There are a couple letters that aren't used because they look too similar to other letters / numbers. When this system was implemented, nearly all pedigrees were hand-written (and many still are) so to cut down on confusion, they just left a few letters out. For example, last year was "V" year. We skipped "W" because it's pretty close to "V" in appearance. "O" is skipped because it could be 0, and so on.
Other letters not used are G, I, Q, U, and Y.
Next year is a Z year, not Y. =)