Northland Utilities asks if Hay River switch ‘is in public interest’

Northland Utilities is asking an independent panel whether taking Hay River’s power franchise away from the company is in the public interest.

In 2016, Hay River’s town council voted not to renew its electricity distribution franchise agreement with Northland Utilities. The NWT Power Corporation is set to take over instead.

However, that transition has taken six years and the clock is still running, in part because of disagreements over things like the fee Northland should receive for its equipment.

Now, the company is asking the Public Utilities Board – which regulates the activities of power utilities in the Northwest Territories – to examine whether taking the power franchise away is in customers’ best interest.

Depending on your point of view, Northland’s request is either an effort to limit the impact on customers or an attempt to stall or cancel the entire transfer, preserving its business in the community.

In a regulatory filing, Northland says the transfer will generate some $2.2 million in extra expenses that the Town of Hay River should have to pay.

Northland says that cost should be split between all of the town’s power customers and collected as a one-time payment. The company says it will not be held responsible for that cost and the alternative, if the town’s customers are not ordered to pay, should be that Northland’s remaining customers pay – residents in the likes of Kakisa, Enterprise, Fort Providence and Wekweètì.

“Significant harm and rate shock will result if these costs need to be recovered from Northland’s remaining customers,” the company writes.

Northland’s filing makes various other proposals that seek to adjust rates and put in place financial protections ahead of the transfer, which is scheduled to take place early next year.

Jay Massie, Northland’s vice-president of northern development and Indigenous relations, told Cabin Radio the loss of Hay River represented a “big reduction in business.” (Northland Utilities in Hay River and the company of the same name in Yellowknife are technically different businesses, though they exist in the same family of companies and tentative talks regarding a merger may take place in the next year.)

“We want to make sure the remaining customers aren’t affected, and that’s that public interest test,” said Massie.

In other words, Northland is suggesting to the Public Utilities Board that calling off the whole transfer – to protect customers, the company asserts, from higher power rates that might result – should be considered, despite the town council’s initial decision.

“That’s a reasonable outcome,” said Massie.

“The board could rule: ‘Yes, this can proceed, it’s in the public interest.’ Or the public is saved harmless, let’s put it that way. Or the PUB can say: ‘This doesn’t make sense, there could be customers harmed, and we’re not going to approve it.’

“I don’t know what that looks like, to be honest. This is our first time ever doing this. If that happens, I’m not sure what happens next.”

Town dismisses Northland’s position

The Town of Hay River and NWT Power Corporation do not share Northland’s interpretation.

The town says Northland’s assertion that extra costs of $2.2 million need to be paid by the town or its customers is plain wrong.

“NUL and the town have already engaged in a litigated process before an arbitrator to determine which party is responsible for these costs,” the town stated by email on Friday last week, using an acronym for Northland Utilities.

“The arbitrator ruled in the town’s favour and held that NUL must bear these costs, not the town.

“NUL argued before the arbitrator that these costs should be borne by the town because the town caused them by ‘terminating’ the franchise. As held by the arbitrator, these costs were not caused because the town ‘terminated’ the franchise. Rather, the franchise agreement was for a fixed term, which has expired.”

The town made clear that it considers the transfer to be fully in the public interest.

“The town expects that town customers will pay lower distribution rates following the transfer,” Friday’s statement continued.

“The PUB will ultimately determine costs to be borne by town and other customers, and the town is confident it will find the rates and regulatory treatments sought by NUL in its application are not just and reasonable.”

The Public Utilities Board itself has asked for more information from the parties involved before proceeding.

The NWT Power Corporation, in a short written statement, said: “NTPC was awarded the Hay River franchise by the Town of Hay River after a comprehensive, open RFP process. NTPC is preparing to file its regulatory applications with the NWT Public Utilities Board this fall.

“The NWT Public Utilities Board will review the impact to customers and ensure the process is fair and transparent.”

The town’s statement concluded: “All parties are working towards completing the transfer by January 1, 2023, or as soon after that date as possible.”

Massie, representing Northland, said: “It’s an unfortunate spot we’re in. This has been ongoing for a number of years … if the PUB says this isn’t in the public interest? It’s going to be very interesting, if that happens.”