December 6, 2010 - The recent Public Utilities Board (PUB) decision to re-balance the Northwest Territories Power Corporation electricity rates and implement other changes to the electricity system reflects the findings and recommendations of the Government of the Northwest Territories’ (GNWT) Electricity Review.

“These changes to the NWT electricity system reflect the essential nature of electricity services in all NWT communities,” says Industry, Tourism and Investment Minister Bob McLeod, who is also chair of the Ministerial Energy Coordinating Committee. “The NWT requires a territorial electricity system that provides all communities with a comparable level of access to electricity services, and therefore, a comparable opportunity to succeed.”

Among the changes that will be made as a result of the PUB’s decision is reducing the number of electricity rate zones in the territory from 33 to seven. Establishing rate zones and direct GNWT support for the electricity system has resulted in substantially lower electricity rates in NWT communities served by thermal generation. The changes came into effect on December 1, 2010.

Minister McLeod, who is also the Minister Responsible for the PUB, recognized the valuable contribution the board has made in this process by issuing its decision. “The PUB did an excellent job in not only implementing GNWT policy direction, but it also made a number of recommendations aimed at improving the Rate Policy Guidelines the GNWT issued to the board in July 2010,” says Minister McLeod. “The public process and the added value provided by the PUB highlight the importance of maintaining a public board to regulate the NWT electricity system.”

In May 2010, the GNWT released a comprehensive review of the NWT electricity system titled: Efficient, Affordable and Equitable: Creating a Brighter Future for the Northwest Territories Electricity System. This review included 19 action items designed to make the electricity system more efficient and power more affordable throughout the territory. Over the long term, the system-wide improvements the GNWT is making will help stabilize costs for all NWT communities and protect against unexpected price increases.

Through actions such as its response to the Electricity Review, the GNWT is taking action to reduce the cost of living in the territory, which is one of five strategic initiatives of the 16th Legislative Assembly.

A full version of the GNWT’s Electricity Review can be found at www.nwtenergy.ca and a copy of the PUB decision can be found at www.nwtpublicutilitiesboard.ca.

For more information, contact:

Darren Campbell
Manager, Public Affairs and Communications
Industry, Tourism and Investment
Tel: (867) 920-8696

Backgrounder:

In May 2010, in response to its extensive review of Electricity Regulation, Rates and Subsidy Programs in the Northwest Territories, the Government of the Northwest Territories (GNWT) released: Efficient, Affordable and Equitable: Creating a Brighter Future for the Northwest Territories’ Electricity System.

This document identified 19 actions that the GNWT would take to address the future of electricity in the NWT. Some of those actions included:

• Establishing seven electricity rate zones down from 33 rate zones.
• Reducing the return earned by Northwest Territories Power Corporation (NTPC) in thermal communities.
• Consolidating electricity rate riders to establish territory-wide fuel and low water riders.
• Maintaining electricity rates for government customers to facilitate the transition to a new rate structure.
• Developing an approach to the Northland Utility (NUL) companies and electricity rates in consultation with NUL.
• Paying down rate stabilization funds, as transitional support, to ensure there are no negative impacts to electricity rates as a result of the new system.
• Forgoing the annual NTPC dividend for 2010/11 and 2011/12, as transitional support, to ensure electricity base rates remain unchanged until at least 2012/13.
• Directing the Public Utilities Board (PUB) to work with the GNWT and electricity utilities to simplify electricity bills to enhance public understanding of their total costs and usage.
• Increasing the Territorial Power Subsidy Program residential usage thresholds to 1,000 kWh per month between September and March, and decreasing the thresholds to 600 kWh per month between April and August.
• Developing a proposal to update the Public Utilities Act that will clarify the authority of the GNWT to issue policy direction to the PUB and provide for standardized reporting requirements of the PUB.

In July 2010, consistent with the Electricity Review, the GNWT issued Electricity Rate Policy Guidelines to the PUB, outlining a new approach to the establishment of electricity rates and initiating the Electricity Review implementation process.

The PUB accepted the guidelines as directives from the GNWT and directed NTPC to file an application to implement the guidelines.

In November, the PUB formally approved revised electricity rates on an interim basis for implementation on December 1, 2010.

In approving electricity rates on an interim basis for December 1, 2010, the PUB directed NTPC to submit a more detailed rate filing in January 2011, with the goal of finalizing the new electricity rates effective April 1, 2011.

Equalization of Northland Utilities (NUL) Thermal Community Electricity Rates

The Electricity Review is premised on a territory-wide electricity system that provides all communities with a comparable opportunity to succeed, in recognition of the essential nature of electricity services across the NWT.

A major component to complete the implementation process of the Electricity Review is to equalize electricity rates in NUL thermal communities with electricity rates in NTPC thermal communities. NUL thermal communities are Fort Providence, Trout Lake, Wekweètì and Kakisa. A solution for these communities is being developed collaboratively between the GNWT and NUL and is expected to be in place by January 1, 2011. These changes will be retroactive to December 1, 2010, ensuring equitable treatment for NUL thermal communities.

Public Utilities Board Process to Finalize Rates by April 1, 2011

The process to finalize the new electricity rates by April 1, 2011 will reflect revised GNWT Rate Policy Guidelines. These guidelines will be developed in consultation with the PUB and all Members of the Legislative Assembly. As requested by the GNWT, the PUB has made recommendations to the GNWT regarding proposed changes to the Electricity Rate Policy Guidelines, including:

• Government electricity rate classes should have flat rates across the zones.
• Distribution related head office and general operational costs should not be included in the wholesale rates charged to NUL communities (i.e. Yellowknife, Hay River).
• Ensuring revenue-to-cost ratios for each of the electricity rate zones are as equal as possible.

Once the PUB recommendations are addressed and reflected in the revised GNWT Rate Policy Guidelines, the NTPC will file a revised rate balancing application with the PUB as required.