N.W.T. communities weigh in on power corporation's proposed 15% rate hike

Communities are weighing in with concerns as the Northwest Territories Power Corporation (NTPC) seeks approval from the territory's Public Utilities Board for a 15 per cent power rate increase.

A hearing before the board took place this week in Yellowknife, where residents — along with the rest of the N.W.T. — already pay the highest electricity rates in Canada.

NTPC says the increase is needed to cover rising fuel prices, inflation, and major capital costs, including the overhaul of the Taltson hydro facility. 

"Approval of the requested revenue requirement will allow NTPC to continue to provide safe and reliable service to the Northwest Territories," Paul Grant, NTPC's chief financial officer, said in his opening statement at the hearing.

Grant also said the company has explored rate mitigation options. He pointed to an announcement in December that the territory would spend $12 million every year for the next four years to offset the rate increase.

"This allows NTPC to propose not a 24.8 per cent increase, but a rate increase of 15 per cent across all classes of customers, minimizing shock," Grant said.

N.W.T. Public Utilities Board chair Gordon Van Tighem said the board will collect written submissions from stakeholders next month. He said a decision on the proposed rate hike is expected before the end of June.

Cost overruns

Dennis Bevington, a former N.W.T. MP and a representative for the Town of Fort Smith, said at the hearing that recent NTPC projects have ended up costing significantly more than budgeted — and that those cost overruns shouldn't be passed on to customers.

One example he mentioned was the Taltson overhaul, which was originally estimated to cost $70 million. The project is now expected to cost a total of $115 million.

"The analysis of what it's going to cost to do the project was completely out of line," Bevington said.

Bevington also noted a five-megawatt diesel generator in Yellowknife that ended up costing double its original estimate. 

Russ Bell attended the meeting representing the hydro communities of Yellowknife and Hay River, and he holds the same opinion as Bevington.

Bell said NTPC had "a lack of rigorous alternative analysis [and] a lack of detailed cost estimates."

NTPC, meanwhile, says wildfires were a major factor in the increased costs.

"The delay from the wildfire then led to an unanticipated issue never before encountered by any other hydro utility that NTPC or its consultants have identified," Grant said.

Rates should be tied to actual costs

Another official says the proposed 15 per cent electricity rate hike could unfairly shift costs onto hydro communities.

Jack VanCamp spoke on behalf of Fort Smith during the proceedings. He says a blanket hike ignores earlier board decisions that tied rates to actual costs in each zone.

"That means we're going to be transferring costs from the thermal zone to the hydro zones. This is another perverse use of the system where the hydro communities are being asked to subsidize the diesel communities," VanCamp said.

Hydro-powered towns like Fort Smith have traditionally paid less due to lower generation costs. The Taltson hydro facility also powers Fort Resolution, Hay River, Enterprise and Kátł'odeeche First Nation.

Dustin Madsen, who represented the Town of Inuvik at the hearing, questioned how NTPC sets fuel prices that help determine electricity rates, and criticized NTPC for using just one month — August 2024 — to forecast fuel costs.

"Using an average of three years, 36 months, or even 24 months, would build in a longer-term average ... I am concerned about using August 2024 as the point-in-time estimate for 2025 and 2026, given how the costs have trended, and I think that would be ill-advised," Madsen said.

Inuvik runs on diesel and natural gas, not hydro, meaning fuel forecasts have a big impact. 

In response, NTPC said the August data was current when forecasts were made and they're open to revisions if directed by the board.