More than half of Inuvik converted to gas
Richard Gleeson
Northern News Services
Inuvik (Mar 05/01) - Ikhil natural gas is less expensive than other fuels, but like all fuel in the North, it is not cheap.
During the first year it was supplied to homes and businesses, Ikhil gas sold for an average of 25 per cent less than fuel oil and 32 per cent less than propane, reports Inuvik Gas Ltd. general manager Lyle Neis.
| Volume discount The NWT Power Corporation is paying five per cent less than residential customers for its Ikhil gas. Under its agreement with the Inuvialuit Petroleum Corporation, supplier of the gas, the price is set every Aug. 1 at 20 per cent below the price of diesel at the time. NTPC currently pays $8.24 per gigajoule for gas, $3.71 less than residents. Diesel fuel and heating oil (which residential gas rates are based on) are both currently 58.7 cents per litre before taxes. Director of western operations Brian Willows said the deal between NTPC and IPC is what made piping gas from the well to town feasible -- "If we hadn't signed on, there wouldn't be gas here," Willows said. The power plant converted to gas engines in September 1999. Fuel is the single biggest operating expense of the corporation's Inuvik facility, said regional finance manager Kell Sewell.
Sewell said it will take the corporation about 15 years to recover the $4.9 million cost of converting to gas.
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Inuvik gas prices are not tied to those charged in the south, Neis said, because all the town, along with the power corporation, are the only consumers of gas from the Ikhil well.
Neis would not say how soon Inuvik Gas Ltd. will recover the estimated $3.5 million cost of building the town's gas distribution system.
The prospect of saving $500-$2,000 per year, along with a conversion incentive program offered by Inuvik Gas and the territorial government, has turned Inuvik into a natural gas town. In December, Inuvik Gas achieved 50 per cent market penetration, with 360 residential and 70 business customers.
Benefits realized
Mayor Peter Clarkson said gas has brought a host of benefits, including lower energy prices, more cost efficient heating (with new boilers or furnaces installed for conversion to gas) and a reduced reliance on diesel shipped up from the south.
The conversion of the town power plant to natural gas also brings savings to consumers in the form of a lower fuel rider costs on electricity bills, Clarkson added. The NWT Power Corporation charges diesel communities a higher fuel rider charge than those on hydro or other forms of energy.
Clarkson's household converted to gas almost as soon as it became available, about 18 months ago.
Still, the price of $11.35 per gigajoule Inuvik customers paid during most of 2000 was above rates paid by most gas consumers in other parts of Canada, though the Ikhil well is just 50 kilometres from town.
Prices charged by Alta Gas North of Alberta ranged from $4-$7 per gigajoule through the year. Unlike Inuvik Gas Ltd. Alta Gas North also charges a flat rate of $11.87 monthly.
Though the price of gas here increased to $11.95 per gigajoule last October, the spread between North and south has shrunk as gas prices continued to climb earlier this year.
In January, Alta Gas North was charging its customers $9.79 per gigajoule.
The franchise agreement allows the town to charge an annual franchise fee or property taxes. Any franchise fee would be passed on to consumers.
The town has yet to exercise the option and so far has charged the company property taxes.
"It wouldn't have benefited the residents of Inuvik, though it would be revenue for the town," said Clarkson.
