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DEH CHO
Customers of the Northwest Territories Power Corporation could pay 29 per cent more for power by 2015 if a proposed rate increase is approved.

A Northwest Territories Power Corporation diesel power plant operating in Fort Simpson. - NNSL file photo

The corporation has submitted a General Rate Application to the NWT Public Utilities Board. In the application, the corporation has asked for increases of seven per cent effective April 1, 2012, 2013 and 2014 and a five per cent increase as of April 1, 2015. The compound percentage would mean a 29 per cent increase over four years.

The proposed rates reflect increases in the cost of generating and distributing electricity that have occurred in the five years since the last application, Brendan Bell, the chairman of the corporation, stated in a press release. The proposed rates also take inflation over the next four years into account.

The territorial government is contributing $33.8 million over three years to allow the rate increase to be spread out over four years. Rates will be sufficient in 2015-16 to cover the corporation's revenues so GNWT contributions will no longer be needed, Bell said.

Since Dec. 1, 2010, when the restructuring of the NWT electricity system came into effect, residential customers in the 20 communities in the corporation's thermal zone have been paying approximately 49 cents per kilowatt hour (kWh) while commercial customers have been paying 42 cents/kWh after surpassing the subsidized amount of electricity.

The Deh Cho communities included in the zone are Fort Simpson, Wrigley, Jean Marie River, Fort Liard and Nahanni Butte.

If the rate increases are approved by 2015, residential customers will be paying 61.13 cents/kWh while commercial customers will face costs of 51.86 cents/kWh.

Chief Fred Tesou of the Nahanni Butte Dene Band said the increases will be difficult for members of his community.

"I think they won't like it," he said.

Prior to the 2010 restructuring, people in Nahanni Butte had the second highest electricity rates in the territory at 166.40 cents/kWh for residential and 214.65 for commercial. With the proposed increase the rates are increasing back towards that level, said Tesou.

"I'm pretty sure a lot of people will be disappointed," he said.

Tesou said the increase would also be financially difficult for the band, which pays for the electricity for the band office, fire hall, water plant, radio building and three garages in the community. The radio building alone costs approximately $1,800 a month to power, he said.

Sean Whelly, mayor of Fort Simpson, questioned the reasons for the increase.

"Twenty-nine percent over four years seems exorbitant," he said.

Whelly said it doesn't seem plausible that the corporation can be forecasting such a large increase unless the territorial government is already covering some of the difference between revenue and expenditures and is pushing the corporation to make consumers pay for the shortfall. If this is the effect of having two years of lower electricity rates then people have been duped, Whelly said.

"We thought we had a chance to get ahead," he said.

Electricity is one of the village's largest expenses. Whelly added because the territorial government hasn't increased funding to the village it may become necessary for the village to pass the additional costs on to residents through higher taxes.

The rate increase will ultimately be born by consumers while they pay for their own electricity and as businesses pass on the cost of the increase to their customers. It will be the hardest on the people who can least afford it, many of whom live in small communities, said Whelly.

Michael Miltenberger, the minister responsible for the corporation, said the five-year pause between the rate reviews is part of the problem.

"If we adjusted rates each year it wouldn't be that much of a shock," he said. "After a five-year pause we have to make up all that ground we've lost. Right now the costs are far outstripping the revenues."

Miltenberger said the corporation has cut its costs "down to the dollar" and is looking for alternative sources of energy to improve future costs.

– with files from Lyndsay Herman

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