The extraordinary scale of the NWT’s shift from hydro to diesel

The NWT is desperate to use less diesel. In reality, it’s burning three times as much as it did just two years ago.

While individual news reports have documented the NWT Power Corporation’s need for more diesel – the water in some hydro systems is critically low, and the big Taltson hydro plant was out of action for a year-long refurbishment – the figures that show the true scale of the change are only now becoming available.

Presenting to a committee of MLAs on Monday, power corporation boss Cory Strang showed a chart of diesel consumption in recent years.

Between 2017 and 2020, the power corp was burning around 20 million litres of diesel per year to generate power in NWT homes, many of them in small communities where diesel is the only energy source reliably available.

By 2021-22, that had dropped to just over 15 million litres a year.

But in the years since, the amount of diesel being burned for power in the territory has shot up.

In 2022-23, it returned to more than 20 million litres. In 2023-24, that became a staggering 45 million litres a year.

Strang said this was a combination of Taltson being offline – work that lasted for twice as long as was expected – and the ongoing record low water levels that are affecting the Snare hydro system northwest of Yellowknife. Huge quantities of diesel are being burned because the NWT rarely has any other option ready to go when hydro fails.

For years, now, Yellowknife has been running on roughly a 50-50 split between hydro and diesel rather than the usual mix of 98-percent hydro, two-percent diesel.

The Jackfish power plant, which is designed to be the city’s diesel backup, has been running almost without pause since July 2022.

In other words, Yellowknife is in practical terms no longer a hydro community. Business as usual for the territorial capital – and other regions, like the South Slave – has become heavy reliance on diesel, which is having a large impact on emissions and costing tens of millions of dollars more.

The power corporation is trying to raise its rates to get some of that money back from customers, but the GNWT is also promising to find $45 million in the space of 18 months to offset the financial disaster that is buying huge sums of extra diesel at a time when the fuel’s cost has gone up by 40 percent in two years.

The major Taltson hydro facility’s year-long absence is designed to be a one-off, a project that will keep the dam functioning for decades to come. On its own, the extra diesel associated with that work can be written off as an outlier.

But nobody knows how long the current low water levels will last, there’s no immediate solution in sight, and there are very few alternatives for the NWT to take off a shelf and quickly activate.

“We can’t continue to go on the way we’ve gone on for 50 years without a sense of urgency,” said Caroline Wawzonek, the minister responsible for the power corporation, during a frank exchange with regular MLAs at Monday’s meeting – in which she came as close as possible to calling it a crisis without letting the exact phrase escape her mouth.

“If you want to call it a crisis, use that urgency and use that sense of drive to do something that is going to be big,” she told Yellowknife Centre MLA Robert Hawkins, who had himself called it a crisis moments earlier, as she called for the territory’s politicians to collectively back some form of major shift in approach.

Even Strang, who collects his 25-year long service award at the power corporation on Tuesday, said basically nothing had changed in a quarter of a century working there.

“We’ve had the same model for the last 25 years,” he acknowledged.

“We built the wind turbine up in Inuvik for a change, we’ve replaced an old dam here at Bluefish,” he said, listing a couple of things the power corp had done that maybe stretched beyond the norm.

Otherwise, he said, “It has looked the same.”

“The future is inflation going up by two to three percent a year and sales being flat,” he added, a situation that means the power corporation either enters a death spiral of revenue loss and degrading infrastructure or keeps raising rates on the backs of residents to fund itself.

“I’m telling you what the future will look like,” said Strang, “unless something is done.”

What’s the situation?

But what could a new approach be? What can the NWT government, or any government, actually do quickly and realistically?

First, here’s a guided tour of what Wawzonek and Strang say is actually going wrong, so you can understand how they are interpreting the situation in front of them.

Hydro water levels are low, inflation is increasing costs, and diesel costs are going up at an even faster rate, Strang said, but the power corp is gradually losing customers because the population isn’t growing and there are no big new clients, like mines.

Everyone wants more renewable power and less diesel, he continued, but that can cause problems.

“As you add more renewables to the system, you need to be cautious about the impact on rates and system reliability,” Strang said.

“When renewables are added to a community that already has sufficient generation and is experiencing little or no growth, there can be upward pressure on rates. These additional assets also need to be maintained, adding cost to the system.”

The power corp believes adopting renewables too quickly could make the situation worse and leave NTPC with less revenue while driving up costs for residents as a whole.

Yet even staying on diesel, which for decades was the safe option, is now described by Strang as a “costly logistical challenge” because of the fuel’s cost – and that’s before considering its environmental impact. So NTPC doesn’t want to just stay on diesel, either.

OK, so how about hydro?

That’s where the low water problem comes in, alongside the fact that the Taltson hydro facility in the South Slave isn’t connected to Yellowknife and the North Slave, so its extra capacity isn’t being put to good use.

The GNWT has spent decades talking about making that link, but it hasn’t happened. The project would cost more than $1 billion and while the federal government keeps promising it’ll pay for that, it has not yet done so.

