Hay River puts off decision on power distribution contract

Hay River puts off decision on power distribution contract
The future of Hay River’s power distribution hangs in the balance after town council decided to postpone the awarding of a contract to one of the three providers bidding to deliver the service.Photo courtesy of Northland Utilities.

Unsatisfied with the information at hand, decision makers on Hay River’s town council opted to hold off on selecting a company to distribute power throughout the community at a meeting held on Sept. 21.

Hay River began issuing requests for proposals from power companies in May, after deciding it would not renew its current contract with Northland Utilities (NUL), the provider since the 1960s.

So far, NUL, the Northwest Territories Power Corporation and Flash Point Facilitators have stepped up as potential proponents.

“Two of the proponents obviously would require infrastructure,” Hay River Mayor Andrew Cassidy said in an interview with the Journal. “In the franchise agreement, there’s a provision for the town to take over Northland’s infrastructure at the end of the franchise agreement, but there is a cost to that and that’s the purchase price.”

That purchase price is currently unknown.

“Until we can actually find out what the price of Northland’s assets are, we’re not 100-per-cent sure which set of numbers we are able to run with from the other proposals,” Cassidy said. “Council discussed that and we decided that now is certainly the time for us to move forward and get that asset price.”

At this point in time, NUL has asserted it is unwilling to sell its infrastructure.

Should the price point given by NUL be higher than town council deems “reasonable,” a clause in the current agreement states it has the right to go to arbitration to fight for a lower price.

However, this process could be lengthy and cost “tens of millions of dollars,” Cassidy said, explaining council’s hesitation in taking this route.

“We weren’t sure if there was going to be any other bidders other than Northland Utilities,” he said. “Now that we know there is interest and now that it looks like there could be some potential rate reductions, we’ve decided that it is worth it at this point in time for us to go forward and see what the true asset value is going to be through arbitration.”

Hay River’s power distribution contract is set to expire in November 2016.

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