Report urges fewer constraints on Power Corporation
Richard Gleeson
Northern News Services
Yellowknife (Dec 06/00) - A report on power generation and distribution in the NWT recommends the government loosen its hold on the NWT Power Corporation but rejected privatizing the utility.
Division and operating restrictions such as the requirement to use profits to subsidize power in remote communities make the corporation unattractive to prospective buyers, the report concluded.
"Shareholders would be lucky if they received anything in excess of $50 million," Jim Robertson, one of the authors of the report, said at a press conference Monday to announce the release of the review. Robertson estimated the replacement value of the corporation's NWT assets is $550 million.
The Territorial Power Support Program will consume 100 per cent of NWTPC's net profits this year, the report states. Last year 59 per cent of profits went into the subsidy program.
With the April 1 2001 separation of the NWT and Nunavut sides of the corporation, profits are expected to drop and costs increase. It is anticipated that by that time the corporation's debt will be $146 million, $40 million of it owed by the newly-created Nunavut Power Corporation.
NWTPC is a territorial reincarnation of the federally-owned Northern Canada Power Commission, which the government purchased for $50 million in 1988.
Instead of privatization, the report recommends NWTPC be operated as an arms-length crown corporation with less restrictive regulatory requirements.
Under the scenario, the government would retain ownership, but the corporation would not be hindered by the provisions of the NWT Power Corporation Act, Public Service Act or Financial Administration Act. The changes would allow the corporation increased financial flexibility, including the ability to invest to hedge risk in power prices if it starts selling power for export. The corporation would no longer be required to funnel up to 100 per cent of its profits into the power subsidy program.
Rate review hearings the corporation goes through each December cost an average of $1.2 million or about two per cent of every power bill, the report noted. Under the recommended arrangement, the Public Utilities Board would be eliminated, a simplified formula introduced to regulate rate setting, and much of the regulatory control of the corporation fall to cabinet.