In the Snare hydro system, water levels last year were 11 feet lower than normal, Strang said, setting out the challenge posed by low water – and the reason why Yellowknife is burning so much diesel year-round.

He said the NWT isn’t the only place facing this problem, and gave British Columbia and Manitoba as examples of other jurisdictions in the same situation.

But those provinces are part of a bigger southern grid and have a range of options. The NWT has a collection of tiny grids and no power connection to anywhere beyond its borders.

That introduces two problems. One, you can’t easily get cheap power from somewhere else when your own power sources are compromised. Two, you can’t sell excess power, so generating more power than you are using becomes pointless.

“Bermuda has the same problem we have. Because they’re not connected, you can’t flow that excess power somewhere,” said Strang.

“That’s why battery storage technology, as it becomes cheaper, is helpful, because you can store it and reuse it somewhere, use it another time.”

Three-year problem

Wawzonek said the territory’s ambitions for power projects need to be bigger, and it needs to get on and build something – taking a risk, as Premier RJ Simpson has urged his government to do, rather than waiting for a big customer like a mine to be fully built first.

Giving examples of mining projects that are being talked about but aren’t confirmed yet, she said: “If we wait until Pine Point mine is actually operational, it’s too late. They will have made their own plans by then. Waiting until lithium is actually operational is too late, they will have made their own plans by then.

“We need to make ourselves available now, so that industry is able to make that part of their business plan when they go to their funders. If we can’t do that, we will miss the boat again.”

She added the territory’s politicians perpetually demand that things “be done in three years,” because that’s about the useful length of time available to them before each election.

“Taltson is the prime example for the Northwest Territories,” Wawzonek said, referring to the expansion of Taltson hydro to generate more power and serve the North Slave.

“The fact that it wasn’t built 25 years ago when it first came up – and when we knew there were diamond mines coming – speaks to the inability to do something that is going to take longer than three years and cost a lot of money.”

The Taltson project was initially envisaged in phases. Phase one? Connect it to the North Slave. Next phase? Connect the whole system to the south so power could be exported (or, should the need arise, imported.)

Territorial officials said that second phase is off the table right now because there is no demand in the south for northern power.

They said talks were ongoing with the Canada Infrastructure Bank, a federal funding body, to build phase one, but there were still no formal promises of major federal investment.

One project leaders like

All this doesn’t mean the peoples of the North are completely out of ideas.

As one example, near the Arctic coast, the Inuvialuit Regional Corporation is developing the M-18 gas well with a view to becoming a natural gas, propane and synthetic diesel supplier for the region in the next few years.

The project has been billed as providing energy security in the area “for decades to come,” bringing permanent jobs and cost savings.

In November last year, receiving an award for subsidiary the Inuvialuit Petroleum Corporation’s work on M-18, IRC Chair Duane Ningaqsiq Smith said more could be done.

“My region represents 26 percent of the NWT’s landmass. You know, I have a community in Banks Island that is the size of France. None of this has really been looked at or tapped into to the extent that it can. We’re open to that opportunity,” he told a Yellowknife audience.

Strang said projects like M-18 could “transform” a region from a power perspective, replacing the arduous process of trucking gas up from BC with access to locally sourced fuel instead. (A wind turbine began serving Inuvik last year, and officials say both wind and gas will help the town reduce its reliance on diesel and the resulting emissions.)

“Now you’re building your capacity, teaching your kids a new technology,” said Strang of M-18’s development.

“If you have an issue, you’re just making a phone call to someone that you see at the hockey rink, versus all the way down to somewhere in southern BC.”

But even M-18, one gas well, has taken years to advance to this point, and Wawzonek pointedly said on Monday that none of the options in front of her feel quick or cheap at a territorial level.

Meanwhile, as Tu Nedhé-Wiilideh MLA Richard Edjericon noted, residents are being asked to bear the increasing cost of business as usual in the absence of other solutions.

“We have homeowners paying anywhere up to $1,000 per month for power. As a government, I don’t know how long we’re going to continue to sustain ourselves this way,” he said.

Wawzonek took time to stress that the power corporation does not, she said, earn a profit from its customers. The minister said rates are raised to cover costs, not to bring in money for the government. Instead, money flows the other way – the central territorial government gives NTPC extra cash to subsidize power rates.

Strang said inflation had increased by 25 percent in recent years and NTPC’s power rates had increased by 24 percent, which he said demonstrated that the power corporation “has generally been able to keep rates equal to inflation.”

But they both agreed something has to change, after decades of other politicians and bosses saying the same thing.

“Solving the energy situation in the Northwest Territories is one of the most significant things that we have in front of us,” said Wawzonek.

“Again, back to ‘let’s not let a good crisis go to waste.’ If I go ahead and use that language, [the NWT should] use this as an opportunity to truly bring everyone together in the Territories and say, what are the different pieces?

“What do we need to do right now so that we don’t lose out on opportunities and are ready to take them?”