N.W.T. utilities board cuts NTPC salary increase, rejects some costs in rate application decision

The N.W.T.'s public utilities board has denied part of the Northwest Territories Power Corporation's (NTPC) request to increase rates, and directed it to cut planned increases to management salaries and benefits.

Those are part of dozens of directives the board issued Monday in a decision on the power corporation's general rate application. Other requests the board denied or scaled back included costs tied to the delay of upgrades to the Taltson hydro facility and severance costs.

NTPC's application, which was the subject of a lengthy regulatory process and a hearing in April, has fluctuated in how much electricity rates could be raised. Parts of the increase have previously been approved in interim rate decisions. NTPC is currently proposing a 15 per cent increase to electricity rates.

Salaries and performance pay increases cut

NTPC had argued its management salaries were rising less than inflation, but parties that weighed in during the regulatory process pointed to data showing pay for top staff was outpacing both inflation and the wages of non-management employees.

The board directed it to reduce management salaries and benefits by $183,300 this year.

It also directed it to cut $306,000 in planned increases to performance pay for employees.

NTPC argued that performance pay improves key areas like system availability and customer service, but the board found NTPC had not provided enough evidence for how that benefited the public. 

Costly hydro delays

NTPC's overhaul of the Taltson hydro plant, intended to replace diesel generation in the South Slave, has consistently been delayed the past few years due to wildfire evacuations, winter construction complications,and mechanical issues. Powering South Slave hydro communities in the meantime has cost NTPC tens of millions of dollars worth of diesel fuel.

NTPC proposed passing those fuel costs — $36 million worth, which was roughly 10 times what it had originally budgeted for fuel and which totalled about a third of the total $115-million project — on to customers, including costs driven by wildfire delays.

The board denied part of this request.

It pointed out about $30 million of the diesel costs were due to construction delays from the Hay River fire in 2023, and said if those costs were included in electricity rates, those rates may not "reflect the true cost of energy delivery."

It allowed NTPC to recover the costs of fuel that would have been incurred regardless of the fire, which NTPC had originally budgeted to be around $3.5 million.

The board warned that NTPC could lose customers if these costs were a part of rates.

It also denied NTPC's request to add an unexplained $700,000 worth to Taltzon zone supplies and services unless the power corporation could adequately defend doing so.

Utilities board approves costs for hybrid board of directors

In its application, NTPC also included more than $500,000 in new costs related to its shift to a hybrid board of directors that includes independent members. Since 2016, the board has been made up of N.W.T. government officials.

"The addition of independent board members is expected to provide a broader range of perspectives, strengthen board capacity, and improve public representation," NTPC wrote in its application.

Interveners recommended that NTPC provide more evidence of expected and quantifiable benefits of a hybrid board.

The board allowed the costs, under the condition that NTPC develops metrics to evaluate whether the hybrid board improves governance, cost-efficiency, or project management. The board requested those metrics be included and reviewed during NTPC's next general rate application.

NTPC must now submit a revised application reflecting all of the changes directed by the board, which will then determine final rates.