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SOMBA K'E/YELLOWKNIFE - The GNWT is estimating the NWT Power Corporation's rate increases will cost it $1.2 million this year in subsidies.

Under the Territorial Power Support Program, the government pays the difference between community residents' rates - typically much higher than Yellowknife rates - and the Yellowknife rate for users' first 700 kilowatt hours on each month's power bill.

The NWT Power Corporation's general rate application was approved late last month and came into effect Nov. 1, tacking a 17-month rate rider onto bills, which raised rates significantly for many outside the capital city.

"We have done some analysis and we are looking at increased costs in the order of $1.2 million," said Margaret Melhorn, deputy minister of the financial management board.

An additional $1.2 million would bring the total paid out for the subsidy to $11.1 million for the 2008/09 fiscal year.

"The current budget doesn't meet the projected requirements so there would have to be a request for additional funding," she said.

Melhorn said the department does not know what the additional costs will be next year.

The increase would most likely be higher, taking into account a full 12 months with the rate riders, which expire in April 2010.

Rates increased by more than 39 cents per kilowatt hour in Nahanni Butte and more than 13 cents per kilowatt hour in Fort Simpson.

Premier Floyd Roland, minister responsible for the power corporation, said in an interview Thursday the amount budgeted for the subsidy is growing, although he did not have a figure on what it would cost.

It has ballooned considerably in the past 12 years.

"The Territorial Power Support Program back in 1995-96 was in the range of about $3.4 million and nowadays it's hovering at about $10 million," he said.

The government budgeted nearly $9.9 million toward the subsidy for the 2008/09 year in June before the rate increases came into effect in November.

Last year, the government spent more than $9.3 million on the subsidy. Inuvik residents received $1.8 million and $848,000 for Fort Simpson residents.

Inuvik's rates increased by 4.59 cents per kilowatt hour and Fort Simpson's by 13.37 cents per kilowatt hour.

The Territorial Power Support Program is paid out by the Financial Management Board Secretariat.