by Richard Gleeson
Northern News Services

NNSL (May 09/97) - Northland Utilities is shoring up its defence as the battle for control of power distribution in Yellowknife enters the playoffs.

Fighting a hostile takeover by the city, Northland says an appraisal of its assets conducted last year underestimates its value by $6.8 million.

Shortly after the release of last year's valuation, conducted by California-based consulting firm RMI, Northland announced it would conduct a pole-by-pole audit of its assets.

RMI pegged Northland's assets at $15.7 million. Northland's audit concluded it is worth $22.5 million. And the process Northland used to take stock of its assets was verified by Calgary consultants Demke Management Ltd.

Northland released a comparison of the two studies, noting:

• RMI study based on a three-day field audit whereas Northland's took three weeks

• RMI study omits two-thirds of underground portion of system

• RMI study based on 1995 labor and material costs.

Northland manager Al Brekke said if the city buys the business Yellowknifers will pay more for their power.

"The financing costs alone will add at least $3 million over five years to city residents' utility bills or property taxes," Brekke said in a Tuesday press release.

Northland says if the city contracts NWT Power Corporation to operate the system, additional costs will be $15 million over five years.

That contradicts a preliminary study done by the Power Corp., which is eyeing the takeover as an opportunity to become distributor, as well as supplier, of power in Yellowknife.

The Power Corp. study, assuming a purchase price of $15.7 million, said a takeover by the city would result in cost savings on distribution of between 3.5 and 6.5 per cent.

Part of the savings reduction would come from the layoff of six employees. At Monday's city council meeting, Northland employees voiced their concerns about this part of the Power Corp. plan.

Following the release of the RMI report, council decided to further investigate the takeover of the facility and said it was willing to pay as much as $250,000 to do so.

That, said Mayor Dave Lovell, would cover city legal expenses if the attempted takeover goes to court.