Check against delivery

Mr. Speaker, when the Public Utility Board, or PUB, accepted the terms of sale of the Hay River utility franchise to the Northwest Territories Power Corporation, or NTPC, earlier this year, it set a deadline of October 30 for the filing of a General Rate Application, or GRA, by all NWT utility companies. On Wednesday afternoon, NTPC filed a GRA Over the next several months, the PUB will review the application to ultimately determine whether the costs that NTPC has presented are reasonable and reflect the true cost to deliver electricity.

The GRA process is managed by the PUB. It is designed to be inclusive and has opportunities for Indigenous and community governments and members of the public to participate in several different ways, both formally and informally. The PUB will provide information about how to participate as the process advances.

Regulated utilities have limited flexibility in how rates are set. Rates are set by the PUB to ensure that rates align with policy direction and, in general, follow the principle of cost causation, meaning that whoever is benefiting from electricity generation and infrastructure pays for the cost of that generation and the cost of the associated transmission and distribution infrastructure.

The structure of the electricity systems across the NWT is very challenging. The NWT electrical system is primarily an isolated, non-integrated system meaning it is not connected to the North American grid. Since we are not connected to the continental grid, unlike other jurisdictions that can share electricity, in the NWT we are on our own.  

NTPC operates two separate hydroelectric grids that are also not connected. Since the two hydro systems are not connected, they cannot back each other up and consequently, the hydro systems rely on diesel generation for backup.

Diesel generation on the hydro systems is typically only required under two conditions. The first is when there is low water on the Snare system and the second is when the Taltson hydro unit is shut down for maintenance. Both conditions are occurring today, and this has a material impact on costs and greenhouse gas emissions.

NTPC also operates 21 separate community grids primarily powered by diesel generators. However, over the last few years NTPC has reduced diesel generation by increasing natural gas generation in Inuvik and increased use of renewables from utility-owned infrastructure but also power purchase agreements with Indigenous governments.

As more renewables are added to the system, NTPC needs to be cautious about the impact on rates and system stability. When renewables are added to a community that already has sufficient generation and is experiencing little or no growth, there can be upward pressure of rates.  Those additional assets must maintained, adding additional costs to the system.  Finding the balance between a sustainable, reliable, and affordable energy system is a challenge, but it is a challenge we are embracing. 

As we all know, the NWT is experiencing little to no economic growth in major industrial sectors such as mineral resource production and this has impacts on NTPC.  While other jurisdictions across North America that are connected to the continental grid are worried about their ability to keep pace with growing demand, over the last decade in the NWT, electricity sales have declined or remained flat just about every year. Without increased sales from industrial activity, there will be pressure on rates just to keep up with general inflation.

Recognizing all these challenges, the Government of the Northwest Territories has made significant investments in the electricity sector over the past two years to help keep rates low. In my May 2024 budget address, I announced that the GNWT would make a $30 million contribution to help offset the impact of increased generation costs in the North Slave due to extreme low water in the Snare Hydro system, which came on top of a $15.2 million contribution by the previous government in 2023. The contributions acknowledged that low water was a matter beyond the control of the Northwest Territories Power Corporation and the resulting dependence on diesel could have an unacceptable impact on electricity rates. The price of diesel has increased by approximately 40% since electricity rates were last set and the increase has impacted every community as diesel provides either primary or backup power.

This government has also made an additional $38 million contribution to the Inuvik Wind Project to reflect the higher-than-expected cost of the project and to ensure those costs do not lead to an increase in rates.

Despite these investments, NTPC is still facing many of the same cost pressures as other Canadian utilities. Many of these utilities have applied for rate increases because of similar inflationary cost pressures to what we are seeing in the NWT.

The GRA is seeking a rate increase that is the same across all three rate zones: the Snare Zone, the Taltson Zone, and the Thermal Zone. While this is not the normal approach, NTPC has laid out its rationale in the application. It will be up to the PUB to determine whether the approach is reasonable.

NTPC’s GRA seeks a rate increase equivalent to 17.7% over 2022-2023 rates. This is in addition to a 7.1% interim rate increase that was already approved by the PUB in July 2024, resulting in an overall increase of 24.8%. NTPC is forecasting the rate increases will be phased in over the next year, but the timing and final rate increase will ultimately be determined by the PUB after the public rate review process is concluded.

There are four primary categories driving the need for rate increases:

1. Extraordinary Events, such as extreme low water in the Snare River system;
2. Fuel Prices;
3. Large Capital Projects, such as the Taltson Overhaul; and,
4. Normal Operations, which includes inflationary pressures while electricity sales remain flat.

NTPC 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 and in the coming years, to avoid risks associated with catastrophic failure. While progress has been made in upgrading the required electricity infrastructure, there is still work to be done and costs to be incurred.

Mr. Speaker, the GNWT will continue to help offset higher residential electricity rates across the NWT through the Territorial Power Support Program. 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.

NTPC will continue to work with the GNWT and the private sector to increase its industrial 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.

Thank you, Mr. Speaker.