February 15, 2012 - Mr. Speaker, high electricity costs are a fact of life in the North and are a significant component of the cost of living for the people of the Northwest Territories. External factors like global energy prices, our remote location and lack of economies of scale all contribute to high costs in our communities. Some costs of producing and distributing electricity in the NWT can be controlled, however, and the Government of the Northwest Territories remains committed to managing these in order to keep costs for our residents as low as possible.

Last December, I updated Members of the Legislative Assembly on the work the Northwest Territories Power Corporation has been doing to make sure its structure and operations support the Government’s efforts to contain electricity costs, including:

• A flatter corporate structure meant to keep NTPC more effective and efficient in the long run;


• Eliminating nine positions in the organisation, three of which were senior management positions, including the Chief Operating Officer;


• Bringing the bonus pay system into alignment with the GNWT’s bonus system;


• Creating apprenticeships that will give NWT residents the opportunity to be trained in skilled jobs that contribute to life in the North;


• Implementing significant cost reduction initiatives to offset rising inflation and increased diesel costs over the past five years; and


• A strategic plan aimed at excellence in three areas customers look to most: reliable service, price and keeping our commitments.

Other steps the Government of the NWT has taken include new rate zones that spread the costs of generating and distributing electricity across more people, so no community is stuck with unfairly high electricity rates. We also made changes to the Territorial Power Subsidy Program – at some cost to the GNWT – to provide residential customers with more relief from the high costs of electricity while still encouraging them to conserve.

Even with these measures, Mr. Speaker, the GNWT cannot prevent global energy trends and inflation from affecting the costs NTPC must incur to provide service to its customers. Costs continue to rise beyond the Power Corporation’s control and the rates it charges consumers are no longer enough to make up the difference. Very soon, the Power Corporation will have to go forward with a General Rate Application seeking approval for new electricity rates.

A General Rate Application is an important part of the process for regulating public utilities. Through the GRA, the Power Corporation will explain to the Public Utilities Board why it needs to charge new, higher rates. Based on the information presented to it, and input from the public, the Board will make a decision on whether or not new rates are justified. It has been five years since NTPC’s last GRA.

The GNWT is currently undertaking a due diligence review of the Power Corporation’s General Rate Application. We want to make sure we get our homework done and that only those costs that absolutely have to be passed on to the customer are included in the GRA. The review is examining cost pressures on NTPC, opportunities for operational efficiencies, and looking at how costs have risen for other electricity companies in the last five years.

The review will also consider strategies for mitigating rate increases, including the option of financial support from the GNWT to cover some of the shortfall between costs and revenues. Any financial support from the GNWT will have to be considered in terms of its impact on other programs and services in communities. Given the current fiscal situation, it is not likely that we will be able to cover the shortfall entirely, but we are committed to doing what we can to keep electricity rate increases as manageable as possible for our residents.

Mr. Speaker, a final report from the consultants conducting the review is expected by the end of February. NTPC is expected to file its rate application in early March and the first rate adjustments may start as early as this April.

I will be providing regular reports to members of this Assembly on the progress of NTPC’s General Rate Application and the Government’s ongoing efforts to minimize the impact on NWT residents.

Thank you, Mr. Speaker.