SOMBA K'E/YELLOWKNIFER - Lew Voytilla, chair of the Northwest Territories Power Corporation (NTPC), offers a blunt assessment of a mining company's chances of getting discounted hydro power rates for a proposed processing plant at Pine Point.

Lew Voytilla: the chair of the Northwest Territories Power Corporation says the cost of power in Saskatchewan is not relevant in the NWT. - NNSL file photo

"At the end of the day, they aren't going to get cheaper power than everybody else in that regulated system," Voytilla said, referring to the area in the South Slave served by the Taltson River hydroelectric system. "That's the reality."

In January, Avalon Rare Minerals Inc. wrote Premier Floyd Roland requesting power rates for Taltson power that would be competitive with rates in Saskatchewan.

"What Saskatchewan sells for is really not relevant to us simply because we have to recover our cost to service," Voytilla said.

Avalon Rare Metals Inc. is considering building a processing plant at Pine Point for ore from its Nechalacho rare earth metals deposit at Thor Lake, about 100 km southeast of Yellowknife.

Voytilla said if Avalon established a plant at Pine Point, the corporation would have a legislative duty to serve it.

"If we have the generation available, we'll just put them on and start servicing them. If we don't have the generation, we have to go and acquire that generation, either diesel or hydro, and build that into our system," he said.

Access to power is on a first-come, first-served basis, he said. "The simple answer for Avalon is we can't reserve it and sell it to you for the price of power in Saskatchewan. If you were the first customer to come, we would sell it to you and we would sell it to you at whatever regulated price that may be set. That's the reality of the legislation and the reality of a regulated utility."

If Avalon were to set up a processing plant at Pine Point, the Public Utilities Board (PUB) would likely establish a blended rate for power, Voytilla said, adding a blended rate would be well above what the company would pay for power in Saskatchewan.

"We don't have an ability to give a preferential rate to Avalon," he said, pointing out such an arrangement is prohibited by the Public Utilities Act.

Voytilla said, if new diesel or hydro generation is added to service an Avalon plant, a blended rate would likely mean everyone's rates would rise in the South Slave to help pay for the extra generation and transmission.

The NTPC has been trying to market excess Taltson power for 20 years, ever since the Pine Point mine closed.

The Taltson system has an 18-megawatt capacity, but five to six megawatts has not been used since Pine Point closed.

Currently Deze Energy Corporation is working on a proposal to expand Taltson and sell the energy, including the five to six megawatts of unused power, to the diamond mines.

"If they're willing to sign a contract to buy it, yes. Why wouldn't we?" Voytilla said. "We've got a customer who wants that power. We don't have a customer right now. We haven't had one for 20 years for that power."

On the other hand, he said Avalon Rare Minerals is still a potential mine and may not be ready to sign a power supply contract for four or five years.

Voytilla said, in general, the quickest and cheapest way of meeting new demands for power is diesel generation, adding it would take 24 months to bring new diesel generation on stream, compared to about a decade for hydro.

The NTPC chair also said there might be other potential industrial users in the South Slave, such as a pipe coating plant in Hay River or another new mine.