Bob McLeod: GNWT Support for Cost Associated with Extreme Low Water Conditions in the North Slave Electricity System

2 septembre 2015
Déclarations et discours de ministres

Thank you to everyone for attending today’s press conference.

The high cost of energy continues to be one of the most significant challenges faced by the people of the Northwest Territories and our government. Our government is committed to addressing that cost where and how it can, including taking steps to ensure residents are shielded from increases due to factors outside our control, like weather conditions. Around the world, governments are dealing with costs brought on by climate change, and our territory is not alone in facing situations like this.

As you probably know, water levels in the Snare Hydro System continue to be at record lows. This has required the Northwest Territories Power Corporation to use diesel generation to supplement energy production in the North Slave, resulting in increased costs.

Those costs have to be paid, and we really only have two options: either the Government of the Northwest Territories makes up the difference, or power rates for all NWT residents  increase. While our financial resources are already strained, we do not believe that passing on those additional costs to our residents makes sense.Today, we are here to announce that the Government of the Northwest Territories intends to fund up to $29 million in costs associated with the extreme low water conditions being experienced in the North Slave electricity system.

This funding support will include up to $22 million for the remainder of this fiscal year and an additional $7 million in 2016-17, to cover diesel costs to July 2016.  

I’ll note that these figures are based on conservative cost estimates. If the low fuel prices we are seeing today continue for the next year, the total cost may be $23 million as opposed to $29 million. The anticipated diesel usage is in the range of 29 million litres and we have based our projections upon $1 per litre for bulk diesel fuel.

We were aware that severe droughts usually take more than one year to recover, but we did not know the extent to which this drought has persisted. Now that we have the data, we will be including the cost for 2015-16 in a supplementary appropriation, to be considered by the Legislative Assembly later this month.

I have said before that continuing to subsidize power costs this way is not sustainable for the long term, especially given the fact that our revenue growth has not kept pace with our expenditures. While we have to take this step to shield all NWT ratepayers at this time, we continue to look for longer term solutions. Those solutions include efforts to reduce Northerners’ energy consumption, as well as continuing to look at options for generating and distributing power that will help mitigate against future events like this. During the Energy Charrette last November, the situation in the North Slave electricity system was widely discussed.

In response to the Charrette recommendations, the GNWT re-profiled internal funding to be directed towards a North Slave electricity system resiliency study. Improving resiliency means improving the ability of the electricity system to withstand events such as droughts, increasing system stability and reliability.

This study will consider a range of longer term options that can be deployed to improve the North Slave system, will look at our water monitoring data and procedures, and examine ways we can avoid this type of potential ‘rate shock’ in the future.

 There are some additional details on the actions we are pursuing as well as some of the responses implemented by the Northwest Territories Power Corporation. I’ll turn to Minister Miltenberger to provide more details.