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SOMBA K'E/YELLOWKNIFE - Next month's increase in power rates will bring more revenue to the city in the form of franchise fees from Northland Utilities, as long as power usage remains relatively stable.

The utility pays franchise fees for city infrastructures that allow the company to provide power to residents.

Jeff Barbutza, manager of Northland Utilities, said the franchise fees paid to the city are based on a percentage of the company's sales.

"When you say that if the sales go up because the wholesale power rate goes up, then yes, essentially it will go up accordingly," said Barbutza.

The NWT Power Corporation's recent general rate application was approved by the Public Utilities Board, raising the average power bill issued by Northland Utilities to city residents by 10 per cent.

The temporary 17-month rate riders that account for the raise in rates will flow through the utility company beginning with December bills.

Barbutza pointed out, however, that an increase in rates would not necessarily mean franchise fee payments will increase, because the fees are determined by sales from usage.

In 2004, Northland Utilities paid out $645,000 - or 2.44 per cent of its revenues that year - in franchise fees to the City of Yellowknife.

Barbutza said franchise fee rates paid to the city break down to four per cent for the first $5.25 million of the company's gross revenue, three per cent of the next $3.5 million, and two per cent of the gross revenue in excess of $8.75 million.

Carl Bird, the city's director of corporate services, said the city collected $720,513 in franchise fees from the utility in 2007. This year, it is projecting $727,000 and $781,000 in 2009.

The revenues are put into the city's general fund, he said. Meanwhile, the city is subject to power rate increases.

"Our electricity bills are going to go up," he said.

The city is forecasting $1.56 million in power costs this year and $1.68 million in 2009 taking into account both traffic and street light usage, as well as power for all other city buildings.

Bird said there is no linkage between increased revenue collected by franchise fees and increased power costs, meaning one would not directly pay for the other.

Northland Utilities is currently re-filing its general rate application, which will mean further power rate increases in the near future.

"There will be an increase, but it's too early to determine what that is," said Barbutza.

He was also not able to provide a figure on what the increase in franchise fees would be, as it is determined on the percentage of utility sales.