GNWT issues a directive to limit power rate hikes
Feared full cost recovery would drive some utility bills up too high
Kirsten Fenn
Northern News Services
Friday, March 3, 2017
SOMBA K'E/YELLOWKNIFE
The territorial government is directing the Public Utilities Board to put the brakes on attempts to achieve full cost recovery from NWT communities for the price of providing them with power.
Remi Gervais, senior analyst for the Department of Public Works and Services, left, and Robert Sexton, director of energy policy and planning at Public Works and Services, are seen at their office on Tuesday in Yellowknife. - Kirsten Fenn/NNSL photo |
Many communities in the NWT either pay more or less than what it actually costs to provide power to them, depending on a number of factors, including unforeseen expenses incurred during the year.
Last fall, Northland Utilities, which buys power from the NWT Power Corporation and distributes it to customers in Yellowknife, launched a public campaign claiming city residents were paying $500 more a year on average than customers in other communities, such as Fort Smith and Fort Resolution. The company pointed to a cost of service study indicating Yellowknife residents were paying 14 per cent more than what it actually costs to provide power to the city.
Louis Sebert, minister responsible for the power corp. dismissed that claim, arguing the 14 per cent figure was a projection from 2011 that never became reality and that the true figure was less than zero.
The Public Utilities Board has been pushing power corp. to equalize cost recovery levels in all communities but the GNWT fears doing so too rapidly could lead to exuberantly high power bills in communities that aren't paying the full cost.
The GNWT also directed the board that customers should pay a range of 90 to 110 per cent of the true cost of power.
"Some of the rate zones are (paying) as low as 75 per cent of the cost," said Robert Sexton, director of energy policy and planning at Public Works and Service.
"If you were in a zone that paid 75 per cent, you're outside of this range, which means your power costs needs to increase to come within the range so you're paying closer to the true cost of the power you use."
Glen Abernethy, minister responsible for the Public Utilities Board, issued a policy directive to the board last week to increase cost recovery rates by no more than one per cent annually. The GNWT had previously directed the board to keep this rate to a maximum of three per cent a year.
Sexton said last week's policy directive is meant to avoid sharp power rate increases, as power bills have been steadily on the rise for years.
Just because the government is slowing the cost recovery rate doesn't mean power bills won't continue to go up, however.
In July, the Public Utilities Board approved power corp.'s interim request to increase power rates by 4.8 per cent between Aug. 1, 2016 and March 31, 2017.
At the time, power corp. had also asked for that increase to remain in effect and for an additional four per cent increase to come into play in each of the following two years.
Whether those changes will come into play has yet to be decided.
Sexton said if power corp.'s requested increases and the original three per cent adjustment to the cost recovery rate allowed by the board had both come into effect, some residents in the territory could have seen a seven per cent increase in power rates.
"Because we've done this, we're going to get a small increase in only a few zones," Sexton said.
Communities like Yellowknife that already pay within 90 to 110 per cent of the cost of power will only see a four per cent rate increase if power corp.'s request is approved, said Remi Gervais, a policy analyst with the Department of Public Works and Services.
Communities that pay less than 90 to 110 per cent of the cost of power, could see as much as a five per cent rate hike if power corp.'s proposed increase goes through and the board also applies the one per cent increase, Gervais told Yellowknifer.
"We did this to avoid increases beyond the four per cent in many zones," Sexton said.
"The last thing people want to see are large increases or fluctuating electricity rates. It's not helpful for anyone."
Sexton said setting a range allows customers' rates to remain more "stable" over time, even if the actual cost of providing power fluctuates, and is something smaller jurisdictions such as the Yukon have done as well.
The government, meanwhile, will pay a range of between 100 to 130 per cent, to ensure it continues to subsidize rates, Sexton said.
The territorial government advised the utilities board that it can adjust government cost recovery rates by up to three per cent annually, according to background documents discussing the policy directive.
