Wait! The bad news got less bad! Your YK power rate hike might be 17%

The NWT Power Corporation has good news about the bad news that might make the bad news slightly less bad, but still bad.

The power corporation has asked for year-on-year rate increases amounting to 25 percent across the Northwest Territories. We already knew that piece of bad news.

On Thursday, there came another one. Naka Power said it wanted a 4.1-percent rate increase of its own. Since NTPC generates power in Yellowknife and Naka Power distributes it, Yellowknifers would face paying both increases.

Asked if that meant Yellowknife customers were staring at an increase of around 30 percent, Naka Power’s Jay Massie replied: “That is the concern.”

After an article reflecting Massie’s comments was published, the NWT Power Corporation said he was wrong because the increases apply to different parts of your bill. They aren’t simply added together.

As NTPC explains it, the power corp is asking to increase its wholesale rate by just under 25 percent. Using figures that would have been roughly accurate last month, that would mean the wholesale rate going from 22.79 cents/kWh in Yellowknife to 28.44.

Meanwhile, Naka Power’s distribution and admin costs – which were 9.21 cents/kWh – would go up 4.1 percent to 9.59.

A few other smaller costs are involved in the average bill. Overall, NTPC says, the cost of power for a Yellowknife resident in that scenario would go from 35.38 cents/kWh to 41.41. That’s a 17-percent shift.

To be clear, that is still some of the most expensive electricity available anywhere in Canada. Above 40 cents per kWh is more than double what you would pay in most southern provinces. In some cases, it’s four or five times higher.

But it’s not a 30-percent increase, NTPC said. (Which would have pushed the rate to 45.99 cents/kWh.)

Hay River franchise costs

These rate increases we’re talking about are not final yet.

The Public Utilities Board, which regulates power utilities in the NWT, will spend the months ahead scrutinizing both the NTPC and Naka Power applications. It could choose to reject them or ask for them to be amended. That has happened in the past.

As that process unfolds, Yellowknife isn’t the only community whose power is in the spotlight.

The forthcoming switch in Hay River from Naka Power to NTPC as the town’s power distributor is also likely to be at the heart of the regulatory debate.

Almost a decade ago, Hay River’s town council chose NTPC over Naka Power to take over the local franchise. A vast, years-long regulatory and legal battle ensued. The transfer to NTPC is now scheduled for March 2025.

NTPC has said Hay River’s customers will get cheaper power once it takes over (even allowing for the possible 25-percent rate hike). But taking over the franchise also comes with costs NTPC has to pay.

The City of Yellowknife, in a letter to the PUB, expressed concern that the transfer of Hay River’s power franchise from Naka Power to NTPC might have a knock-on effect on Naka’s operations elsewhere.

The city’s letter described that as a “dramatic change” and called for that issue to be “adequately addressed” before Yellowknife’s rates for the years ahead are finalized.

Naka Power, which has launched a public relations offensive to discuss NTPC’s rate increases and its loss of the Hay River franchise, said it questioned whether the power corporation is unfairly placing the cost of taking over that franchise on customers elsewhere in the territory.

“If we look at what’s happening for a price increase in Yellowknife, we’re hoping none of those costs are going from Hay River up to Yellowknife. That doesn’t make sense to us,” said Massie.

The NWT Power Corporation’s general rate application – the document that would trigger the 25-percent year-on-year price hikes if approved in full – does mention the Hay River franchise transfer.

NTPC has said it needs major rate hikes to meet territory-wide costs like the rising price of diesel and natural gas, and to combat issues like low water levels.

However, the Hay River franchise transfer also “accounts for [an] approximately $4.9-million increase in the 2025-26 forecast revenue requirement,” the power corporation states in its application.

For example, NTPC expects to pay about $1.5 million a year to employ nine staff to run the Hay River franchise.

On the other hand, the power corporation has said acquiring the Hay River franchise will allow it to achieve “greater economies of scale,” meaning overall costs may come down in other areas.

Massie said Naka Power will intervene in NTPC’s rate application to scrutinize this issue.

“I want to ensure there are no costs unnecessarily shifted between customers or from one zone to another zone,” he said.

“Any projects that NTPC is doing elsewhere, how do they affect and how should they be borne by Yellowknife customers is really what we’ll be in there to discuss.”

Yellowknife application to be examined

Heading back to the Yellowknife side of things, NTPC says Naka Power is leaving out some key information when it paints its 4.1-percent requested rate increase as a more reasonable approach.

“Naka Power does have a smaller 4.1% increase in their GRA but they do not have exposure to the 40-percent increase in fuel prices, large capital replacement costs or low water costs which have figured substantially in the NTPC cost increases,” power corporation chief financial officer Paul Grant said by email on Thursday afternoon.

Grant also noted that Naka Power has recently earned more money from its Yellowknife customers than was technically allowed under the PUB’s rules, which the City of Yellowknife also points out in its letter to the regulator.

Grant said the regulator had “historically expressed concerns” regarding Naka Power and predecessor Northland Utilities “overearning” in Yellowknife, and speculated that this may be one reason why Naka Power requires “a smaller increase.”

All this means that Naka Power’s own application for a rate increase is also under scrutiny, and the city has asked the Public Utilities Board to examine other aspects of that application in more detail.