Northland Utilities to N.W.T. MLAs: Please save us
Private utility makes urgent plea to regular MLAs to stave off impending loss of Hay River franchise
Northland Utilities is making a desperate last-ditch attempt to reverse its declining fortunes in Hay River — and making some bold claims about the Northwest Territories government.
In 2014, the Town of Hay River put the town's power distribution franchise up for competitive bidding after decades of service from Northland. The town was unhappy with how much residents were paying for power.
Northland, which is majority-owned by ATCO, a private company, lost its contract to the Northwest Territories Power Corporation, which is owned and run by the N.W.T. government.
- Hay River won't renew Northland Utilities power distribution agreement
- Lights out for N.W.T. Power Corp.'s board of directors
While Northland has for months painted the government's decision to bid on the contract as an encroachment into private enterprise and as a move to expropriate Northland's energy distribution assets in Hay River, the company's accusations took on an extra charge last week.
On Thursday Doug Tenney, vice-president of Northern development for Northland, met with regular MLAs to urge them to pressure cabinet members to put a stop to the process of buying up Northland's approximately $12-million assets in Hay River, at least until a third party can complete a review of a potential territory-wide partnership between the power corporation and Northland.
The proposition comes as the power corporation prepares to take over the Hay River franchise in November — unless negotiations for purchasing the assets drag on, in which case Northland will remain responsible for keeping the lights on in Hay River.
Tenney says Northland has been trying to talk to the N.W.T. government for at least a decade about combining the two power companies into one entity, a move Tenney says would save up to $3.5 million in operating costs.
"We can't quite understand why we haven't been able to get the government to have a conversation like that," said Tenney.
On Friday, however, Louis Sebert, the minister in charge of the power corporation, refuted that narrative.
"It's a rather radical proposition being put to us late in the day," he said. "We haven't had a chance to consider it at all."
Cost of Northland buyout: $180 million
Tenney — making little distinction between the power corporation and the government — said that if the government insists on moving forward in Hay River, then it should just buy out all of Northland's business interests in the entire territory.
Those interests, according to Tenney, are valued at around $180 million. Besides Hay River, Northland also delivers electricity to homes in several other communities including Yellowknife and Fort Providence.
Sebert chuckled at the notion of the government making that purchase, saying, "This is the first we've heard of this as a possibility. We're not considering it at this time."
Tenney says a number of factors have led Northland to suggest that desperate solution, which even he decries, saying it would be an unjustifiable expense at a time when the government's finances are "strained."
He says the government's recent move to replace the power corporation's board of directors with a stable of senior government bureaucrats is a step toward getting rid of the N.W.T. Public Utilities Board, the body that approves changes to electricity rates.
Tenney adds the government has in the past told the board to overcharge Northland for wholesale power in Hay River and Yellowknife (in turn forcing Northland to overcharge its customers in those communities) so that the power corporation can undercharge rate payers in smaller communities.
Tenney also suggested that if the government is willing to bid on the Hay River contract, it may also do so if the City of Yellowknife decides to put that city's power franchise up for competitive bidding in a few years.
No plans to dissolve regulator, says minister
In other words, the cards are being increasingly stacked against Northland, says Tenney.
"It's pretty tough if you're not wanted in a community by the government and the government holds all the cards," he said.
"They [actually, Premier Bob McLeod] appoint the Public Utilities Board, they set all the rules. If they don't want you here, it's going to be rather difficult to be in business."
"That's simply not true," said Sebert of Tenney's claim about the board's impending demise.
"There are no plans to dissolve it."
In fact, after making the accusation on paper and in front of regular MLAs, Tenney told reporters he had nothing to back up his claim.
"I don't have anything that I can point to or any name that I would give you that said, 'This is who told us that's what's happening,'" he said.
Playing the First Nation card?
Tenney's other overarching argument against the power corporation's bid on the Hay River contract is that, by winning the contract, the power corporation is taking business away from First Nations.
Denendeh Investments, a partnership of 27 Dene First Nations, owns 14 per cent of Northland Utilities.
Three months after the Town of Hay River announced it would not renew Northland's Hay River contract, Northland announced a plan to allow Denendeh to increase its ownership stake to 50 per cent. It even tweaked the masthead on its website to say "An ATCO and Denendeh Company."
But that deal hasn't even been finalized.
To help with his charm offensive with MLAs last week, Tenney had by his side Darrell Beaulieu, the president of Denendeh Investments.
Beaulieu said Denendeh's stake in Northland has provided a stable source of revenue for the group.
"We need somebody to care," Beaulieu told MLAs, with Ed Sangris and Ernest Betsina, the chiefs of Dettah and Ndilo, watching supportively behind him.
"We have to keep the GNWT accountable for the potential dangerous path they're on," added Beaulieu.
Asked later if his argument about taking business away from First Nations is disingenuous given that the ownership deal has yet to be finalized more than a year after it was announced, Tenney replied, "No, I don't think that's fair at all.
"I think even at a 14-per-cent ownership stake they have a significant asset there that's generated significant income for them over time. It allows them to participate in other things."
Respect the process, says MLA
Some MLAs appeared unconvinced with Northland's pitch.
Kieron Testart, the MLA representing Yellowknife's Kam Lake constituency, said that as far as the already-awarded Hay River contract is concerned, what's done is done and Northland should move on.
"We have to be respectful of the Town of Hay River," he said. "We have to be respectful of all our partner governments."
"I'm not saying cancel it," Tenney said of the contract. "Let's have a real conversation about [a partnership]."
After the Town of Hay River awarded the contract to the power corporation, the two groups released a joint statement saying they believe the power corporation can offer Hay River power rates that are 20 per cent cheaper than what Northland is offering.
On Friday, Sebert conceded that that estimate is "somewhat of a moving target, but we're optimistic that once this process is concluded, rate payers in Hay River will see significantly lower power rates."
Tenney says ATCO has agreed to find jobs for any Northland employees in Hay River who lose their jobs once the franchise is transferred to the power corporation, although those jobs are unlikely to be in Hay River.
But he also pointed to reports that the territorial government may absorb those people.
"Which obviously begs the question," asked Tenney. "If they want to hire all of our staff, where are these magical savings going to come from?"