencies and implement capital upgrades which supprt system reliability. Imprve system reliability t meet natinal standards and decrease cntrllable utages n the new integrated grid by 50% in Develp Clean Energy Slutins t meet Frecast Demand Backgrund jb f accurately frecasting demand very difficult. Yukn Energy is fully cmmitted t full public engagement n the issue f new demand and supply requirements. In March f 2011 Yukn Energy held an Energy Planning Charette and plans are t cntinue this prcess n a smaller basis t lk at individual technlgy ptins. Yukn Energy has als been ding public pinin surveys related t planning and service perfrmance. The results f these surveys are available n the Yukn Energy website. Lad frecasts indicate the requirement fr new generatin f apprximately Gwh per year by This represents an increase in energy requirements f apprximately 40% with lads increasing frm 385 Gwh in 2010 t 543 Gwh in This additinal lad is a result f ppulatin grwth and expansin f new residential subdivisins such as Whistle Bend in the City f Whitehrse and new Industrial lads prvided by new mines cnnecting t the grid. In rder t meet this new lad, Yukn Energy has been cnducting planning studies and examining a large number f supply ptins. These studies are challenged by the lad frecast, the fact that Yukn is islated frm the Nrth American grid, and Yukn Energy's current lad/supply curve. In additin t thse challenges the lad frecast itself is subject t a great deal f bth upside and dwnside risk. Mines may nt develp and mre mines may require pwer making the Pririties Bring int service new supply prjects, which will prvide at least 100 Gwh f clean energy by Acquire grant funding r new methds f risk financing t enable Yukn Energy t plan fr new prjects withut a requirement fr equity returns r ratepayer risk. Prcure financing fr these prjects that will enable Yukn Energy t build the prjects and mitigate ratepayer risk ver the lng term Cntinue t plan fr the future and take steps and undertake wrk, which will allw Yukn Energy t prtect the pprtunity t build new prjects by the 2014 timeline. Develp a strategy and a partnership plan t build new energy prjects in cncert with Yukn First Natin Partners. Implement an nging series f public discussins n energy challenges and technlgy pprtunities, which will supprt Yukn Energy's cmmitment t STRATEGIC PLAN - April

13 meaningful public engagement n energy planning. Make decisins n which prjects t build and arrange preliminary financing by the Secnd Quarter f Wrk with the Yukn gvernment regarding plicy initiatives specifically the IPP and Net Metering plicies currently being develped. Ptential prjects include: Bimass District Heating Enhanced Hydr Strage Suthern Lakes May Gladstne Diversin Liquefied Natural Gas (LNG) Gethermal New Hydr Waste t Energy / Bigas Wind Implement a Demand Side Management Prgram Backgrund Energy demand in Yukn has recently surpassed the hydr surplus that existed with the clsure f the Far Mine. Given increasing new demands fr electrical energy and in anticipatin f grwing lads the Yukn Utilities Bard instructed Yukn Energy (and Yukn Electrical) t develp a Demand Side Management plan t address cnsumptin at the same time as we are cnsidering new supply ptins. The need fr a DSM plan is a pririty at Yukn Energy and was a clear message cming ut f the Energy Planning Pririties Charette held early in Public surveys by Yukn Energy als supprt the need t take significant steps t deal with energy cnsumptin alng with the need fr new supply. Yukn Energy in cnjunctin with Yukn Electrical and the Yukn gvernment established a DSM planning cmmittee in 2010 t address the need t take actin n energy demand and develp a cmprehensive DSM plan. Several pilt prjects and public engagement activities were als undertaken t supprt plan develpment. Cmplete the Cnservatin Ptential Review Study cmmissined in Once the reprt is cmplete examine the data and set pririties fr DSM wrk. Establish measurable targets and csting techniques t measure the success f the DSM prgrams. Cntinue t implement DSM pilt prgrams and assessment wrk t ensure that actin n reducing demand is well underway during Wrk with industrial partners t cmplete energy audits and fllw up wrk t ensure efficiencies are implemented as apprpriate. Deliver a public educatin prgram thrugh, training prgrams, public utreach campaigns and specific schl based initiatives. Wrk with cmmunity partners t develp and deliver specific fcused demand reductin prgrams n a cmmunity by cmmunity basis. STRATEGIC PLAN - April

