Power corporation applies for 25% increase in rates across NWT

The NWT Power Corporation is seeking regulatory approval to increase customers’ rates by 25 percent, saying it needs the money to cover “substantial” cost increases.

The same rate increase would apply across each of the different NWT zones served by the power corporation.

A 7.1-percent increase was already approved by regulator the Public Utilities Board in July. The remaining 17.7 percent is the subject of the latest application.

If approved, the higher rates will be phased in over the next year “with timing still to be determined,” NTPC said in a news release.

The increases are not final. The PUB has the power to reject the application and has done so in the past when applications contained “an unacceptable level of rate shock.”

NTPC’s latest application will be examined by the PUB over the coming months. If anything, this one represents a higher level of rate shock than one the regulator rejected two years ago.

However, the power corporation and the minister responsible, Caroline Wawzonek, argue there is no choice but to ask customers for much more money as costs spiral.

In a statement, Wawzonek said she “recognizes the financial pressures many residents are experiencing as the cost of living continues to rise.”

Without GNWT subsidies of $45.2 million over the past two years, the minister said, rate increases would have approached 45 percent.

“We are actively exploring options to provide additional financial support to further mitigate the impact of these proposed rate increases,” she said.

What does NTPC say the cost issues are?

Low water and volatile fuel prices were the problems Wawzonek identified as the key drivers of NTPC’s cost increases. She called them “unavoidable challenges.”

A years-long drought has left Yellowknife operating on half hydro, half diesel for many months. Normally, the territorial capital is practically entirely powered by hydro.

Meanwhile, the South Slave’s Taltson hydro plant has been offline for more than a year longer than planned as maintenance work drags on, meaning huge and unexpected replacement diesel costs.

NTPC says diesel prices have risen by 40 percent since the last time it applied for territory-wide rate changes, while natural gas prices have risen by 70 percent.

Under its proposed rates, NTPC would receive around $47 million in revenue from the “non-government retail” sector in 2025-26, which includes residential customers.

The power corp hopes to receive $53 million from government sales, $2 million from industrial sales and $48 million from selling wholesale to Naka Power, which distributes electricity in Yellowknife.

While NTPC’s rate increases don’t directly affect Yellowknife residents, Naka Power must pay any increased rate and would be almost certain to pass that increase on to its customers.

What about Hay River?

Right now, Naka Power is the distributor in Hay River, too, but that is set to change in the coming months.

A decade-long legal and regulatory battle over who gets to distribute Hay River’s power is set to end in March when NTPC takes over from Naka Power.

That transfer adds a layer of complexity to what will happen to Hay River residents’ rates.

When Hay River starts using NTPC as its distributor, the town will become part of NTPC’s Taltson zone and will still have to pick up the 25-percent increase for that zone, if the PUB approves it.

But NTPC has said the initial rate it sets for Hay River customers before that increase kicks in will be significantly lower than the rate Naka Power is charging.

In documents filed with the PUB, the power corporation says a Hay River resident paying 45 cents per kilowatt hour through Naka Power right now – a sum that includes a rider (an extra fee) to cover diesel costs while Taltson hydro is offline – will pay an initial NTPC rate of 26 cents per kilowatt hour.

The exact percentage change for Hay River customers, from the Naka Power rate now to the final rate if NTPC’s application is approved, wasn’t immediately clear. Cabin Radio has asked NTPC to provide that information.

What else does NTPC say it’s doing?

As it announced its bid to charge customers 25 percent more, in what is called a general rate application, the power corporation insisted it was working on other ways to cover its increasing costs.

Wawzonek said the territory was developing a new energy strategy that would get the NWT to net-zero emissions by 2050 while improving “energy security, affordability and sustainability,” but the GNWT hasn’t produced a detailed road map of what change that’ll bring to residents and their rates, or when.

NTPC has also warned that some projects designed to reduce emissions “can come at a higher cost.”

In its application to the PUB, the power corporation said it was trying the following other tactics to reduce costs:

• selling more electricity to drive up revenue, especially through electric heating, industrial customers and electric vehicle charging, which is currently a tiny fraction of demand but is expected to gradually grow;
• trying to reduce diesel consumption where it can;
• working on better project management; and
• achieving “economies of scale” such as by taking over Hay River’s power franchise, meaning more customers.

“We recognize that many customers are experiencing economic challenges due to inflation that has caused significant increases in the cost of food, housing, energy and other goods and services,” NTPC president Cory Strang said in a statement.

“NTPC has made every effort to keep rates as low as possible for customers but we are facing major issues, such as extreme low water and high diesel prices, that are beyond our control.

“Funding support from the GNWT has helped offset these challenges but NTPC is still facing substantial increases in the cost to deliver power to customers.”