Hay River picks NTPC to distribute power
Northland Utilities vice president says game is far from over
Paul Bickford
Northern News Services
Monday, March 7, 2016
HAY RIVER
Hay River town council voted on March 3 to take the next steps that would see the Northwest Territories Power Corporation (NTPC) acquire the electrical distribution system and franchise agreement in the community.
The town and corporation say once that becomes a reality, customers could expect an overall decrease of about 20 per cent in the cost of electricity. The vote by council was not unanimous - one councillor voted against the motion.
The decision follows a request for proposals in May 2015 for the supply and distribution of electricity within the town.
"It wasn't an easy decision," said Mayor Brad Mapes. "There's also a lot to go forward. It's not going to be just like they can flip the switch. There's a process. It could take six months, it could take up to 18 months."
Mapes said the NTPC proposal was the only one that offered large savings. Long-time holder of the franchise - Northland Utilities (NWT) Ltd. - is not ready to give up the fight after its proposal was not accepted by the town.
"I think the game is far from over. I think there's a lot of time left in it," said Doug Tenney, vice-president for northern development with Northland Utilities.
The council motion authorizes a binding letter of intent with NTPC for a franchise agreement effective after Nov. 30, 2016 - when the current agreement expires - and stipulates NTPC will purchase the facilities from the town at the same cost paid by the town in acquiring the facilities from Northland Utilities, which is part of the ATCO Group of Companies.
"That's simply all that it is is a letter of intent," said Tenney. "It's not really a legally binding document. Otherwise they would have called it an agreement or a contract."
Mapes said payment for the distribution system would be made to Northland Utilities by NTPC indirectly through the town. Tenney said no value has been placed on the distribution system, although he previously put the pricetag of Northland's territory-wide assets at $180 million.
"We're not for sale. We're not looking to be sold. So there is no price," he said. "But there certainly is a clause in the franchise agreement that we have with the Town of Hay River that at the end of the term they have the legal ability to buy our assets ... If we can't agree on a price, we appoint a third-party arbitrator and that third-party arbitrator tries to determine what is a fair price."
Tenney said the process of determining a price won't begin until the existing franchise expires on Nov. 30.
"I don't know how long the process will take but, as I see it, it will certainly take past Nov. 30," he said. "The franchise agreement does contemplate that kind of a situation happening. We would carry on for whatever period of time it took the third-party arbitrator to come up with the price."
The town received proposals from three interested parties in response to its request for proposals.
"Certainly, I'm pleased that we're able to offer electrical services to the town and give some lower rates for the residents and businesses of Hay River," said Emanuel DaRosa, president and CEO of NTPC.
DaRosa also assured all 11 current employees of Northland Utilities in Hay River that NTPC intends to offer them positions as part of the transition. Some Northland employees were among the people attending the council meeting on March 3. Rates are made up of three components - wholesale, distribution and back-up generation. The rate for wholesale power, which NTPC already provides to Hay River from the Taltson River hydro site, is regulated by the Public Utilities Board and set at a regional level for the South Slave.
The town and NTPC say the cost of the distribution component would be reduced in excess of 30 per cent, while the back-up generation component would be reduced in excess of 15 per cent, when compared to current rates.
