The question of how many power distributors the territory really needs was raised again in legislature last week, sparking a heated debate among MLAs who say private franchise agreements in some communities are driving up the costs of living.
Yellowknife Centre MLA Robert Hawkins kept at the issue of power distribution agreements last week, accusing private companies of making undue profits off of Northerners through what he called unfair sole-source contracts, an issue he’s been vocalizing since session began on Feb. 4.
Either competition has to be created to drive the price down, or the NWT Power Corp. (NTPC) has to take over distribution in the communities currently serviced by private companies, Hawkins argued.
“If we cannot create an environment of a robust competition, then we simply need to have the courage to break up the monopoly, because the Power Corp. minister said quite nicely the other day, this is an essential service. We must find a way to protect the public’s interest. That’s why we’re here. That’s what we should be fighting for,” Hawkins emphasized last Wednesday.
While NTPC, a crown corporation of the GNWT, currently handles distribution in most NWT communities, Hay River, Yellowknife, Fort Providence, Wekweeti, Enterprise and Trout Lake are serviced by Northland Utilities Ltd. (NUL), an ATCO company.
Hawkins said it’s clear that NTPC is putting efforts into bringing down the cost of energy in communities with help from the territorial government, which has pumped $80 million in subsidies into the corporation in the past four years. That’s why he’s wondering why the GNWT has not done more to prevent companies like NUL from making a profit off of those subsidies.
“Why do we have southern distributors here in the Northwest Territories when we have an option to start squeezing this problem towards a positive solution?” he asked. “We have a southern distributor working here in the Northwest Territories who has an insatiable appetite for profit at a time when people’s cost of living factor has gone through the roof that they can no longer carry.”
‘We are not a middle man’: NUL
Officials with NUL say it is misinformed to assert the company acts as a middle man responsible for driving up power rates for Northerners.
“The electricity services we provide…are required in the communities we serve regardless of the service provider,” reads a statement from NUL online.
The company said it does not mark up the cost of power, and that its “fair and reasonable” rates are reviewed and approved by the Public Utilities Board.
It said buying out NUL would not solve the problem of high energy costs in communities.
“The cost to buy-out Northland Utilities would have significant cost implications to either rate payers or tax payers in the NWT,” the company said. “Government, Northland Utilities and NTPC need to work together to allocate utility costs differently, and work with Indigenous communities to assess and develop new sources of energy, continue to increase operational efficiencies and implement new technologies.”
Distribution model under review
Still, Michael Miltenberger, the minister responsible for NTPC, said Hawkins raised “good, legitimate” questions. He said the GNWT is already considering a review of the power distribution model following last fall’s energy charrette, especially in light of certain franchise agreements coming up for renewal.
Hay River’s municipal government recently announced it would not be renewing NUL’s 10-year contract with the town due to costs, and has invited NTPC to bid on the tender.
Whether or not NTPC plans to throw its hat in the ring, Miltenberger said, has yet to be decided.
“There are economic questions; there are regulatory questions; there are policy questions and legal questions that we have to be clear in our minds before we formally stand up and take a final position on that issue, but that work is going to be considered so that we can in fact make as informed a decision as possible,” the minister said.
Still, Miltenberger said he questions the need for more than one distributor in the NWT, and admitted the cost difference experienced by NUL customers is significant. While Fort Smith pays $0.18/kWh for its hydro, Hay River pays $0.32/kWh. In Yellowknife, NUL charges $0.28/kWh.
“The rates NUL is charging, they’re making a high profit. They’re making multi-million dollars a year,” Miltenberger said at a recent constituency meeting in Fort Smith. “Our (government) subsidy goes straight to NUL. That doesn’t make sense to me.”
Yellowknife is scheduled to negotiate its franchise agreement in 2017 when the current contract goes up for renewal.