14 Prject Capital Financing Backgrund Yukn Energy is a rate regulated utility subject t the Yukn Utilities Act and under the jurisdictin f the Yukn Utilities Bard. Essentially, Yukn Energy is regulated by an ecnmic regulatr, which means the regulatr is primarily cncerned with Yukn Energy's csts and their impact n ratepayers. Yukn Energy is als regulated by the Public Utilities Act, the Business Crpratins Act, the Yukn Waters Act. and bth the written and unwritten plicies and directins prvided by its ultimate sharehlder, the peple f Yukn, as represented by the Yukn gvernment. As well, public cnsultatin and public engagement influence the directin that Yukn Energy takes in terms f prjects and plicies. Ensuring that ratepayer risk and the lng term expsure t cst risk is f primary cncern t Yukn Energy. In recent years the crpratin has taken steps t build majr capital prjects with little r n cst t ratepayers by using innvative financing tls. In this regard, Yukn Energy has been able t cmbine financial grants frm federal and territrial surces, acquired cntributins frm industrial custmers, and secured prject cntributins frm YDC. These financing methdlgies are imperative if Yukn Energy is ging t supprt the grwth in the territry's ecnmy, cntinue t Pririties expand its asset base and serve a quickly grwing electrical lad. Yukn electricity ratepayers cannt shulder the cmplete burden f building new generatin assets. The small rate base and the high risk assciated with building large prjects makes it imprtant t deal with the issue f bth shrt term risk and lngterm financial risk up frnt befre prjects prceed. Identify surces f existing funding fr bth prject planning and prject cnstructin. Establish a framewrk fr financing new generatin prjects t mitigate risk, which includes lng term capital cntributins and financing supprt. Build n First Natin engagement activities t pursue First Natin partnerships in Yukn Energy prjects. Establish a fund that will reduce the risk t ratepayers fr the necessary planning csts required t build an inventry f available generatin and transmissin prjects. STRATEGIC PLAN - April

15 Financial Sustainability Backgrund Yukn Energy has nt achieved its apprved Rate f Return n Equity in the last fur years due t rising csts. The cst f maintaining existing aging assets t ensure reliability is increasing. In the 14 years since the last rate increase, labur csts have increased. Since 2009 alne we have added apprximately a dzen psitins t address the wrklad f a larger system and increasing challenges. Rate increases have been mitigated and deferred due t: sale f surplus hydr diesel displacement debt refinancing capital cntributins frm gvernments and custmers. Pririties Develp a General Rate Applicatin t increase revenues and prvide the financial capacity needed by Yukn Energy t meet custmer requirements and expectatins. STRATEGIC PLAN - April

16 GLOSSARY Bimass Energy resurces frm rganic matter, including wd, agriculture waste, and ther living material that can be burned t prduce electricity and heat (frm the Energy Strategy). Clean energy Yukn gvernment's Energy Strategy des nt define clean energy specifically but speaks t increasing renewable energy, cnservatin and respnsible use f il and gas recurses. BC Hydr and the BC Gvernment define clean energy as bigas, bimass, energy recvery generatin, gethermal, hydrcarbn, hydr, hydrgen, municipal slid waste, slar, tidal, wave, wind r ther ptential clean r renewable electricity surces. Climate change A change in the average weather that a given regin experiences. Climate change n a glbal scale includes changes t temperature, shifts in wind patterns, and changes t precipitatin (frm Climate Change Actin Plan). Cntrllable utages There are planned and unplanned utages. Cntrllable utages are thse that are unplanned and caused by human r equipment failure as ppsed t being caused by an element f nature like lightening, birds r wind. Independent pwer prducer (IPP) An energy prducer wh generates electricity fr sale t utilities r cnsumers such as the general public, businesses r industries (Energy Strategy). Net metering Electricity cnsumers wh wn small, renewable energy generatrs such as wind r slar can receive a credit fr a prtin f the electricity they generate (Energy Strategy). Renewable energy Energy that cmes frm surces renewed n an nging basis thrugh natural prcesses. Examples include sun, wind, wd, flwing water, r relatively warm grund, air r water temperatures (frm Climate Change Actin Plan). Sustainable develpment Beneficial sciecnmic change that des nt undermine the eclgical and scial systems upn which cmmunities and scieties are dependent (Umbrella Final Agreement). Sustainable electricity is abut pursing innvative business strategies and perating activities that meet the needs f members, stakehlders and the cmmunities in which we perate, while prtecting and enhancing the legacy we leave fr future generatins (Canadian Electricity Assciatin). Demand side management (DSM) Initiatives that influence patterns f energy cnsumptin, including actins t shift energy use frm peak times t perids when less energy is required (Energy Strategy). Gethermal The use f heat frm the earth t generate electricity r prvide space heating and cling (Energy Strategy). STRATEGIC PLAN - April