Diane Archie: General Rate Application

Check against delivery

Mr. Speaker, the past two years have been a difficult time for us all as we endured the challenges associated with a world-wide pandemic. We now face a period of economic uncertainty, due in part to the war in Ukraine and its global implications on the availability of, and cost of, goods and services.

Mr. Speaker, this government is aware that residents of the Northwest Territories are concerned about the cost of living, including the cost of electricity. We recognize that inflation is putting pressure on household budgets and rising costs make living in the North ever more expensive.

Electricity rates across the territory are set by the Public Utilities Board, an independent, quasi-judicial body. Electricity rates are influenced by a number of factors, including but not limited to revenues from sales, fluctuating fuel prices, inflation as well as fixed costs borne by utilities to operate and maintain their assets. While our government is working hard to protect ratepayers from costs associated with necessary investments in Northwest Territories Power Corporation’s aging infrastructure during a period of unpredictable costs, there remains a need to revise rates across the territory.

To this end, Mr. Speaker, the Northwest Territories Power Corporation filed a General Rate Application, or GRA, with the NWT Public Utilities Board yesterday afternoon, seeking a change to electricity rates in the communities the Power Corporation serves.

Unfortunately, despite significant federal and territorial government investments, current rates are not producing sufficient revenue to cover the cost of producing and delivering electricity to customers.  Northwest Territories Power Corporation requires an overall revenue increase of approximately seven percent to address this situation, which will be phased in over two years. This is the first increase to base rates the Power Corporation has proposed since 2019.

Northwest Territories Power Corporation has worked very hard to keep rates as low as possible while providing reliable service and investing in new and refurbished assets such as hydro units, local power plants, transmission lines and power poles. Many of its assets are beyond their serviceable life and require investment now, to avoid risks associated with catastrophic failure. We simply cannot risk waiting any longer.

Fortunately, in collaboration with the Department of Infrastructure, the Power Corporation has been able to secure federal funding from the Investing in Canada Infrastructure Program towards several of its capital projects. To date, a total of 89.4 million dollars for six projects has been secured, which would otherwise have been fully paid for through rates.  

Mr. Speaker, the GNWT will also continue to help offset higher residential electricity rates across the NWT through the Territorial Power Support Program, or TPSP. This program ensures that all NWT households can, with modest energy saving efforts, pay the same power rate as Yellowknife. The GNWT subsidizes the difference between local rates and Yellowknife rates up to 1000 kilowatt hours in the winter and up to 600 kilowatt hours the rest of the year. This program represents a cost to the GNWT of several million dollars annually.

The rate increases being proposed in most communities are in line with, or below, annual inflation since the last rate increase. The rate increases are also consistent with electricity rate increases in other parts of the country. In fact, after two years, most residential customers will have experienced a bill increase equal to an average 1% per year since 2019, after TPSP is applied.

In the Snare and Thermal Zones, the GRA proposes that rates increase by 2.5% in each of the next two years. A portion of this will be covered by the TPSP. If the Power Corporation’s proposal is accepted by the Public Utility Board, it is estimated that an average residential customer in the Snare and Thermal Zones will see an increase in their monthly bill of approximately 3.5% or $11.50 after two years. 

While the Taltson and Norman Wells rate zones have also not seen a rate increase since 2019, the need to adjust for historical issues and to meet Public Utility Board guidelines that rates in a given zone cover between 90% and 110% of the cost to deliver electricity in that zone has resulted in a higher rate increase proposal. Rates in Norman Wells and the Taltson Zone do not currently meet the 90% threshold and must be increased by 10% in each of the next two years to close the gap between what it costs to deliver power and revenues collected from customers. To reduce the burden on customers, the Power Corporation is asking that proposed rate increases be implemented over the next two years rather than all at once.

The proposed rate increase in Norman Wells will also be offset by the TPSP so the actual impact of the proposed rate increase on the residential customer will be the same $11.50 per month as in Snare and Thermal, or a 3.5% increase over the next two years.

Customers in Northwest Territories Power Corporation communities in the Taltson Zone have had the lowest rates in the NWT for a number of years and do not qualify for the TPSP. Even after the increase proposed in this GRA, rates in Fort Smith and Fort Resolution will remain lower than other communities in the NWT and lower than the TPSP rate.

Mr. Speaker, while I recognize that the timing for these proposed rate increases is less than ideal, Northwest Territories Power Corporation is required to file an application with the Public Utility Board to address its current fiscal realities. Despite significant financial contributions from government to fund necessary work on the Power Corporation’s aging infrastructure, as well as government support programs designed to offset higher rates in communities, there unfortunately remains a need to adjust rates at this time.

Northwest Territories Power Corporation will continue to work with the GNWT and the private sector to increase its customer base, as well as identify operating efficiencies and cost saving opportunities within the Corporation, to help stabilize the cost of electricity moving forward while ensuring our grid remains reliable.

Quyanainni, Mr. Speaker.